Mobile Customer Relationship Management 9781846637179, 9781846637162

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06/11/2007

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ISSN 1463-7154

Volume 13 Number 6 2007

Business Process Management Journal Mobile customer relationship management Guest Editor: Ragnar Schierholz

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Business Process Management Journal

ISSN 1463-7154 Volume 13 Number 6 2007

Mobile customer relationship management Guest Editor Ragnar Schierholz

Access this journal online _________________________

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Editorial advisory board __________________________

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Guest editorial ___________________________________

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Mobile customer relationship management: an exploratory analysis of Italian applications Marta Valsecchi, Filippo Maria Renga and Andrea Rangone ___________

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Mobile customer relationship management: underlying issues and challenges Jaakko Sinisalo, Jari Salo, Heikki Karjaluoto and Matti Leppa¨niemi ______________________________________________

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Internet vs mobile banking: comparing customer value perceptions Tommi Laukkanen _____________________________________________

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CONTENTS

CONTENTS continued

Contextual perceived value? Investigating the role of contextual marketing for customer relationship management in a mobile commerce context ThaeMin Lee and JongKun Jun___________________________________

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SMS advertising, permission and the consumer: a study Fatim Bamba and Stuart J. Barnes ________________________________

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Mobilizing customer relationship management: a journey from strategy to system design Ragnar Schierholz, Lutz M. Kolbe and Walter Brenner ________________

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Mobile technology in field customer service: big improvements with small changes Matti Rossi, Virpi Kristiina Tuunainen and Marju Pesonen____________

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The role and impact of business process management in enterprise systems implementation Abdullah S. Al-Mudimigh ________________________________________

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Awards for Excellence ____________________________

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ADVISORY GROUP Professor Thomas H. Davenport Babson College, USA Professor Varun Grover William S. Lee Distinguished Professor of Information Systems, Clemson University, USA

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Dr H. James Harrington The Harrington Institute, USA Dr John Peters Emerald Group Publishing Limited, 60/62 Toller Lane, Bradford, UK Professor N. Venkatraman David J. McGrath Jr, Professor of Management, Boston University, USA

EDITORIAL BOARD Professor Hassan Abdalla De Montfort University, Leicester, UK Dr Hartini Ahmad Universiti Utara Malaysia, Malaysia Dr Tariq Al-Noaim King Saud University, Saudi Arabia

Dr Ismail Khalil Ibrahim Johannes Kepler University, Austria Professor Mahadeo Jaiswal Management Development Institute, Gurgaon, India Professor Kai Jakobs Computer Science Department, Technical University of Aachen, Germany Dr Gyeung-Min Kim Ewha Womans University, Korea Dr Ned Florencio Kock Texas A&M International University, USA Dr Peter Ku¨ng Cre´dit Suisse, Zurich, Switzerland Ming-Fong Lai Senior Engineer, National Applied Research Laboratories, Taiwan Professor Binshan Lin Department of Management & Marketing, Louisiana State University in Shreveport, USA

Professor Mustafa Alshawi Faculty of Business and Informatics, University of Salford, UK

Professor Pericles Loucopoulos Chair of Information Systems, Department of Computation, Manchester Business School, Manchester, UK

Dr Birdog˘an Baki Karadeniz Technical University, Turkey

Dr Selma Limam Mansar Zayed University, UAE

Professor Saad Haj Bakry College of Engineering, King Saud University, Saudi Arabia

Professor Rafael Paim Department of Production Engineering, Cefet-RJ, Rio de Janeiro, Brazil

Professor David Bennett Aston Business School, Birmingham, UK Dr Ganesh D. Bhatt Morgan State University, USA Dr Ilia Bider Director R&D, IbisSoft AB, Stockholm, Sweden Professor Georgios I. Doukidis Department of Management Science and Technology, Athens University of Economics and Business, Athens, Greece Professor A. Sharaf Eldin Faculty of Computers and Information, Helwan University, Cairo, Egypt Associate Professor Galal Hassan Galal-Edeen Cairo University, Egypt Dr George M. Giaglis Athens University of Economics and Business, Greece Professor A. Gunasekaran University of Massachusetts, USA

Business Process Management Journal Vol. 13 No. 6, 2007 p. 752 # Emerald Group Publishing Limited 1463-7154

Dr Bernd Hienrich University of Augsburg Business School, Germany

Dr Ray Hackney Director BIT Research, The Business School, Manchester Metropolitan University, Aytoun Street, Manchester, UK Professor Suliman Hawamdeh School of Communication and Information, Nanyang Technological University, Singapore

Professor Michael Rosemann Business Process Management Group, Queensland University of Technology, Australia Professor B.S. Sahay Institute of Management Technology, India Dr Christopher Seow University of East London, UK Dr Afzaal H. Seyal Institute of Technology, Bandar Seri, Brunei Professor Namchul Shin Pace University, School of CSIS, New York, USA Dr Khalid S. Soliman Hofstra University, USA Dr Kimberlee Synder Winona State University, USA Dr Marinos Themistocleous Brunel University, UK Dr Mohamed Tounsi Prince Sultan University, Saudi Arabia Dr Zulkifli Mohamed Udin Universiti Utara Malaysia, Malaysia Professor Anthony Wensley Rotman School of Business, Ontario, Canada

Guest editorial About the Guest Editor Ragnar Schierholz works as a researcher at the Institute of Information Management of the University of St Gallen, Switzerland. He is a member of the Competence Center Customer Management (CCCM), in which large European companies do joint research on customer relationship management (CRM) and knowledge management. His research focus is on the application of mobile business technology in the field of CRM. Prior to his work in St Gallen, he has worked as an IT consultant for IBM Germany, Lotus Professional Services Germany and as an IT Service Engineer for ONEstone GmbH Germany. He earned degrees as Master of Science in Computer Science from the Western Michigan University, Kalamazoo, USA and as Diplom-Wirtschaftsinformatiker (equivalent to a Master of Science in Information Systems) from the University of Paderborn, Germany.

Mobile customer relationship management: foundations, challenges and solutions Technological advancements in mobile communications enable new ways of doing business, often referred to as “mobile business”. Mobile business is typically defined as the application of mobile technologies to improve or extend business processes and open new market segments. However, even though strongly influenced by technology, mobile business is not limited to technological aspects, but requires appropriate management concepts as well. The research field dealing with the interaction of businesses with their customers and the related back-end processes within the businesses, such as marketing, sales and service processes, has often been referred to as CRM. In its beginning, CRM has also been mostly technology driven, but today it is mostly considered as technology-based management approach. This special issue deals with the application of mobile business concepts and technologies in the domain of CRM. This is what we define as mobile customer relationship management (mCRM). It involves mobile business support for internal CRM processes such as marketing campaign management, mobile sales force, mobile sales channels or mobile customer service interaction. Examples of mCRM include mobile marketing campaigns, mobile sales reporting, mobile ticketing, and product-related mobile information services. The goal of the special issue is to give insights into fundamentals of mCRM, identify current challenges of mCRM, to propose solutions to current problems and challenges in mCRM and to demonstrate successful examples of mCRM. To reach this goal, we have acquired seven excellent papers which cover mCRM from various perspectives. In the first paper, Valsecchi, Renga and Rangone identify typical mCRM applications in the Italian market by an exploratory analysis. In order to gain a better understanding of mCRM and the associated benefits, they analyze seven cases from both public as well as private organizations in further detail. In the second paper, Sinisalo, Salo, Karjaluoto and Leppa¨niemi derive a conceptualization of mCRM and develop a framework of underlying issues and challenges in mCRM. They conducted an in-depth case study with a large Finnish retailer and identify critical issues both on a conceptual and a technological level. In the third paper, Laukkanen explores

Guest editorial

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customer value perceptions of mCRM by comparing internet banking with mobile banking. He conducted a qualitative study with in-depth interviews with users of internet banking and mobile banking and identifies differing value perceptions that customers expect when dealing with these two channels of banking services. By understanding these value perceptions, service providers gain a better understanding of the differentiation of mobile services against their online and traditional counterparts. The fourth paper by Lee and Jun performs a quantitative analysis in order to understand customers’ repurchase intention in mobile commerce channels by applying concepts from the technology acceptance model, customer satisfaction and contextual perceived value. They propose a model combining these concepts to explain customer repurchase intention in the mobile commerce context. The fifth paper by Bamba and Barnes focuses on SMS-based advertising as a specific application in mCRM and investigates consumer acceptance issues with SMS advertising. Obtaining permission from the consumer before contacting her with advertising communications is a legal requirement in many countries nowadays to avoid spam. Based on a multi-method approach including qualitative and quantitative elements, Bamba and Barnes develop a model explaining consumers’ willingness to give such permission. In the sixth paper, Schierholz, Kolbe and Brenner develop a method for the introduction of mCRM in organizations covering strategic management, process management and technological issues. The method helps business managers to avoid typical pitfalls in the introduction of mCRM into their organization. Finally, in the seventh paper, Rossi, Tuunainen and Pesonen conduct an in-depth case study and explain a successful example of a mobile field force application in a tobacco reseller from the Baltic region. The case study demonstrates how mCRM concepts can be applied to improve the performance of CRM business processes and identify what it takes to implement mCRM successfully. We also include an additional paper by Al-Mudimigh which investigates the role and impact of business process management (BPM) in successful Enterprise System (ES) software package implementation. All papers though taking a different perspective to mCRM – from conceptualization and benefit analysis, via technology acceptance of users and introduction method to valuable case studies of application in selected industries – share the same vision that mobile technologies will change the way customer relationships are managed in the future. This special issue also shows that this mobile future is already economically feasible today and here to stay. The editors strongly endorse this perception. The guest editors wish to thank the executive editor for giving us the opportunity to compile this issue as well as the numerous reviewers that made this quality set of papers possible. Finally, since some of the papers were initially accepted to HICCS-39 we also thank the organizers of the annual electronic CRM mini-track of “diverting” the best mCRM papers to this issue. Ragnar Schierholz Guest Editor

The current issue and full text archive of this journal is available at www.emeraldinsight.com/1463-7154.htm

Mobile customer relationship management: an exploratory analysis of Italian applications

mCRM: an exploratory analysis

Marta Valsecchi, Filippo Maria Renga and Andrea Rangone

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Department of Management, Economics and Production, Politecnico di Milano, Milan, Italy Abstract Purpose – The paper’s aims are to estimate the size of the Italian market for mobile customer relationship management (mCRM) services and to try to evaluate some benefits that can be obtained through the use of mCRM applications by companies. Design/methodology/approach – The research involved a census of mCRM applications in order to construct a typology of mCRM applications being used and the analysis of some case studies to assess the impact of such applications on the perspective adopted by the company. This second phase involved interviews with managers of the companies. Findings – In 2005, 1,077 mCRM services were used by 405 companies in Italy. The main benefits found were the improvement of customer satisfaction, an increase in the efficiency of internal processes and an increase in revenue. Research limitations/implications – The present research considers only Italian services based on data and not on voice. Future research will be required to investigate end-user needs and wants (which are not treated in this paper) and to make a comparison between the Italian market and other markets. Practical implications – This research is the first step towards the generation of a systematic study of mCRM applications and their future development. The hope is that other companies could benefit from the use of these kinds of technologies. Originality/value – The present research focuses upon companies that give a strategic role to their relationship with customers. The results provide a systematic typology of current services for those companies that do not know about opportunities offered by the mobile channel. Keywords Italy, Customer relations, Relationship marketing, Mobile communication systems Paper type Research paper

Introduction Customer relationship management (CRM) is one of the management tools targeted to increase corporate profit. The goal of companies from using CRM applications is to know their own clients and to offer personalized services, in order to increase both customer satisfaction and client loyalty in the long run (Gebert et al., 2003; Kalakota and Robinson, 2001; Shani and Chalasani, 1992). Among the main channels for customer one-to-one relationship management, the mobile channel seems a very effective instrument to reach the client anywhere and anytime (Arnbjerg, 2004). As a matter of fact, the mobile phone is a personal device almost always present in the customer’s pocket, it is easy to use and it supports interactive applications (Mobile Marketing Association, 2004). In recent years, customers have demonstrated a fast growing capability to use all mobile, value added services, such as infotainment services, games, ring-tones and logos.

Business Process Management Journal Vol. 13 No. 6, 2007 pp. 755-770 q Emerald Group Publishing Limited 1463-7154 DOI 10.1108/14637150710834532

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Moreover, some research conducted on the Italian digital music segment demonstrated that the mobile channel is ten times more effective than the web channel (IFPI, 2006). All this, indicates a great opportunity for the companies using the mobile net as a promotional channel to increase corporate brand awareness and to deliver a more complete services to the consumer, to supplement company products. At present, there is little information in the literature about how enterprises manage consumer relations exploiting the mobile channel – mCRM. Few articles have been written about mobile advertising (Virtanen et al., 2005; Facchetti et al., 2005; Perlado and Barwise, 2005; Trainito, 2002). These works give us some data about the effectiveness of mobile advertising, its value added, and its effects on consumers. Moreover, in these articles some studies of the impact of mobile advertising campaigns on returns on investment (ROI) are presented. It transpires that most marketing managers resist using mobile advertising campaigns, for a number of different reasons. First of all, for the uncertainty of returns on investment. Secondly, for lack of specific competences. Thirdly, there is a lack of collaboration and information sharing between their company and others mobile value chain players (mobile network operators, mobile phone producers, marketing agencies). Finally, there is no standardization of marketing and mobile technology. On the basis of these preliminary considerations, the School of Management of Politecnico di Milano, where the authors of the present paper work, decided to conduct an exploratory analysis of the mobile CRM services market, based upon earlier studies of mobile and wireless technologies from 2001 onwards. Our goals are an in-depth exploration of the use of mCRM and to develop an understanding of the related impacts inside companies. The end and social purpose of this work is to give an impetus to a network of mCRM knowledge generation. The choice of Italy as the country for analysis is suggested from a number of considerations. In particular, in Italy, mobile phone penetration amounts to 82 per cent (Assinform, 2006): it is one of the deepest in the world. In the second place, Italy is one of the countries with the highest presence of UMTS subscribers (International Telecommunications Union, 2005). Also, the number of UMTS subscribers is higher than broadband internet users. Fourthly, but very importantly, there is already a large market for mobile digital contents: e949 million in the 2005 (Bertele` et al., 2006). It is also important to underline the fact that users have a propensity to use the interactive functions of mobile phones (for instance, during some television transmission, the short message service (SMS) based voting services produce 300,000 contacts per day from 5 million viewers) (Mediaset, 2006). Finally, many leading companies are based in Italy that are playing an important role in the mobile service provider market in USA, South America, EU and Far East (such as Buongiorno, Dada, etc.). Among the elements described above, it is important to stress that 36 per cent of the whole mobile digital contents market is SMS based; this data in now decreasing in favour of videos and browsing applications. Literature analysis: the definition of mCRM Before carrying out the exploratory research about mCRM applications, we conducted an extensive literature review in order to identify a clear definition of CRM. Based on the results of that review, we produced a definition of mCRM which will be used throughout this work.

From the first theories about CRM to the present day, many authors gave their interpretation of the CRM approach and offered a variety of definitions of CRM. In particular, a systemic bibliographical study enables us to define three different approaches to CRM. The first approach is the technological one: it considers CRM to be a data-processing instrument to support marketing activities. Twogood (1998) supports this way of thinking, underlining the operative tools (e.g. the data warehouse) that help the company to create and maintain a relationship with the client. The second approach is the process approach: CRM is the process of linking client knowledge and management: CRM extends the concept of selling from a discrete act performed by a salesperson to a continual process involving every person in the company. It is the art/science of gathering and using information about your customers to build customer loyalty and increase customer value (Tuck, 1998).

Another similar definition can be found in Craw Cour (2000): CRM is the active process of the knowledge (not the data) about clients widening, so that the company could use that knowledge to personalize the corporate business and strategies in order to satisfy every client individual need.

Finally, there is the conceptual approach: it identifies CRM as a philosophy. The authors taking up this approach consider the CRM to be a complex strategy involving all the corporate organizing structure in order to strengthen the relationship with the client; they avoid considering CRM only as an instrument of data collection. According to the conceptual theory, through the CRM the business culture becomes client-oriented. One of the first authors adopting a conceptual definition was Middleton (1999) who asserted that CRM must allow the companies to know their clients and, thanks to the new opportunities given by the new information and communication technologies, to create a long-lasting customer relationship. Eberhardt (2001) thinks the same and suggests shifting the corporate strategy to focus on correct management of customer relationships, understood as a real strategy rather than a data-processing application suite. Gebert et al. (2003) also define CRM as a business strategy and systematic approach issuing from relationship and one-to-one marketing which is based on the integrated and active management of personalized relationships with customers. Another conceptual theory representative is Lee (2000), who asserted that CRM means adoption of a customer-oriented business strategy; this new strategic approach involves the redesign of every functional activity in the company and requires business process re-engineering. This reengineering process must be supported by, and not driven by, the CRM technologies. The definition we use in the present study comes under the last heading, the conceptual approach. In particular, the definition we used in all our work is the following: CRM is a corporate strategy and a systematic approach based on relational marketing that has the aim to select and manage the clients in order to optimize their value in the long run and, consequently, to maximize value creation for the enterprise.

Consequently, mobile CRM means CRM, according to the previous definition, realized by a mobile device (such as a mobile phone or PDA). In particular, from an operational point of view, a CRM service is a service that is not an end in itself, and that exists only

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as a finishing or improvement of another service that can be considered the “principal service.” Some example of “principal services” coupled with a mobile value added CRM service are the following: a home banking service (principal service) and the information about the balance of a bank account provided via SMS (mCRM service); the opening of a ski facility (principal service) and up-to-the-minute news about the weather on the ski run (mCRM service); a transport service (principal service) and the booking and notification service for bus tickets or the taxi trips (mCRM service). The methodology As mentioned in the introduction of this paper, after 1998 the School of Management of the Politecnico di Milano created some permanent observatories, called “ICT Management” to study and critically analyze the diffusion of new technologies in Italian companies. This group of researchers, over the years, constantly increased its knowledge of the main companies in a range of technology sectors (for example, B2b, e-commerce, B2c, intranet, mobile consumers, mobile businesses, Wi-Fi, RFId) through surveys, direct interviews and case studies. Every year every observatory published a report with the main results of its research. The authors of the present paper work for the Consumer Mobile Vas Observatory that studies mobile and wireless applications for consumers: it was established in 2001 and since 2004 has broadened its analysis to include CRM services. This paper reports, the results of the research conducted in the 2005 by this observatory, which involves the work of five researchers. Given the objectives indicated in the introduction, the empirical study involved the following two phases. The first one was a census of “Italian mCRM applications” (performed at the Consumer Mobile Vas Observatory) in order to identify the types of mCRM utilized by companies. The second phase was the analysis of some case studies to assess the impact of such applications on the perspective adopted by companies. Starting from the first phase, the main steps carried out to conduct the census and identify the main applications were as follows: we checked every sector listed by Istat (National Institute of Statistics) in its classification of the economical activities. For each area, we identified the companies that use mobile CRM applications using both online resources (search engines, directories specially dedicated to CRM, mobile network operator portals) and offline sources (articles from specialized journals, press reviews, interviews with experts, etc.). In this way, we knew all Italian mCRM applications both public (that are available to any user, like information about theatre productions) and private (only directed to service subscribers, such as mobile banking services). We did not consider services not written in the Italian language or based only on voice. After the identification, we analyzed the “types” of all mCRM applications in relation to the following nine variables. The first variable was the type of service, which was broken down into six main categories. First of all, a service can be an informative content which provide only information (e.g. on cultural events, on public administration services, on transport, trade and promotional information). The second category regards the booking services aimed to give users another instrument to book restaurants, hotels, tickets, etc. Then, there are the booking services and transaction advice. The fourth type is the payment

service allowing users to pay for some services like parking or to make a donation, etc. The fifth type of service is mobile banking that gives consumers the opportunity to receive settlements or details of bank account and credit card, to make bank transfers, etc. And the final type was mobile trading (e.g. stock and index quotations, share portfolio consultation, bond sales). After the identification of the type of the service analyzed, we identified the company sector that could be public, non-profit, transport, manufacturing or service industry, trade, telco, entertainment and financial business, and the process supported (i.e. pre-sale, sales, after sale service) by the service. An important variable for the knowledge of the market is the fruition technology: SMS, multimedia messaging service (MMS), browsing, video. Finally, we evaluated the fruition method (pull, push, push and pull), the activation modality (mobile or non-mobile channel), service cost and the service length, as well as the dependence on mobile network operators. It is important to explain that mobile payment, mobile banking and trading are mCRM services because they are services that are useless without the main (or principal) service and their goal is to increase customer satisfaction, giving him or her some mobile value added services. The second stage of the empirical study assessed the benefits of the mCRM applications through 20 case studies conducted through a first mail questionnaire and a direct, follow-up interview with senior management of some companies that use mCRM services. The survey not only allowed the interviewee to prepare the necessary data for the interview, but also reduced the interviewee bias to some extent. These case studies, dealing with the main companies that use mCRM applications, were chosen through secondary sources (i.e. search engines, articles from specialized journals, press reviews, reports, conventions and web sites) and through our own census. We followed these choice rules to select the target companies: the relevance of the mCRM application used; the time when the application was introduced to the company; the availability of company managers for interview; the representativeness as regards the application types identified; and finally, the representativeness as regards the company sector identified. According to these rules, the sample of case studies involved 20 companies or public bodies using these types of application: . mPayment (11 cases); . information services (seven cases); . mBanking services (one case); and . booking services (one case). The companies belonged to these sectors: . nine to public administration (i.e. central administration, local administration, hospitals, school and universities); . five to transport; . four to entertainment; and . two to finance.

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During the case studies, we investigated the following issues: the company profile, the mCRM application used, the resources involved, the decision-making process, the technology used and the costs and benefits produced by the mCRM application. Empirical results Census of mCRM applications In this section, we will present the main results obtained and some graphs demonstrating the results of our census. The mCRM services census allowed to identify 1,077 services provided to consumers in 2005 in Italy, and used by 405 companies. Compared with similar research performed in 2004, there had been an increase of 14 per cent in the number of companies using mCRM and a 44 per cent increase in services. This confirms the interest in mCRM among enterprises. The companies already using mCRM in 2004 have increased the set of services utilized. There is the predominance of informative contents which account for 657 applications (61.2 per cent). The financial services are half of informative services, divided between mobile banking services (15.2 per cent) and mobile trading services (15.1 per cent). All the other applications account for less than 4 per cent of provision (Figure 1). On the supplier perspective (Figure 2), the corporate sector which is most highly represented is public administration (49.5 per cent), of whom 96.5 per cent are Decentralized Public Administration. In second place the financial sector that covers a percentage equal to 17.1 per cent made up of banks (89.9 per cent), investment services (8.7 per cent), and insurance services (1.4 per cent). This is followed by the entertainment area (9.9 per cent): entertainment places (52.5 per cent), tourism (17.5 per cent), sports board (17.5 per cent), and other forms of entertainment (12.3 per cent). The manufacturing and service industries have only a small presence (9.4 per cent) and the percentages of the transport field and the trade sector are lower (3.7 and 3.5 per cent, respectively). Figure 2 also shows the remaining rates for non profit, telco, and other. From the analysis of the number of services offered by any supplier type (Figure 3), we can conclude that public administration offers 53.4 per cent of services (government

Mobile Banking services 15.2%

Payment services 2.1%

Figure 1. Service type – base: 1,074 services

Mobile Trading services 15.1%

Booking services and transaction Booking services advices 2.9% 3.3%

Source: Census

Other services 0.6%

Informative contents 61.2%

Entertainment business 9.9%

TLC Trade 2.5% 3.5%

Other 1.7%

Public Administration 49.5%

Manufacturing and service industry 9.4%

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Financial sector 17.1%

Figure 2. Service supplier company sector type – base: 404 suppliers

Transport No profit 3.7% 2.7%

Source: Census Trade 1.3% Manufacturing and service industry 3.9%

Financial sector 33.0%

mCRM: an exploratory analysis

Entertainment TLC business Other 3.9% 0.7% 1.2%

Transport 1.7%

Public Administration 53.3%

No Profit 1.0%

Source: Census

bodies, communalities, universities, hospitals), and the financial sector 33 per cent, while the other areas represent a percentage under 4 per cent. If we restrict analysis to only the informative contents, it is interesting to stress that public administration offers the nearly the whole of this service category. The supported processes by Italian mCRM applications (Figure 4) are after-sales service (68.3 per cent of cases), pre-sale (15.7 per cent), and sales (3 per cent). However, another 12.9 per cent of the applications support both pre-sale and after sales service. With regard to the fruition technology (Figure 5), more than 80 per cent of the services are SMS based. According to Riva (2004), some reasons explaining the success of SMS are: “everyone” uses SMS; SMS always (and almost in real time) reaches the receiver; they

Figure 3. Classification of services according to the supplier type – base: 1,074 services

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68.3%

762 15.7%

12.9%

3.0%

Figure 4. Classification of services on the basis of supported process – base: 1,074 services

After-sale

Selling

Pre-sale

Pre-sale and After-sale

Source: Census

80.9%

13.2% 5.3%

Sms

Figure 5. Fruition technology – base: 1,074 services

Browsing through mobile phone

Browsing through pda

0.5% Mms

0.1% Video

Source: Census

are not an invasive service and contain short messages which are fast to read. To these reasons, he adds some commercial explanations, like the cost for contact for the company is very low, SMS are easily personalized, it is possible to receive immediate feedback on the promotional campaign and the cost for client acquisition is lower than other marketing channels. Another mobile technology used is the micro browsing, that is the Wap navigation on mobile network operator portals. Finally, in Italy there are very few applications based on MMS or video. From the authors’ point of view, these fruition technologies will have increasing usage in the future. In fact, the first experiences of CRM mobile

video are interesting, like the service provided by a skiing locality showing on a mobile to the tourist the state of slopes. Analysing the fruition method (Figure 6), it appears that 60.5 per cent of the services are of push type, i.e. the user has to subscribe to a service and then he or she automatically receives the services; whereas pull services (32.5 per cent) are used on demand by the user when he or she needs them. Finally, there are some services (7 per cent) that present two fruition methods (push and pull). Finally, on the question of cost, 85.7 per cent of the services are free, that means that user pays only the transmission cost (SMS cost, data transmission cost, etc.). The other services are fee-paying: in particular mobile banking and mobile trading are the main application categories that require a payment (Figure 7). Other mCRM services that require payment are, for example, some weather information services about tourist resorts, some news subscriptions about entertainment events, some booking and notification applications, etc.

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Case studies: benefits of mCRM In the second phase of our research, we extended the previous results by studying some of the most representative cases from our census. Our purpose in this section is to understand better the mCRM services supplied by the various firms and estimate the Push e Pull 7.0% Pull 32.5%

Push 60.5% Source: Census

Mobile Banking services 46.1%

Mobile Trading services 39.0%

Other services 1.3% Informative services 8.4% Booking services and transaction advices 1.3% Source: Census

Figure 6. Fruition method – base: 1,074 services

Payment services 2.6% Booking services; 1.3%

Figure 7. Type of payment for services – base: 154 services

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benefits obtained from running them. The case studies have been chosen so as to cover as far as possible the range of different services and providers. They have been developed by using a mixture of secondary sources and primary sources. We conducted 20 case studies. Only nine of these companies gave us an evaluation of the costs and benefits obtained by the introduction of the mCRM applications. In what follows, we will present only those nine case studies for which a cost benefit evaluation was available. We briefly describe the firm, the mCRM application, the actors involved, the technologies used and the main benefits to the offering firm. Comune di Biella and Comune di Como are two public administrations that offer analogous mCRM services providing practical information to their residents about official contracts, public services, community news and events. Both services are currently available via SMS (though Biella plans to extend its service to browsing) and are customized according to the users’ registered interests and preferences. In both cases, service provision was outsourced to a wireless application service provider (WASP) (respectively Mcomm and Datain) which hosts and runs the application platform and provides the link with the operators. The main benefit observed in both cases is a more effective and efficient communication with residents in terms of timeliness, focus and reach, which results in greater citizen satisfaction and a better city image. In addition, both cases reported internal benefits in terms of a higher productivity and cost reductions due to more accurate contact management and reduced call centre activities as well as the collection of valuable data about citizens’ interests and information needs. Customer information services are also provided by private organizations. For instance, Maison Espan˜a, a restaurant and disco-pub venue, offers its customers an information service about the programmes and events that it promotes. Its service is accessible via SMS in push (after registration) and pull mode and tailored with regard to customers’ profiles. A WASP called Progetto SMS provides the necessary technology and runs the application platform, which also supports MMS. The major reported benefits of this service are higher customer satisfaction and fidelity accompanied with cost and time reductions as compared with the previous direct mail marketing communications. A similar service is offered by movie planet, a movie complex which informs its users via SMS of its weekly schedules and news according to their interests. The service is delivered in push mode after the user has consented to receive it and provides data about his or her interests. Currently, about 1,500 users use this service. A key benefit obtained by the provider is the higher efficiency and quality of its customer service due to a reduction of customer calls for information, resulting in better customer satisfaction and loyalty. Moreover, it allows the firm to gather information about customer interests which may be useful for planning purposes. ASL of Teramo is a public health organization that offers a booking and notification service via SMS and e-mail for its health services. The user can send an SMS with the necessary information to reserve or cancel health services from ASL and gets a confirmation message in return. While, the service represents a small fraction of client demands, ASL has observed increased customer satisfaction as well as cost savings and better service due to lower call centre demands. Azienda Padova Servizi (APS) is a municipal organization which manages the road infrastructure of the city of Padova. One of its divisions offers a service called i.park

which allows its users to pay for their parking lots with their mobile phones. The service is developed by SPMC which runs it on its platform. Users register for the service to get a unique ID which they send in an SMS to activate or stop the payment. APS can set the parking areas, their tariffs and check payments on the platform by GPRS. The actual payment is made by credit card or bank account in partnership with a bank. The main benefits obtained by APS are higher customer satisfaction due to the convenience of the payment method, increased revenues due to a reduction of fraud, a higher productivity and cost reductions on activities like physical tickets distribution and payment control. Moreover, interesting data about the usage of the parking areas can be obtained. As the solution is outsourced, initial costs were low but a recurrent fee must be paid. Telepark is a very similar service offered by eight cities including Salerno, Reggio and Torino. Unlike i.park, this service is also available via IVR (voice), and payment is made through specific prepaid cards. The service is run by Telepark, acting as a WASP. The benefits observed are similar to APS: higher customer satisfaction, fraud reduction, higher productivity, cost reduction and generally a better customer service. Fineco is an online banking service that provides information to their bank customers. The customers can receive free SMS when they perform a money transfer, pay with a credit card, etc. But they have to pay (from e0.15 to 0.25) in order to receive the balance on the account, the notification of payment of wages, the status of an investment portfolio, etc. Fineco obtained three main benefits: fewer complaints related to credit card payments, less contact to the call centre in order to obtain information, more revenues from the payments by SMS. eBay Italy sends SMS to the users participating to an auction (both the purchaser and the seller) in order to alert them to the most important events (e.g. an increase in the latest offer). The cost of the service for eBay’s customers ranges from e0.12 to 0.30 depending on the type of information. By using this service, eBay is obtaining better customer satisfaction and an important revenue stream from a CRM service. These cases highlight the fact that, in general, the benefits expected from the launch of mCRM solutions can be grouped in three main categories: (1) the improvement of customer relationships and satisfaction; (2) an increase in the efficiency and effectiveness of its internal processes; and (3) a revenue increase. The first benefit is linked to the fact that mCRM enables personalized and interactive communication with customers, thereby allowing the firm to improve its customer intelligence by making it easier to gather data about each customer. This permits the firm to understand customer needs better and develop suitable responses, as well as to improve interaction with customers by retaining a record of their inquiries, transactions, complaints and problems solved. The second advantage is due to the improved effectiveness and productivity of marketing, sales and service processes supported by mCRM. This may result in enhanced customer acquisition due to better targeted campaigning, increased sales efficacy due to superior customer contact and lead management, and better customer satisfaction and retention due to enhanced customer service and complaint management.

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Finally, the third benefit derives from a revenue increase that is produced on the one hand by the SMS premium or other mPayment application use and on the other hand by the reduction in fraud, as in the case of mPayment services linked to parking. The Figure 8 shows the three categories of benefit categories identified and shows some of the main company business that use mCRM services. Each business sector will try to reach one particular benefit. In particular, public administration and utility stress customer satisfaction and loyalty as the most important results of an mCRM enterprise, which may be linked to some embryonic internal outcome linked to the cost and time reduction and a productivity increase. In contrast with this, financial mCRM services (i.e. mBanking and mTrading) often require a payment and so the financial companies obtain a revenue increase from an mCRM application. The three benefit categories are represented in the following graphic drawn up by the Consumer Mobile Vas Observatory on the basis of the discussions with the managers of each company interviewed. The horizontal axis represents a possible definition of the adoption level of mCRM application. In particular, it represents the “maturity of the service”: a service can be considered mature when it has been adopted by a large number of users and has given the opportunity to the company to realize all its aims. Different companies of the same business sector could reach different level of mCRM service maturity. On the cost side, mCRM often does not involve a substantial investment in the technological solution, personnel training or adaptation of processes but, when using free SMS, some companies consider that the operating costs related to sending of SMS are too high. Frequently, the companies give a positive evaluation of their investments in mCRM, but none have performed an analytic evaluation of them.

Value Driver

Benefits for the user company

SMS Premium

e

" servic

"Mature Revenue increase Finance

Figure 8. mCRM service benefits

Process automation increase

Process cost reduction

More effective and efficient communication

User satisfaction increase

P.A. the up of Start- vice ser

Utility

mCRM service Maturity Source: Consumer mobile vas observatory

Conclusions This paper presents the main results of exploratory research into mCRM applications in Italy. The research was carried out in two phases: a census covering all the important solutions employed in Italy, followed by 20 selected case studies which have been analyzed in order to gather important information about the main applications identified in the census. Where possible the case studies have been used to identify the principal benefits produced in the company by its use of mCRM services. Through our census, we confirmed that the mCRM services market has attained a substantial size, with about 1,077 services offered by 405 providers, and presents good future prospects at least from a supply perspective. This is a significant figure as compared with the totality of mobile, value added services of all types offered to consumers in Italy. The majority of the services are informative ones, providing only information and news (e.g. on cultural events, on public administration services, on transport, on trade) and promotional messages. Financial services account for half of the informative services, evenly divided between mobile banking and mobile trading services. The other applications include a small number of services supporting booking, notification and payment processes. There is a variety of firms and businesses offering these services, but they are mostly concentrated in public administrations. Another noteworthy company sector is the financial one and in particular the banks. Both the entertainment area and manufacturing and trade sectors report few applications. The main processes supported by mCRM applications in Italy was found to be after sales service, because the principal purpose of CRM is the increase of customer satisfaction. More than 80 per cent of these services are SMS based, but in the future the development of more multimedia and presumably more innovative services is likely, due to the growing penetration of newer generation devices with multimedia features. The majority of the services is supplied through a pull method and is free, with the exception of the financial services that are almost always fee-paying. The benefits that were identified in the verified through the case studies fall into three categories: the improvement of customer relationships and satisfaction, an increase in the efficiency and effectiveness of the company’s internal processes and a revenue increase. Our research is only the first step towards the generation of a systematic study of mCRM applications and their future development, which is a promising sector for development. In particular, future research is required to deal with three important aspects. Firstly, there needs to be research into the highly important aspects of the demand side which have not been addressed in this paper, to investigate end-users’ needs and wants, and their attitudes and intentions towards such services, as well as their actual adoption decisions and usage. Secondly, a more in-depth analysis of the benefits of mCRM services to the company, and their impact upon its strategy, cost structure and economic value is needed. And, thirdly, a comparison between the Italian market and other European markets would be extremely useful. References Arnbjerg, M. (2004), Emergence of Mobile CRM in Western Europe – Vendor Strategies, IDC, Framingham, MA.

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Assinform (2006) Annual Report on ICT in Italy, Assinform, Milona, available at: www. assinform.it Bertele`, U., Rangone, A. and Renga, F. (2006), “Mobile VAS: il futuro delle Telco . . . o dei media?”, Research Report, Dipartimento di Ingegneria Gestionale, Politecnico di Milano, Milan, available at: www.osservatori.net Craw Cour, R. (2000), “Crm.Talk South Africa”, South African Networks, CRM.Talk No. 056. Eberhardt, C. (2001), “CRM special report – the five tenets of a good CRM strategy”, Target Marketing, July 1. Facchetti, A., Rangone, A., Renga, F. and Savoldelli, A. (2005), “Mobile marketing: an analysis of key success factors and the European value chain”, International Journal of Management and Decision Making, Vol. 6 No. 1, pp. 65-80. Gebert, H., Geib, M., Kolbe, L. and Brenner, W. (2003), “Knowledge-enabled customer relationship management. Integrating customer relationship management and knowledge management concepts”, Journal of Knowledge Management, Vol. 7 No. 5, pp. 107-23. IFPI (2006) Digital Music Report, IFPI, London. International Telecommunications Union (2005), “Ubiquitous network societies: the case of the Italian Republic”, International Telecommunications Union, Geneva, available at: www. itu.org Kalakota, R. and Robinson, M. (2001), E-business 2.0: Roadmap for Success, Addison-Wesley, Boston, MA. Lee, D. (2000), “Dick Lee’s Definition of CRM”, CRM.Talk No. 054. Mediaset (2006), “Investor Communication” During the Presentation the Deal with Vodafone Concerning DVB-H, Mediaset, Milan. Middleton, H. (1999), “What is customer relationship management?”, NCR Relationship Management Report, Vol. 1. Mobile Marketing Association (2004), What is Mobile Marketing, Mobile Marketing Association, Denver, CO. Perlado, P. and Barwise, V.R. (2005), “Mobile advertising: a research agenda”, in Stafford, M. and Faber, R. (Eds), Advertising and New Media, M.E. Sharpe, Armonk, NY. Riva, F. (2004), “Il marketing e` sempre piu` mobile”, p. MAhtml, available at: www. webmarketingstrategico.com/mobile_MA.html Shani, D. and Chalasani, S. (1992), “Exploiting niches using relationship marketing”, Journal of Consumer Marketing, Vol. 9 No. 3, pp. 33-42. Trainito, F. (2002), “Wireless advertising”, Computer World on Line, available at: www.cwi.it/ showPage.php?template ¼ rubriche&id ¼ 9405 Tuck, L. (1998), “Customer relationship management discussion list”, CRM.TALK Acquire, retain, and grow profitable customer relationships, CRM.Talk No. 001. Twogood, C. (1998), Customer Relationship Management: Data Warehouse Imperative for Obtaining True Customer Relationship Management, NCR Corporation, Dayton, OH. Virtanen, V., Bragge, J. and Tuunanen, T. (2005), Barriers for Mobile Marketing and How to Overcome Them, Helsinki School of Economics, Helsinki. Further reading Ahmad, R. and Buttle, F. (2001), “Customer retention: a potentially potent marketing management strategy”, Journal of Strategic Marketing, Vol. 9 No. 1, pp. 29-45.

Anderson, T. (2002), “Relationship marketing in B2B setting”, Journal of Market-Focused Management, Vol. 5. Barnes, S.J. (2002), “Wireless digital advertising: nature and implications”, International Journal of Advertising, Vol. 21, pp. 399-420. Barwise, P. and Strong, C. (2002), “Permission-based mobile marketing”, Journal of Interactive Marketing, Vol. 16 No. 1, pp. 14-24. Bertele`, U., Rangone, A. and Renga, F. (2005), “Mobile VAS: e` boom multimediale”, Research Report, Dipartimento di Ingegneria Gestionale, Politecnico di Milano, Milan, available at: www.osservatori.net Bussaca, A.G. (1998), “Costruire la fedelta`”, Il Sole 24 Ore, Milan. Camponovo, G. and Cerutti, D. (2004), “The spam issue in mobile business: a comparative regulatory overview”, paper presented at the 3rd International Conference on Mobile Business, New York, NY. Camponovo, G. and Pigneur, Y. (2003), “Analyzing the M-business landscape”, Annales des Telecommunications, Vol. 58 Nos 1/2, pp. 59-77. Camponovo, G., Pigneur, Y., Rangone, A. and Renga, F. (2005), “Mobile customer relationship management: an explorative investigation of the Italian consumer market”, paper presented at m-Business 2005 Conference, Sydney. Costabile, M. (2003), “Il capitale relazionale negli ambienti digitali. Specificita` analisi e implicazioni per il management”, in Scott, W.G. (Ed.), Il management dell’impresa nell’economia digitale, Il Sole 24 Ore, Milan. Coviello, N.E. and Brodie, R.J. (1998), “From transaction to relationship marketing: an investigation of managerial perceptions and practices”, Journal of Strategic Marketing, Vol. 6, pp. 171-86. Davies, J., Sepulcri, D. and Thompson, E. (2003), CRM in Italy: A Market Appraisal and Overview, Gartner, Stamford, CT. De Ruyter, K., Moorman, L. and Lemmink, J. (2001), “Antecedents of commitment and trust in customer-supplier relationship in high technology markets”, Industrial Marketing Management, Vol. 30 No. 3, pp. 271-86. Gronroos, C. (2004), “The relationship marketing process: communication, interaction, dialogue, value”, Journal of Business & Industrial Marketing, Vol. 19 No. 2, pp. 99-113. Hougaard, S. and Bjerre, M. (2004), Strategic Relationship Marketing, Springer, London. Kalakota, R. and Robinson, M. (2002), M-Business: The Race to Mobility, McGraw-Hill, New York, NY. Kotler, P. (2003), Marketing Management, 11th ed., Prentice-Hall, Upper Saddle River, NJ. Lane, N. and Piercy, N. (2004), “Strategic customer management”, European Management Journal, Vol. 22, pp. 659-68. Lee, Y. and Kim, J. (2003), “What is the mobile marketing for? A cross national study on the value structure of the mobile internet”, paper presented at Americas Conferences on Information Systems. Malthouse, E.C. and Blattberg, R.C. (2005), “Can we predict customer lifetime value?”, Journal of Interactive Marketing, Vol. 19 No. 1, pp. 2-16. Peppers, D. and Rogers, M. (1993), The One to One Future: Building Relationships One Customer at a Time, 1st ed., Currency Doubleday, New York, NY. Peppers, D. and Rogers, M. (2001), Impresa one to one: il marketing relazionale nell’era della rete, Apogeo.

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Porter, M.E. (1980), Competitive Strategy: Techniques for Analyzing Industries and Competitors, The Free Press, New York, NY. Rich, M.K. (2000), “The directions of marketing relationship”, Journal of Business & Industrial Marketing, Vol. 15 Nos 2/3, pp. 170-9. Rowe, G.W. and Barnes, J.G. (1998), “Relationship marketing and sustained competitive advantage”, Journal of Market Focused Management, Vol. 2, pp. 281-97. Ryssel, R., Ritter, Th. and Gemunden, H.G. (2004), “The impact of information technology development on trust, commitment and value creation in business relationship”, Journal of Business & Industrial Marketing, Vol. 19 No. 3, pp. 197-207. Samiee, S. and Walters, P.G.P. (2003), “Relationship marketing in an international context: a literature review”, International Business Review, Vol. 12 No. 2, pp. 193-214. Scharl, A., Dickinger, A. and Murphy, J. (2005), “Diffusion and success factor of mobile marketing”, Electronic Commerce Research and Applications, Vol. 4, pp. 159-73. Shankar, V., Smith, A.K. and Rangaswamy, A. (2003), “Customer satisfaction and loyalty in online and offline environments”, International Journal of Research in Marketing, Vol. 20. Siddal (2004), “Multimedia mobiles gives marketer a brighter promotional picture”, GartnerG’ Report, Gartner Inc., Stamford, CT. Virtanen, V. and Raulas, M. (2004), The Modes, Barriers and Drivers of Mobile Marketing, Center of Direct Marketing Excellence and LTT Research, San Francisco, CA. Wells, W.D. (1997), Measuring Advertising Effectiveness, Lawrence Erlbaum, Mahwah, NJ. Corresponding author Marta Valsecchi can be contacted at: [email protected]

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Mobile customer relationship management: underlying issues and challenges Jaakko Sinisalo, Jari Salo, Heikki Karjaluoto and Matti Leppa¨niemi

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Department of Marketing, Faculty of Economics and Business Administration, University of Oulu, Oulu, Finland Abstract Purpose – The purpose of this study is twofold. First, in order to guarantee a coherent discussion about mobile customer relationship management (mCRM), this paper presents a conceptualization of mCRM delineating its unique characteristics. Second, the authors develop the empirically grounded framework of the underlying issues in the initiation of mCRM. Design/methodology/approach – A single-case-study method is used for the empirical component of the study in order to gain a holistic view of the case and access to latent and confidential information of the company under scrutiny. Semi-structured interviews of the key informants of the company form the main data source through which the issues are identified and the proposed framework is built. Findings – The proposed framework identifies issues that can be divided into three categories (exogenous, endogenous and mCRM-specific) the company has to take into account when moving towards mCRM. Research limitations/implications – Since, this is a single-case study the findings cannot be generalized and used in other contexts without reservation. Practical implications – When planning to initiate mCRM, the illustrated framework includes all the vital issues that should be considered and serves as a preliminary guideline from which to approach mobile CRM. Originality/value – This paper shed light on the emerging phenomenon known as mCRM. Keywords Relationship marketing, Mobile communication systems, Customer relations Paper type Research paper

Introduction Customer relationship management (CRM) has recently gained widespread popularity in many disciplines and industries. The essence of CRM for a company is the ability to provide differentiated relationship value and to communicate continuously with customers on an individual basis (Park and Kim, 2003). It is also increasingly imperative to provide CRM activities through media that customers are interested in interacting with the company. In principle, this thinking is well founded, while in practice it can be excessively difficult to implement. The proliferation of technology-based systems and their rapid advancement are bringing about fundamental changes in how companies interact with customers (Parasuraman and Zinkhan, 2002). Digital channels, for instance, are considered to create unique and positive experiences – not just transactions – for customers by The financial support of the Finnish Funding Agency for Technology and Innovations is gratefully acknowledged. The authors also wish to thank the organizations whose invaluable collaboration has made this work possible.

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mixing aspects of product, service, brand and communication (Wind et al., 2002). In practice, this development has led to a situation where several companies and industries have started utilizing the mobile medium to promote CRM activities. To illustrate this situation, Finnair, the National Airline of Finland (www.finnair.com), was one of the first companies in the world to adopt a mobile phone service for their loyal customers that enables passengers to check in for flights in advance via short message service (SMS). By using this service, passengers can go directly to the departure gate without the hassle of waiting in line at check-in. The advantage for the customer, in addition to time-saving and ease of use, is that the details of the flight are automatically stored on the mobile phone and are accessible whenever needed. The addition of the mobile medium as a channel through which to manage customer relationships not only creates possibilities, but also poses challenges as well. For instance, companies need to build the technological infrastructure that enables the management of customer relationships through the mobile medium. Subsequently, the technological infrastructure enabling the utilization of the mobile medium needs to be integrated to the existing CRM system. In addition, further challenges stem from the fact that customers need to opt in for the mCRM program and provide the company with information necessary for initiating communication with them. Against this backdrop, the objective of this paper is to assess the underlying issues and challenges facing companies when moving towards mCRM. The authors argue that the existing theories do not explain the phenomenon adequately. Since, conceptual agreement is a necessary prerequisite for a coherent discussion about a phenomenon, it is of decisive importance to propose a conceptualization of mCRM delineating its unique characteristics. Following a literature review, we build a theoretical framework of the initiation of mCRM, which is completed with the aid of a case study. The proposed framework illustrates the underlying issues and challenges of the initiation of mCRM. In order to do this, this study analyzes the phenomenon from the retailer’s point of view. The paper concludes by discussing the implications of the results for both theory and practice, outlining the main limitations of the work and identifying avenues for further research in this emerging field. Literature review: from RM to mCRM The origins of CRM can be traced back to the concept of relationship marketing (RM) (Gebert et al., 2003; Zablah et al., 2004). The term RM was initially coined by Berry (1983), who defined it as attracting, maintaining and – in multiservice organizations – enhancing customer relationships. This emphasis on relationships defines how companies interact with their customers (Gummesson, 1999; Sheht and Parvatiyar, 2000). CRM is the outcome of the continuing evolution and integration of marketing ideas and novel available data, technologies, and organizational forms with the goal of engaging in a meaningful dialogue with individual customers (Boulding et al., 2005; Campbell, 2003). While RM does not acknowledge the technology underlying the management of customers, CRM uses information technology (IT) in implementing RM strategies (Ryals and Payne, 2001). In existing literature, there is a consensus that CRM requires the company to manage and coordinate communication with customers across different media (Thomas and Sullivan, 2005; Payne and Frow, 2005). This is because different customers have different needs and thus, the company should treat them differently

(Boulding et al., 2005). However, with the growing number of channels through which the company can communicate with its customers, getting their time and attention has turned into a major challenge (Davenport and Beck, 2000). Accordingly, it has become more difficult for companies to find the appropriate media and strategies to use in order to communicate with their customers. Especially, promising for CRM purposes is the potential – established by the integration of electronic media and database technologies – for creating unique and personalized communication with individual customers (Schultz and Bailey, 2000; Peltier et al., 2003). As stated, this potential has been gradually put into practice by several industries. Paralleling this development, the internet as a channel through which to manage customer relationships (eCRM) has attracted significant attention among academics (Bradshaw and Brash, 2001; Feinberg et al., 2002; Fjermestad and Romano, 2003). Despite of being a subset of eCRM, mCRM has gained far less attention (Sinisalo et al., 2006; Schierholz et al., 2006). Although the potential of the mobile medium within CRM is broadly acknowledged among academics (Kannan et al., 2001; Barnes and Scornavacca, 2004; Aungst and Wilson, 2005), there is still a severe lack of research that delves into this nascent phenomenon. Some publications have concentrated purely on mCRM. For instance, the book by Newell and Lemon (2001) can be considered one of the first publications concentrating on mCRM. It strives to explain how businesses can incorporate wireless technologies into existing operations and strategies. Chan and Lam (2004) examined features of CRM implemented on the internet (eCRM) and the mobile channel (mCRM) from the customer’s perspective and, consequently, proposed an analytical framework for examining current practices. Camponovo et al. (2005) explored the value of mobile CRM service offerings to consumers in the Italian market. Additionally, Sinisalo et al. (2006) illustrated the underlying issues of the initiation of mCRM. From the business engineering viewpoint, Schierholz et al. (2006) presented a structured method by which mobile business can be introduced to the CRM field. In addition to these studies, mCRM has generated a number of non-academic works such as white papers. Giving all credit to the previous studies, this investigation, with the inclusion of a case study, is expected to be a welcome addition to this research stream since the main proportion of the literature on mCRM is conceptual in nature and lacks empirical evidence. Mobile customer relationship management: conceptualization and unique characteristics Conceptualization of mCRM When a concept is deeply embedded with technology, as is the case with mCRM, there is a tendency to mistake the technology for the concept itself (Balasubramanian et al., 2002). Because rapid advancement in the mobile industry has created a plethora of divergent technologies, it is necessary to separate the concept from its underlying technologies to accomplish a conceptualization without it becoming subject to the volatility of technological change. Camponovo et al. (2005) defined mobile CRM as “services that (1) aim at nurturing customer relationships, acquiring or maintaining customers, (2) support marketing, sales or service processes, and (3) use wireless networks as the medium of delivery to the customers”. This definition of mCRM, while useful, is inadequate in two respects. First, it does not emphasize sufficiently the critical role of communication in establishing and maintaining profitable customer

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relationships (Duncan and Moriarty, 1998) although communication stands at the core of every interaction. In reality, the communication dimension with customers has been missing since CRM systems have been primarily technology driven (Laczniak et al., 2005). Therefore, in conceptualizing mCRM, it seems appropriate to emphasize communication. Second, there is confusion around the terms mobile and wireless as the definition uses both of them. Wireless is not necessarily mobile (Balasubramanian et al., 2002; Anckar and D’Incau, 2002; Kumar, 2004; Varshney and Vetter, 2000), since wireless access, such as a desktop computer using signals carried over a wireless local area network, can only allow very limited mobility within the range of this access point. True mobility, however, can be achieved, for instance, by an underlying mobile network which implements mobility, basically, across the whole world. In true mobility, the ability to communicate is not contingent of being at the fixed physical location at a particular point in time and possesses the potential to be continuously maintained during a substantial physical movement from one location to another (Balasubramanian et al., 2002). In order to avoid confusion, this is important to keep in mind when defining mCRM. Accordingly, we define mCRM as: . . . communication, either one-way or interactive, which is related to sales, marketing, and customer service activities conducted through the mobile medium for the purpose of building and maintaining customer relationships between a company and its customer(s).

The mobile medium performs essentially the same function as any other channel within CRM. While the channels share this important purpose, the different channels have certain distinguishing characteristics. The most salient difference with mCRM is that the parties engaged in communication are connected through the mobile medium. This difference, in turn, leads to a number of other differences that are worth mentioning and are elaborated on in the next section. Unique characteristics of mCRM As stated, these unique characteristics of mCRM are mostly due to the exceptional features of the mobile medium. In this paper, we focus on the salient characteristics that are vital in CRM. The first distinguishing characteristic pertains to personalization of communication within the mCRM context. Unlike other media, a mobile phone generally belongs to only one person and, accordingly, a message sent through the mobile medium reaches the person to whom the communication is targeted almost every time. Thus, advanced personalization is vital in communicating through the mobile medium. This is important, since it is evident that sending a relevant communication to fewer customers will always result in a significantly higher return than sending an inaccurately targeted communication to a great number of customers (Greenville, 2005). In addition, serving loyal customers on a personal and individual basis, for instance by sending relevant and time-sensitive information, may strengthen the emotional relationship between the company and its customers (Nysveen et al., 2005). Actually, personalized communication is a prerequisite in the mCRM context rather than a unique characteristic. The fact that a mobile phone belongs to only one person not only presents an opportunity but also a challenge (Jelassi and Enders, 2006), since companies cannot afford to irritate customers even once due to the intimate nature of mobile devices. To succeed in personalization, customers must first be identified, and

their preferences, needs and wants need to be understood by the company. Without this identification and understanding, customers are invisible to the company and therefore unmanageable (Park and Kim, 2003). A second distinguishing characteristic pertains to the interactivity enabled by the mobile medium. In dealing with this concept, Hoffman and Novak (1996) made a distinction between unmediated interactivity (e.g. face-to-face communication between two individuals) and mediated interactivity (e.g. communication between two individuals facilitated by a device). Communication through the mobile medium represents mediated interactivity. In fact, numerous studies have emphasized interactivity as one of the main characteristics that make the mobile medium unique (Barwise and Strong, 2002; Barnes and Scornavacca, 2004; Bauer et al., 2005). As such, the mobile phone exhibits all the features necessary in establishing a direct dialogue between the company and the customer. However, the locus of the interactivity exists in the decisions of the actors who choose to interact when it serves their purpose(s) (Stewart and Pavlou, 2002). Therefore, it is crucial that the messages generate interactivity in such a way that responding will serve the receiver’s purposes. It is also argued that personalized dialogues result in enhanced loyalty (Dowling and Uncles, 1997). Accordingly, it is important to utilize this characteristic. Otherwise many of the benefits of the mobile medium will vanish. A third distinguishing characteristic is the flexibility in communication provided by mobile technology. According to Balasubramanian et al. (2002), channels that are time and location flexible are highly valued by customers. Because mobile phone users always carry their devices with them, they are always accessible. Consequently, this means that the mobile medium allows access to an individual virtually anytime and anywhere, whereas all other channels within CRM are restrictive in this respect. Thereby the mobile medium provides access to customers beyond the reach of any other medium, including the internet. In addition, technologies that are aware of the context of the user can provide services in a productive way and thus deepen customer relationships (Barnes and Scornavacca, 2004). Aside from simply providing a platform for flexible communication, the proper utilization of the mobile medium for CRM purposes is also expected to deepen customer relationships. The previously mentioned unique characteristics make the mobile medium suitable for CRM. The addition of the mobile medium as a channel through which to manage customer relationships, however, not only creates possibilities but also poses challenges as well. In the next section, we build a theoretical framework around these challenges and the issues facing companies moving towards mCRM. The proposed framework is then further developed empirically, based on a case study. Building a theoretical framework for the initiation of mCRM Once a company has decided to initiate mCRM and add the new channel to promote CRM activities, it faces several challenges and issues. Owing to the many limitations still inherent in the constantly developing mobile medium, such as small screen size, limited bandwidth and device diversity, the mobile medium has to cope with a limited set of visual and audio capabilities (Jelassi and Enders, 2006). Therefore, the mobile medium lacks the ability to provide a complete range of activities for the companies (Nysveen et al., 2005) and it is obvious that the mobile medium needs to be integrated with other traditional channels to gain a competitive advantage (Geysken et al., 2002).

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Accordingly, the mobile medium can be considered complementary, supplementary or as a substitute channel. Table I shows how the mobile medium can act as an additional channel in CRM. Moreover, after the decision has been made, the underlying issues and challenges which deserve closer attention can be roughly divided into three categories: (1) endogenous; (2) exogenous; and (3) mCRM-specific issues. As shown in Figure 1, both the exogenous and endogenous issues affect mCRM specific issues. These issues are briefly elaborated on below. Endogenous Endogenous issues and challenges stem from inside the company. In order for the mobile medium to be an additional channel for companies’ CRM activities, the mCRM system has to be integrated into the companies’ overall CRM system. In addition, the mCRM solution chosen must have the ability to integrate fully into the existing CRM system. This system integration is a necessary stage for achieving effective Substitute Complement Supplement

CRM System

Figure 1. Theoretical framework of initiation of mCRM

Exogenous

mCRM Specific

Endogenous

Table I. Mobile medium as a channel in CRM

Mobile medium replaces one/some of the existing channels through which activities used to be provided. Accordingly, activities that used to be conduct through the replaced channel are relocated to be conducted through the mobile medium Mobile medium as an additional channel providing existing activities for customers who want to interact with the company through the mobile medium Mobile medium provides novel supplementary activities which are designed for and available through the mobile medium

Customer Database

Technology

Marketing

Regulatory

Mobile Infrastructure

management of the interactions across, and information coordination between, different customer communication contacts (e.g. internet, direct mail, sales calls, mobile medium) (Peppers and Rogers, 2004, p. 170). Accordingly, the existing CRM system has to support the mobile medium as a channel to function appropriately. Therefore, the CRM system adopted has an effect on technological choices made during the initiation of mCRM. Nowadays, extending CRM to include the mobile medium is not as complicated as it used to be, and many CRM systems already support the extension of CRM to the mobile medium. However, in some cases, the mCRM system has to be built separately for technological reasons. A customer database is a prerequisite for any interaction conducted through the mobile medium. Naturally, integration is a necessary prerequisite for mCRM in that it relies upon the existing CRM database. As will be shown in the case study, a permission database can also be gathered purely for mCRM purposes. In order for a company to communicate with its customers, the database must at the very least consist of customers’ mobile phone numbers. However, there are major problems with this kind of simple customer database since it is impossible to communicate with the customer individually, and thus avoiding irritating them is challenging. Therefore, gathering information on a larger scale is recommended. Customers are usually profiled using demographics, psychographics, behavioral and social behavioral data. While demographics, psychographics, and behavioral data are traditionally used in categorizing customers, social behavioral data are being used increasingly within the mobile context. Basically, it refers to the similar sets of behavior within a group of people. In general, the profiles in the customer database are used to segment the companies’ customer base into individuals or groups, in order for communication to meet the needs and requirements of customers. Exogenous There are also two exogenous issues affecting mCRM-specific issues during initiation. First, while intelligent mobile marketing involves the utilization of customers’ personal information, regulatory constraints are the most important element that should be considered when developing mCRM. For instance, mobile marketing in the EU area is regulated by law and involves asking end-users’ permission to send unsolicited marketing messages via all electronic media for marketing purposes (The European Union, 2002). Second, a significant element contributing to technology-related issues in mCRM is the mobile infrastructure. The mobile infrastructure concerns the mobile networks as well as the mobile devices in use. Because the mobile infrastructure is in the middle of an era of transformation, business based on mobile technology will be profoundly different in the near future. Furthermore, the introduction of 3G and 4G technologies in wireless networks provides a foundation for evolving activities, which can be implemented through the mobile medium. While these developments offer various opportunities for planning and implementing more advanced campaigns through the mobile medium, they also make mCRM activities far more challenging since the technological diversity is likely increase. Accordingly, communication through the mobile medium is becoming more complex as the content has to be optimized for a myriad of different devices.

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mCRM-specific factors mCRM-specific issues and challenges stem from the addition of the mobile medium to traditional CRM systems. As mentioned earlier, technology plays a substantial role in CRM (Zablah et al., 2004). Similarly, in order to utilize the mobile medium in CRM, the technological infrastructure needs to be built. On the other hand, customers will not begin using their mobile phones for new functions simply because new technology exists. The key challenge is to get customers to opt in for the mCRM program and subsequently provide the information required to initiate communication with them. Thus, companies have to find the marketing means to attract customers’ attention and convince them to initiate customer dialogue over a mobile medium. So, at the initiation of mCRM, there are two aspects to consider: (1) technology; and (2) marketing. Based on the purpose of the study, the empirical part of this paper aims to enhance understanding of mCRM-specific factors, which are divided into the technology- and marketing-related issues. Before advancing to the case study, the methodology that helped us gain an understanding of the subject phenomenon is described. Methodology Our methodological choices are guided by the basic aim of enhancing existing understanding about the underlying technology- and marketing-related issues of mCRM. Owing to the novel nature of this phenomenon in which the researcher has only little or no control at all over the events as they occur in a real-life context, a case study is the most appropriate method (Stake, 2000). In addition, the case-study strategy can be considered particularly capable of providing new insights into a phenomenon of which very little is known (Eisenhardt, 1989). Case selection is a crucial phase in case-study research, and therefore literature is full of advice on how to select cases (Perry, 1998; Pettigrew, 1989; Stake, 1995; Eisenhardt, 1989). Nevertheless, the decision as to how many and which cases are selected is left to the researcher (Romano, 1989). Here, our empirical strategy is a single-case study, i.e. one central company forms the case. The company in question has two non-food department stores in two different cities and is one of the biggest retailers in Finland in terms of annual turnover. The process of the initiation of mCRM in this particular company was investigated from August until December of 2004. Naturally, the selection of the company was based on the idea that the case should represent the problem of the study. Taking into account the purpose of this study, the single-case study is seen as an appropriate choice for two reasons. First, the aim is to gain an in-depth understanding of this complex subject under investigation. Hence, choosing a single-case study allows a holistic and thorough view of the case. Second, as the information available on this kind of topic is often latent and confidential, the researcher must have access to an organization (Yin, 1994). The chosen approach undoubtedly influences the generalizability of the results of the study (Eisenhardt, 1989). The empirical part of this study consists of various kinds of data. The objective of data collection was to get rich primary data on the phenomenon under study. The semi-structured interviews form the main data source from which the issues were

identified and the framework was built (Arksey and Knight, 1999; Kumar et al., 1993). Accordingly, the interviewees were encouraged to tell how they see the main challenges and issues underlying the initiation of mCRM. The choice of informants was based on the principle that information is best gained through the people involved in the phenomenon under investigation. Although other respondents working in the same company could have offered additional viewpoints of the phenomenon under investigation, the researchers tried to choose key informants from the company who had been actively involved in the initiation of mCRM and, thus, possessed explicit and definite insight into it. Altogether, four retailer’s key informants were interviewed in order to identify issues concerning the initiation of mCRM. Interviews were conducted with the CEO, the marketing manager, the person in charge of electronic commerce and the technology advisor of the company (Table II). By using multiple informants, the authors has increased both the reliability and the validity of the research (Kumar et al., 1993; Bagozzi et al., 1991). In addition, using key informants enhances the understanding of the companies and the case itself (Harrigan, 1983). The CEO of the company was chosen to be interviewed because of his ability to provide a holistic picture of the business surrounding the phenomenon under investigation. With the aid of the interview with the marketing manager, the authors could take a closer look at the marketing-related issues, while the person in charge of electronic commerce and the technological advisor gave us perspectives on the technology-related issues of the studied phenomenon. The authors also used documents, minutes of meetings, industry reports and company visits to triangulate the respondents’ answers (Patton, 1987; Yin, 1994). With the help of the data triangulation employed here, the validity and reliability of the research was increased (Eisenhardt, 1989). Finally, to validate the findings obtained from the interviews, the framework was presented to an industry expert, i.e. the chief technology officer for a leading mobile marketing and mCRM technology company in Europe, to be evaluated and commented on. The results are presented in the next section. The identities of the respondents and the company are not revealed for reasons of confidentiality.

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Initiation of mCRM: a case study In light of the case study, we propose that the initiation of mCRM is based on several technological and marketing-related issues as shown in Figure 2.

Company

Type of contact

Date, and duration of interview

CEO

Interview and e-mail correspondence Interview and e-mail correspondence Interview, telephone calls and e-mail correspondence Interview, telephone calls and e-mail correspondence Meeting, telephone calls and e-mail correspondence

September 8, 2004, 1 hour 40 minutes

Marketing manager Person in charge of electronic commerce Technology advisor Chief technology officer

September 8, 2004, 1 hour 40 minutes November, 5, 2004, 1 hour 36 minutes October 18, 2004, 1 hour, 45 minutes January 17, 2005, 2 hours 20 minutes

Table II. Interview data

Endogenous

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Figure 2. Empirically grounded framework of initiation of mCRM

Exogenous

mCRM Specific

780 Message Pricing

Short Number

Customer Database

mCRM Application

Operator Gateways

Campaign Logic

Technology Marketing Permission Management

Media Mix

Regulatory

Mobile Infrastructure

Technology At the technological level, there are five critical issues to discuss. These revolve around the sourcing and implementation of mCRM technology enabling communication through the mobile medium. The first issue is that the company had to acquire an mCRM server capable of handling, i.e. sending, receiving and storing, an unprecedented number of SMS and MMS messages. In other words, the server is in charge of what content is delivered to whom under what circumstances. The company has to decide either to build in-house expertise or rely on a partner, and whether to use a managed or a hosted solution. In this case, the company decided to start mCRM with a hosted mobile marketing platform provided by one of the leading companies in the mobile marketing and mCRM applications market. The second issue is that the company had to decide how to acquire a SMS number (the number which directs SMS messages from mobile phones to the mCRM server). In Finland, the user has to apply for the five-digit number from the Finnish Communications Regulatory Authority. In other countries, such as the USA, the number can also be in the format of characters. Before the user submits the application, he or she must provide information concerning how many numbers are needed and the contents of the intended service with sufficient accuracy. To avoid this application procedure, the company can also rent a SMS number from some mobile marketing service providers. Basically, they all have SMS numbers, which can be used when a company does not have a SMS number of their own, or has no interest in applying for the number at the very beginning of the mCRM process. In this case, the company decided to rent the number.

The third issue at the technological level concerns the total number of service operators needed to reach the target audience, i.e. the number of connections established with the operator’s messaging network. Basically, the target audience for every campaign will span all the major networks of a given country. Consequently, the campaign must connect to all networks. In Finland, there are approximately 17 service operators. The complexity of connecting to each network directly is significant and has led to the emergence of mobile aggregators. A mobile aggregator takes up a small margin of the network transmission costs but provides a single point of connection for accessing all networks (FirstPartner, 2003). In Finland, the role of mobile aggregators is not fully recognized. This has led to a situation where marketers have trouble when deciding to start mCRM in-house. However, the major service operators provide a service for connecting to their messaging network. The service is often called a messaging interface, which enables sending and receiving SMS and MMS messages between mobile devices and companies’ information systems. Basically, this service includes three different connections: content gateway, short dial number/SMS number and pricing service. The set-up expenses of mCRM are considerably high, because all of the connection charges mentioned above have to be paid individually for every service operator connected to the mobile marketing server. In this case, altogether seven major service operators were connected to the mCRM server and thus, almost all mobile subscribers were able to start SMS dialogue with the company. The rest of the operators were excluded mainly for technical reasons, since they did not provide any kind of service to connect to their messaging network. The fourth issue for the company to consider is that the campaign logic has to be built into the mCRM server, because the mCRM campaign cannot be run without it. Campaign logic refers to the details that customers are supposed to provide, i.e. the details that are asked from the customers during the campaign. Without the campaign logic, the server cannot receive and store messages sent by the service users. In addition, it is almost impossible to turn the data received from customers into customer information without the logic. Well-designed campaign logic includes, at a minimum, plans for a keyword at the beginning of messages sent by a customer and the return message received by a customer. In addition, the campaign generates a variety of valuable data, such as traffic data that is valuable if stored and analyzed. To be sure that relevant information will be saved in the database, accurate plans have to be made. All these logic-related issues with the server have to be considered before the launch of an mCRM campaign. In this case, the campaign logic consists of a keyword, age, gender, and interest areas. With the aid of the keyword, the server can identify received messages as belonging to that particular campaign. In the future, these variables will be used to personalize communication with the customers. The fifth issue is the price collected from the subscriber. Basically, there are three options for setting up the price per message sent by the service user. The first option is a normal SMS price, which is charged from the service user according to the pricelist of the operator in question, typically around 0.05e in Europe. The second option is a free SMS message, which means that the service is free of charge for the service user. The last option is a premium-rate SMS message, which means that the price collected from the service user is determined on the basis of the premium rate price categories provided by the operator in question. The premium-rate price is typically around 1e in Europe.

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In this case, the customers were charged the normal SMS price (cost per sent message for the customer was from 2 to 14 ¢). In light of the above issues, the company can basically rely on the partner – i.e. some service provider – to take care of all the issues related to the technological side of initiation or solve them on an in-house basis. Neither approach – building in-house or relying on partners – is inherently better than the other. It depends entirely on the position, ambitions and resources of the company in question. .

Marketing Once technically implemented, the key challenge of initiating mCRM is to find marketing means to attract customers’ attention and get them to initiate communication with the company in question. At this marketing level, there are two issues to discuss. The first issue at the marketing level is to consider how to attract the attention of potential customers so they will use the mobile medium in communication. Because the attraction phase is conducted with the aid of other media, the initiation of mCRM for the very first time has the same basic principles as any other traditional marketing campaign. The company must identify the target audience, determine communication objectives, design the message, choose the medium through which to lure customers’ attention and finally collect feedback to measure the promotion’s results. When considering mCRM after initiation, a concept should be incorporated into the overall marketing strategy. A new series of campaigns can be based on the mobile medium alone or on the integration of the mobile medium with the existing marketing channels. The latter option, where the mobile medium is integrated into existing marketing campaigns on other media has proven to be the most effective and efficient method (FirstPartner, 2003). In other words, mCRM campaigns complement other media, such as television, print and internet, and vice versa. In this case, a newspaper was used to attract the customer to join the mCRM campaign. The second issue is to consider permission management. The purpose is to assure that the mCRM campaign conforms to all requirements, both ethical and judicial. Thus, permission management deals basically with opt-in lists. In order to communicate with customers through the mobile medium for the purpose of managing customer relationships, there are prerequisites. First, customers to whom messages will be sent must have already registered or otherwise given their permission beforehand. Basically, there are three different ways to obtain a database of opt-in mobile numbers: purchasing, renting or developing the database on your own. The company in question decided to develop or collect the database independently, in order to get prior permission to start a mobile dialogue with its customers. The collection of the database was organized around a marketing campaign, where the company was asking customers to send their personal information, such as mobile phone numbers, as well as names and addresses, preferences and permission to send messages to them. The customers could also sign up to the loyalty program. By signing up for the loyalty program, customers automatically opt in for the company’s permission-based mCRM database. The campaign was successful, as almost 18,000 out of over 22,000 respondents (approximately 80 percent) signed up to the loyalty program or gave their permission. The incentive for the customers to give their personal information was a chance to win a brand new car in a lottery. In addition, it was promised that valuable information and special offers would be sent to those who gave permission, via SMS.

Secondly, although permission is given once by the customers, mobile permission is not permanent and the validity of the customer’s permission is depends on the service provided (Sinisalo et al., 2005). Hence, permissions should be updated on an ongoing basis. To summarize, to initiate mCRM the companies have to consider several issues. We found that acquiring or renting the hosting of a mobile marketing server, sourcing and setting up a short number to handle inbound and outbound messages, connections to the networks, the development of campaign logic, and setting the message price are the key technological issues at the initiation stage of mCRM. From a marketing perspective, a database of mobile numbers for the desired target audience, and the integration of mobile marketing into companies’ overall promotion mix should be taken in consideration when designing an mCRM campaign. Conclusions This paper shed light on the emerging phenomenon known as mCRM. The purpose was twofold. First, mCRM was conceptualized to assure a coherent discussion of the phenomenon. Second, the empirically grounded framework of the issues that companies have to take into account when initiating mCRM was illustrated with the help of a case study. The importance of the investigated phenomenon stems from the fact that many companies already utilize the mobile medium to promote CRM activities. This paper makes two theoretical contributions. First, building on extant literature on mCRM, this paper advances a conceptualization of this nascent phenomenon highlighting the unique characteristics of mCRM. The utilization of the mobile medium to promote CRM activities is a relatively new area enabling novel ways for managing customer relationships which were not possible before. The challenge in underlying communication is to ensure that the right messages are received by the right people in the right way (Pickton and Broderick, 2005). There are two problems with traditional channels in CRM. First, there is the possibility that the message will be missed because it was on the wrong medium at the wrong time, and secondly, there is the ever-present threat of information overload (Hulme, 2003). Because communication through the mobile medium is based on customer preferences, and the customer has given permission to receive messages, the utilization of the mobile medium is assumed to overcome these problems. Second, this paper contributes to the knowledge of this nascent phenomenon by outlining the critical issues affecting the initiation of mCRM. When a company is moving towards mCRM it has to take some endogenous and exogenous issues into account. In light of the case study, we propose that the initiation of mCRM is based on several technological- and marketing-related issues. Because mCRM is becoming a topic of major importance across different lines of business, this paper provides significant insights for marketing managers as well. Based on this study, we argue that as customers increasingly expect to be able to choose which channel they use for interacting with a company, companies should take advantage of these emerging channels as well. As stated, approaching the mobile medium as a separate project may result in an inconsistent and unsatisfactory customer experience. Therefore, the greatest challenge for companies is to combine the mobile medium with traditional media effectively. When planning to initiate mCRM, the framework illustrated in this study includes all the vital issues that should be

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considered, and it is a good guideline from which to approach CRM through the mobile medium. The findings of our study should be interpreted in light of certain limitations. Because our empirical results are based on a single-case study in one country, we should not draw far-reaching conclusions from the data. Given the early stage of the market and the lack of profound empirical evidence on mCRM, further refinement of the proposed conceptualization and empirically grounded framework constitute promising avenues for further research. Further, investigations are needed to empirically examine this nascent phenomenon. A natural extension of this study would be to look at how mCRM is utilized in different kinds of companies ranging from B2B to B2C markets. References Anckar, B. and D’Incau, D. (2002), “Value creation in mobile commerce: findings from a consumer survey”, Journal of Information Technology Theory and Application, Vol. 4 No. 1, pp. 43-64. Arksey, H. and Knight, P. (1999), Interviewing for Social Scientists, Sage, London. Aungst, S.G. and Wilson, D.T. (2005), “A primer for navigating the shoals of applying wireless technology to marketing problems”, Journal of Business & Industrial Marketing, Vol. 20 No. 2, pp. 59-69. Bagozzi, R.P., Yi, Y. and Philips, L.W. (1991), “Assessing construct validity in organizational research”, Administrative Science Quarterly, Vol. 36 No. 3, pp. 421-58. Balasubramanian, S., Peterson, R.A. and Jarvenpaa, S.L. (2002), “Exploring the implications of M-commerce for markets and marketing”, Journal of the Academy of Marketing Science, Vol. 30 No. 4, pp. 348-61. Barnes, S.J. and Scornavacca, E. (2004), “Mobile marketing: the role of permission and acceptance”, International Journal of Mobile Communications, Vol. 2 No. 2, pp. 128-39. Barwise, P. and Strong, C. (2002), “Permission based mobile advertising”, Journal of Interactive Marketing, Vol. 16 No. 1, pp. 14-24. Bauer, H.H., Reichardt, T., Barnes, S.J. and Neumann, M.M. (2005), “Driving consumer acceptance of mobile marketing: a theoretical framework and empirical study”, Journal of Electronic Commerce Research, Vol. 6 No. 3, pp. 181-92. Berry, L.L. (1983), “Relationship marketing”, in Berry, L.L., Shostack, G. and Upah, G.D. (Eds), Services Marketing Conference Proceedings, American Marketing Association, Chicago, IL, pp. 25-8. Boulding, W., Staelin, R., Ehret, M. and Johnston, W.J. (2005), “A customer relationship management roadmap: what is known, potential pitfalls, and where to go”, Journal of Marketing, Vol. 69 No. 4, pp. 155-67. Bradshaw, D. and Brash, C. (2001), “Managing customer relationships in the e-business world: how to personalise computer relationships for increased profitability”, International Journal of Retail & Distribution Management, Vol. 29 No. 12, pp. 520-9. Campbell, A.J. (2003), “Creating customer knowledge competence: managing customer relationship management programs strategically”, Industrial Marketing Management, Vol. 32 No. 5, pp. 375-83. Camponovo, G., Pigneur, Y., Rangone, A. and Renga, F. (2005), “Mobile customer relationship management: an explorative investigation of the Italian consumer market”, Proceedings of 4th International Conference on Mobile Business, 11-13 July, Sydney, Australia.

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International Conference on Information & Management Sciences, July 1-10, Kunming & Dali & Shangrila, China. Stake, R.E. (1995), The Art of Case Study Research, Sage, London. Stake, R.E. (2000), “Case studies”, in Denzin, N.K. and Lincoln, Y.S. (Eds), Handbook of Qualitative Research, 2nd ed., Sage, Thousand Oaks, CA, pp. 435-54. Stewart, D.W. and Pavlou, P.A. (2002), “From consumer response to active consumer: measuring the effectiveness of interactive media”, Academy of Marketing Science, Vol. 30 No. 4, pp. 376-96. Thomas, J.S. and Sullivan, U.Y. (2005), “Managing marketing communications with multichannel customers”, Journal of Marketing, Vol. 69 No. 4, pp. 239-51. Varshney, U. and Vetter, R. (2000), “Emerging mobile and wireless networks”, Communications of the ACM, Vol. 43 No. 6, pp. 73-81. Wind, Y., Mahajan, V. and Gunther, R.E. (2002), Convergence Marketing: Strategies for Reaching the New Hybrid Consumer, Prentice-Hall, Englewood Cliffs, NJ. Yin, R.K. (1994), Case Study Research. Designs and Methods, Sage, Thousand Oaks CA. Zablah, A., Bellenger, D.N. and Johnston, W.J. (2004), “An evaluation of divergent perspectives on customer relationship management: towards a common understanding of an emerging phenomenon”, Industrial Marketing Management, Vol. 33 No. 6, pp. 475-89. About the authors Jaakko Sinisalo is a researcher at the University of Oulu, Finland. His research interests lies at the intersection of mobile marketing and CRM. Jaakko Sinisalo is the corresponding author and can be contacted at: [email protected] Jari Salo received his MSc (Economics and Business Administration) degree from the University of Oulu in 2002 and his doctoral thesis is in the review process. Currently, Salo is a researcher at the University of Oulu, Finland. He has previously published in several academic journals and at international conferences including EMAC, ANZMAC, IMP and HICSS. Salo has also published several academic book chapters and served as an ad hoc reviewer for many conferences. His present research interests include business relationship and network digitization, electronic and mobile commerce. Heikki Karjaluoto is a Research Professor at the Faculty of Economics and Business Administration, University of Oulu, Finland. He received his PhD in marketing from the University of Jyva¨skyla¨ Finland in 2002. His research interests encompass electronic business in general and mobile business and commerce in particular. He has published extensively on electronic business in marketing and information system journals, and he has collaborated both with several researchers in Finland and abroad and with Finnish high-tech companies in common research projects. Matti Leppa¨niemi is a researcher in Integrated Marketing Communication at the University of Oulu, Finland, and the Project Manager of the PEAR project. His areas of interest include mobile commerce, especially mobile marketing.

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Internet vs mobile banking: comparing customer value perceptions

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Tommi Laukkanen Department of Business and Management, University of Kuopio, Kuopio, Finland Abstract Purpose – The aim of the paper is to explore and compare customer value perceptions in internet and mobile banking. The purpose especially is to compare customer perceived value and value creation between internet and mobile bill paying service. Design/methodology/approach – A qualitative in-depth interviewing design was applied in order to ascertain the factors that create value perceptions in fund transfer service via personal computer and mobile phone. Means-end approach and laddering interviewing technique was used in order to reveal how different value creating factors are hierarchically structured and related to each other. Findings – The results indicate that customer value perceptions in banking actions differ between internet and mobile channels. The findings suggest that efficiency, convenience and safety are salient in determining the differences in customer value perceptions between internet and mobile banking. Research limitations/implications – The findings of the qualitative study, being more depth than wide in nature, deserve to be quantitatively measured in future studies in order to provide more generalisable results. Practical implications – The paper provides enhanced information for business managers about both positive and negative customer value perceptions in internet and mobile banking. By understanding how and what kind of value different service channels provide for customers service providers are better enabled to create actions to enhance internet and mobile banking adoption. Originality/value – The contribution of the paper lies in achieving a more profound understanding on consumer value perceptions to internet and mobile banking. It expands the literature on electronic and mobile commerce and on electronic banking especially. Keywords Electronic commerce, Internet, Value added, Banking Paper type Research paper

Business Process Management Journal Vol. 13 No. 6, 2007 pp. 788-797 q Emerald Group Publishing Limited 1463-7154 DOI 10.1108/14637150710834550

Introduction Financial services delivery and consumption has experienced major changes during the last years. Technological development has reshaped the business environment. The banking industry is among the leading sectors in adopting and utilising the internet and mobile technology on consumer markets and consequently its service delivery has undergone changes unprecedented in its history. The development of electronic banking services via multiple electronic channels has made it possible to provide new kinds of added value for customers. Applying the internet with solely focusing on cost reduction may lead to high supply chain effectiveness while potential customer value opportunities may be ignored (Jonsson and Gunnarsson, 2005). Therefore, understanding service user behaviour and value perceptions is one of the fundamental requisites of service development. Customers have become less willing to visit traditional branches, less loyal, more receptive to new electronic channels and more sophisticated in demanding better service quality including 24 hour service availability (Coelho and Easingwood, 2003).

The simultaneous and increasing diffusion of mobile phones and especially WAP-enabled devices has made the transformation of banking applications to mobile devices a logical development in electronic banking (Pousttchi and Schurig, 2004). Indeed, mobile banking has emerged as a wireless service delivery channel providing increased value for customers’ banking transactions. However, despite its many advantages, the use of mobile phones in banking services is still in its infancy and the internet retains its position as the leading channel in electronic banking. The aim of this paper, is to present the findings of a study on customer value perceptions to internet and mobile banking services. The focus is to explore the use of internet and mobile fund transfer services and to compare customers’ positive and negative value perceptions of these two channels. The next section reviews the background of the study while the section Means-end approach presents the theoretical approach and method used. The penultimate section presents the results of the study and in the last section, the conclusions are drawn and topics for further research are discussed. Background Electronic banking is seen as one of the most successful business-to-consumer applications in electronic commerce (Pousttchi and Schurig, 2004). Initially the research focused on the consumers’ attitudes toward automated teller machines (ATM) (Rugimbana and Iversen, 1994; Rugimbana, 1995; Davies et al., 1996; Filotto et al., 1997; Moutinho and Smith, 2000). More recent studies have analysed the development of telephone banking (Lockett and Littler, 1997; Al-Ashban and Burney, 2001) and personal computer (PC) banking (Mols, 1998). Recent years, the research on electronic banking has focused on internet banking (Sathye, 1999; Polatoglu and Ekin, 2001; Black et al., 2002; Karjaluoto, 2002; Karjaluoto et al., 2002a, b; Mattila et al., 2003; Gerrard and Cunningham, 2003) which today includes the option for multiple service transactions conducted via internet. Low fees, time savings and freedom from time and place (Karjaluoto et al., 2002a) have been found to be the most important elements of internet banking. Other factors contributing to its use include easiness-to-use of the service (Karjaluoto, 2002), speed of service delivery (Karjaluoto, 2002), convenience and compatibility with lifestyle (Black et al., 2002; Gerrard and Cunningham, 2003), while complexity of a service (Black et al., 2002), perceived financial cost of a product or service (Black et al., 2002), ignorance of electronic services (Sathye, 1999) and security risk (Sathye, 1999; Black et al., 2002) are found to inhibit the use of the service. However, contrary to previous studies, the findings of Karjaluoto et al. (2002a) showed that security concerns are not among the greatest obstacles to adopting internet banking. Furthermore, some of the most recent studies have concentrated on mobile banking (Barnes and Corbitt, 2003; Brown et al., 2003; Lee et al., 2003; Suoranta, 2003; Luarn and Lin, 2005; Scornavacca and Barnes, 2004; Laukkanen and Lauronen, 2005). The mobile phone as a channel for service consumption offers enormous potential since today, a mobile phone is an integral part of customers’ lives and a growing number of these devices are also equipped with internet connection. Currently mobile banking services enable consumers, for example, to request their account balance and the latest transactions of their accounts, to transfer funds between accounts, to make buy and sell orders for the stock exchange and to receive portfolio and price information.

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Previous studies indicate, that factors contributing to the adoption of mobile banking are related to convenience, access to the service regardless of time and place, privacy and savings in time and effort (Suoranta, 2003). In spite of the advantages the use of the mobile phone in banking actions has remained small. There seem to be some inhibitors that slow down the use of mobile channels in banking transactions. Previous studies indicate that perceived financial cost (Luarn and Lin, 2005) and perceived complexity (Lee et al., 2003) inhibits the use and adoption of mobile banking services. Furthermore, security issues are argued to be among the greatest concerns in the adoption of mobile banking (Brown et al., 2003; Luarn and Lin, 2005). Contrary to previous findings, some studies have argued that security issues are not perceived by customers to be major obstacles in banking transactions (Suoranta, 2003; Laukkanen and Lauronen, 2005). These studies state that, mobile banking was found a secure way to conduct banking transactions by the users. However, Suoranta (2003) found that mobile services were not used since they were perceived as impractical and not sufficiently diversified. Earlier literature has identified factors defining consumers’ electronic banking behaviour but however, the factors seem to represent concepts in different level of abstraction. For example, 24 hour service availability, location free access and service access speed represent concrete attributes of electronic channels whereas concepts like time savings and easiness-to-use represent more the benefits or consequences deriving from the use situation. Moreover, concepts like convenience, security and privacy represent more abstract desired end-states of consumers. Thus, these concepts should not be jumbled together but rather treated as different level constructs that are linked to each other hierarchically. In the light of consumer value perceptions value can be created on different levels of abstraction and can be an outcome of a combination of different factors at different levels of abstraction (Laukkanen, 2006). Thus, what is needed is an approach that is able to identify the concrete channel attributes and their linkages to customers’ desired end-states in the consumption of electronic banking services. Huber et al. (2001) argue that a suitable approach which connects the consumption of products or services and personal values of an individual is the means-end theory. Means-end approach The means-end theory has its roots in cognitive psychology seeking to explain how consumer’s choice of a product or service enables him to achieve his desired end-states (Gutman, 1982). Thus, it is seen as an umbrella term that refers to a set of methods for conducting customer interviews about the reasons for their choices and interpreting consumers’ responses in terms of links between outcomes (Olson and Reynolds, 2001). The approach suggests a hierarchical representation of how customers view products and services (Woodruff and Gardial, 1996) (Figure 1). The way the products and services relate to customers can be represented by three levels: attributes, consequences and desired end-states. Whereas attributes describe the product or service, and consequences describe the benefits that the customer derives or seeks as a result of product or service consumption, the desired end-states are seen as the ultimate ends that are served by the product or service means (Woodruff and Gardial, 1996). The basic idea of the hierarchy is that the intensity of abstraction increases when moving from the lower to higher level. Peter and Olson (2005) argue that business managers and marketing practitioners should understand these three levels of consumers’ product or service knowledge in order to develop effective marketing strategies.

Desired End-States Describes the goals of the person

Internet vs mobile banking

Consequences Describes the user / product interaction

791 Attributes Describes the product / service

About 20 qualitative in-depth interviews were conducted with experienced electronic banking customers of a large Scandinavian bank. About 19 respondents used internet-bill paying service and nine respondents had experience of paying bills via mobile phone. A laddering interviewing technique was used for the data collection. It is basically a one-on-one semi-structured in-depth interviewing technique in which respondents describes freely why something is important to them and researchers try to find linkages between the key perceptual elements across the range of attributes, consequences and desired end-states (Reynolds and Perkins, 1987; Reynolds and Gutman, 1988). Traditionally the laddering probes begin with distinctions made by the respondent concerning perceived meaningful differences between brands of products (Reynolds and Gutman, 1988). In this case, the probes began with distinctions concerning perceived advantages and disadvantages of different electronic channels currently and previously used by the respondent for paying bills. After identifying the customer-perceived distinctions between different electronic channels the laddering process continued with questions such as “Why is that important to you?” after each response. The answers typically led from concrete attributes to consequences and finally to desired end-states of the respondent. The interview further continued until the respondents could no longer provide any further information. Each interview was carried out in a quiet and peaceful room at the University of Kuopio, Finland. This enabled neutral environment for the interview and made possible a close and reliable connection with the interviewee. It is seen extremely important that respondents do not feel themselves threatened and are thus willing to be introspective and look inside themselves for the underlying motivations in a given context (Reynolds and Gutman, 1988). This was enhanced by telling to respondents in the introductory comments that there are no right or wrong answers and that the entire purpose of the study is simply to understand the ways in which the interviewee behaves. In that sense, the respondent was positioned as the expert who “educates” the interviewer. Permissions to use recorder were asked from the respondents and all the interviews were audiotaped and transcribed. In the analysis-phase, all the responded elements were classified into attribute-, consequence- and desired end-state-levels. The focus was to concentrate on the linkages between the elements, not on the elements themselves. The most commonly appeared linkages were summarised in the hierarchical value maps presented in the results section. Results The results indicate that efficiency, convenience and safety are the most important desired end-states of bank customers determining the differences in customer value

Figure 1. Value hierarchy

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perceptions between internet and mobile banking. Efficiency mainly derives from service access locations. In case of internet-bill paying home access saves time by making needles to leave home or office for the service consumption. Similarly, location free access in internet and mobile bill paying is linked to the ability to use the service wherever wanted. However, the results do not provide more detailed reasoning in the case of internet service but the users of mobile fund transfer service claim that the ability to use the service wherever wanted enables immediate action (e.g. transfer money or pay a bill) which saves time and thus is perceived as efficient (Figure 2): During the holiday at the country cottage, I really didn’t bother to leave the cottage in order to find an ATM and pay the bill. I paid the bill on-the-spot via mobile phone. It saved time (Mobile user, respondent No. 13).

The results show that besides efficiency time saving is also related to convenience (Figure 3). Indeed, Yale and Venkatesh (1986) identified time utilisation, referring to effective use of the time available, as one of the six dimensions of convenience: You can tell your child who calls and asks for money for a hamburger: “wait one minute, I’ll transfer 5 euros to your account”. It saves time and is very convenient (Mobile user, respondent No. 9).

The other dimensions in the classification by Yale and Venkatesh (1986) were accessibility, handiness, portability, appropriateness and avoidance of unpleasantness. Whereas accessibility was seen to refer to spatial distance between the spot of need recognition and the optional spot of need satisfaction the handiness was seen to refer to saving or wasting physical effort. Portability resembled accessibility, e.g. consumer has an “online” opportunity to reach the service using for example, a mobile phone whereas appropriateness referred to the ability of a product or service to fulfil the specific need of a consumer. Finally, avoidance of unpleasantness meant certainty that a product or service does not cause unpleasant surprises. While time utilisation seem to provide convenience both in internet and mobile banking, accessibility, handiness and Efficiency

DESIRED END-STATES

Saves time

CONSEQUENCES

Can react immediately to the service need

No need to leave home or office to perform the service

Can use service wherever wanted

Figure 2. Efficiency in internet and mobile banking

ATTRIBUTES Internet (PC) fund transfer Mobile fund transfer

Location free access

Home access

Internet vs mobile banking

Convenience

DESIRED END-STATES Saves time

CONSEQUENCES

Can react immediately to the service need

Can use service whenever wanted

No need to leave home or office to perform the service

Can use service wherever wanted

ATTRIBUTES

Takes time

Location free access

Difficult to use

793 Need to browse Can not see entire page

Independent of time

Home access

24/7

Poor visual view Small amount of information

Keyboard

Display

Internet (PC) fund transfer Mobile fund transfer

portability seem to provide convenience especially in internet banking. This is derived from home access and round-the-clock ability enabling customers to use the service whenever they want to: Previously I purposely needed to go somewhere to pay the bills. Now it is much more convenient (Internet (PC) user, respondent No. 4). I don’t have to think and schedule a point in time to pay a bill. I am totally free to pay my bills when ever I want to – usually on a whim (Internet (PC) user, respondent No. 1).

Moreover, Pousttchi and Schurig (2004) have argued, that the data input method needs to be simplified at least in situations where a large amount of data are entered. When paying bills electronically customer usually needs to enter passwords and access codes in order to log into the service. Furthermore, the customer needs to punch in the account numbers, index numbers, the sums and due dates, et cetera. This increases the burden on the customer, especially when the service is used via a mobile phone. The respondents claimed that the small keyboard of the mobile phone makes it difficult to use and inconvenient but also increases uncertainty in service consumption (Figure 4): Once I paid some bills via mobile phone but it felt a bit slow to punch the buttons on a keyboard. I felt it was so clumsy (Mobile user, respondent No. 8)

The results indicate marked perceived differences between PC and mobile phone in bill payment service especially with display of the device. In the case of the mobile phone, the small screen with small amount of information makes the device very difficult to use in fund transfer. The respondents claimed that the visual display is insufficient and they are not able to see the entire bill on the screen. Therefore, they need to browse while using the service. This was perceived inconvenient and to increase the feeling of uncertainty in service consumption:

Figure 3. Convenience in internet and mobile banking

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Safety

DESIRED END-STATES

Difficult to use Need to browse

794 CONSEQUENCES

Can not see entire page

Good Poor visual visual view view

Small amount of information

Figure 4. Safety in internet and mobile banking

ATTRIBUTES

Keyboard

Display

Internet (PC) fund transfer Mobile fund transfer

Smaller buttons without a real keyboard makes the mobile phones’ technical features pretty limited. The keyboard makes it slower to enter the information and therefore it feels more uncertain (Mobile user, respondent No. 12). It is much easier [via computer] to get the whole picture, the sums and index numbers et cetera. Somehow it is easier to check the information on the computer screen instead of the mobile phone, which gives you one piece of information at a time (Mobile user, respondent No. 8). . . . since you cannot see the entirety, you need to check the information entered and remember it while browsing through the inputted information. If I suddenly doubt whether I put the correct account number, I need to browse back and check. On the other hand, on a big screen [computer] you can check the information entered immediately and continue. It is the feeling of safety (Mobile user, respondent No. 12).

However, the feeling of uncertainty differs from perceived security issues. Some previous studies indicated that security is not perceived as a major obstacle in mobile banking transactions by customers (Suoranta, 2003; Laukkanen and Lauronen, 2005). The findings of this study support the argument since the issue for the respondents was not related to data security or other security issues but instead they were worried about their own errors made while using the service: I trust the WAP -technique as much as the internet, but the thing is that you cannot see the whole picture (Mobile user, respondent No. 12).

Conclusions and future research The general focus of this paper was to provide more understanding on business managers decision making about customer behaviour in the electronic banking context.

The results describe customer perceived positive and negative value perceptions to fund transfer via internet and mobile phone. The most noteworthy differences between these two channels are related to the location free access to the service and the display of the device. The most important contributor to mobile banking seems to be the ability use the service wherever wanted, which is related to the capability for immediate actions and time savings in service consumption. The keyboard and the display of the device seem to be the clearest inhibitors to the use of mobile bill paying service whereas in the use of the PC the case seems to be the opposite. Technological development in the mobile sector, like 3G and improved displays of the devices, will likely change the current situation and improve wireless service consumption. However, data input may still be a bottleneck in the consumption of some mobile financial services without improvements like in-built barcode readers. The barcode readers could be used to reduce the burden and perceived uncertainty of the customer and increase convenience in mobile bill paying by copying the account numbers, index numbers, the sums and due dates from the printed bill into the mobile phone. The customer would only need to accept or reject the payment. Future research could focus on more convenient data input methods in mobile bill paying. Moreover, the study showed that theoretically it seems that efficiency and convenience are somehow overlapping concepts in electronic service consumption. The relation between convenience and efficiency seems to be somewhat obscure also in the current literature. Berry et al. (2002) have defined efficiency as an aspect of convenience. On the contrary, Holbrook (1994, 1999) has placed convenience under the concept of efficiency. However, the authors agree that efficiency refer to the perceived benefits customers receive in relation to the sacrifice or costs. This efficiency perception means that consumer perceives cognitively the ratio of benefits and sacrifice. For example, when a consumer perceives that mobile bill paying saves time compared to his earlier way of paying, the perception of efficiency is formed. Based on the results of the study and current literature it seems that whereas convenience is a multi-dimensional construct including cognitive appraisals and more hedonic emotions efficiency, in its part, is purely related to economic ratio between benefits and sacrifice. However, the relation between convenience and efficiency concepts needs more attention in future studies. The use of mobile banking is still in its initial stage and more research in the field is needed. This paper compared internet and mobile banking using a qualitative in-depth interviewing method. The objective of qualitative studies is not to find results that can be generalised but instead to gain a deeper understanding of the phenomenon explored. On the one hand, the results of the paper form a basis for more generalisable quantitative studies. On the other hand, since the results seem to indicate that the usability of the devices and services is essential for customers, multidisciplinary research focused on usability issues in electronic services could be beneficial. References Al-Ashban, A.A. and Burney, M.A. (2001), “Customer adoption of tele-banking technology: the case of Saudi Arabia”, International Journal of Bank Marketing, Vol. 19 No. 5, pp. 191-200. Barnes, S.J. and Corbitt, B. (2003), “Mobile banking: concept and potential”, International Journal of Mobile Communications, Vol. 1 No. 3, pp. 273-88. Berry, L.L., Seiders, K. and Grewal, D. (2002), “Understanding service convenience”, Journal of Marketing, Vol. 66 No. 3, pp. 1-17.

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Mattila, M., Karjaluoto, H. and Pento, T. (2003), “Internet banking adoption among mature customers: early majority of laggards?”, Journal of Services Marketing, Vol. 17 No. 5, pp. 514-28. Mols, N.P. (1998), “The behavioral consequences of PC banking”, International Journal of Bank Marketing, Vol. 16 No. 5, pp. 195-201. Moutinho, L. and Smith, A. (2000), “Modelling bank customer satisfaction through mediation of attitudes towards human and automated banking”, International Journal of Bank Marketing, Vol. 18 No. 3, pp. 124-34. Olson, J.C. and Reynolds, T.J. (2001), “The means-end approach to understanding consumer decision making”, in Reynolds, T.J. and Olson, J.C. (Eds), Understanding Consumer Decision Making: The Means-end Approach to Marketing and Advertising Strategy, Lawrence Erlbaum Associates Inc., Mahwah, NJ, pp. 3-23. Peter, J.P. and Olson, J.C. (2005), Consumer Behavior & Marketing Strategy, 7th ed., McGraw-Hill, New York, NY. Polatoglu, V.N. and Ekin, S. (2001), “An empirical investigation of the Turkish consumers’ acceptance of internet banking services”, International Journal of Bank Marketing, Vol. 19 No. 4, pp. 156-65. Pousttchi, K. and Schurig, M. (2004), “Assessment of today’s mobile banking applications from the view of customer requirements”, Proceedings of the 37th Hawaii International Conference on System Sciences, Big Island, Hawaii. Reynolds, T.J. and Gutman, J. (1988), “Laddering theory, method, analysis, and interpretation”, Journal of Advertising Research, Vol. 28 No. 1, pp. 11-31. Reynolds, T.J. and Perkins, W.S. (1987), “Cognitive differentiation analysis: a new methodology for assessing the validity of means-end hierarchies”, Advances in Consumer Research, Vol. 14 No. 1, pp. 109-13. Rugimbana, R. (1995), “Predicting automated teller machine usage: the relative importance of perceptual and demographic factors”, International Journal of Bank Marketing, Vol. 13 No. 4, pp. 26-32. Rugimbana, R. and Iversen, P. (1994), “Perceived attributes of ATMs and their marketing implications”, International Journal of Bank Marketing, Vol. 12 No. 2, pp. 30-5. Sathye, M. (1999), “Adoption of internet banking by Australian consumers: an empirical investigation”, International Journal of Bank Marketing, Vol. 17 No. 7, pp. 324-34. Scornavacca, E. and Barnes, S.J. (2004), “M-banking services in Japan: a strategic perspective”, International Journal of Mobile Communications, Vol. 2 No. 1, pp. 51-66. Suoranta, M. (2003), “Adoption of mobile banking in Finland”, doctoral thesis, Jyva¨skyla¨, Finland, Jyva¨skyla¨ Studies in Business and Management 28. Woodruff, R.B. and Gardial, S.F. (1996), Know Your Customer: New Approaches to Understanding Customer Value and Satisfaction, Blackwell Publishing Ltd, Cambridge, MA. Yale, L. and Venkatesh, A. (1986), “Toward the construct of convenience in consumer research”, Advances in Consumer Research, Vol. 13, pp. 403-8. Corresponding author Tommi Laukkanen can be contacted at: [email protected]

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Investigating the role of contextual marketing for customer relationship management in a mobile commerce context ThaeMin Lee Department of Business Administration, Chungbuk National University, Cheongju, Korea, and

JongKun Jun Department of International Business, Hankuk University of Foreign Studies, Yongin, Korea Abstract Purpose – The purpose of this paper is to propose and validate the mobile commerce (MC) consumers’ repurchase intention (RPI) model including technology acceptance model (TAM), customer satisfaction (CS), and contextual perceived value (CPV) of marketing offer as a new MC-specific construct. Design/methodology/approach – A survey instrument was used to gather data to test the relationships shown in the research model. x 2 difference test was conducted in order to examine the contribution of CPV of marketing offer in explaining MC consumers’ RPI. The hypothesized relationships were tested using the structural equation modeling. Findings – The results of this study reveal that integrating CPV with CS and TAM in a single model can better explain and predict MC consumers’ RPI. CPV has a significant effect on RPI, CS and perceived usefulness. Research limitations/implications – CPV activated by contextual marketing is the key factor for customer relationship management in MC context. Originality/value – The primary contribution of this study is to integrate CPV of marketing offer with TAM and CS into a coherent and parsimonious model that jointly predicts RPI. Keywords Customer satisfaction, Mobile communication systems, Relationship marketing Paper type Research paper

Business Process Management Journal Vol. 13 No. 6, 2007 pp. 798-814 q Emerald Group Publishing Limited 1463-7154 DOI 10.1108/14637150710834569

1. Introduction Mobile businesses are opening up new marketing and customer relationship management (CRM) opportunities because they can provide two-way interactive communications which are location specific and highly personalized. Mobile phones have shown to be very personal devices which may provide firms with unrivalled possibilities to build and maintain one-to-one relationships with their customers, combined with a set of unique features such as ubiquity, constant reachability, personalization, and localization (Camponovo et al., 2005; Siau et al., 2003). In the mobile commerce (MC) environment, it is possible to identify the users and their geographical position by tracking the technical address of the mobile device. In this study, we will employ the term MC for electronic commerce transaction carried out via mobile phones based on Bai et al. (2005). Using the information on the users’ identity, position, access time, and profiles, mobile service providers can offer the users optimal information or services, which are contextually relevant to them at the point of need.

For example, a mobile service provider may send the information or coupon for blue jeans to a consumer, who enters the department store to purchase jeans. This is an example of “contextual marketing.” Contextual marketing refers to the extent to which e-businesses use the ubiquitous internet to provide customers with relevant information in the right context and in real-time (Kenny and Marshall, 2000). The mobile medium is well suited to enhance traditional CRM because the contextual marketing via mobile phone enabled by its very personal character and localization may allow the marketer to develop intimate relationships with customers. Despite the potential of mobile CRM (hereafter referred to as mCRM), only the internet as a channel to manage customer relationships (eCRM) has attracted a lot of attention among academics (Feinberg et al., 2002; Fjermestad and Romano, 2003), whereas understanding of managing customer relationships through mobile medium has gained far less attention (Sinisalo et al., 2006). We attempt to bridge this gap in the literature by proposing and validating the MC-specific CRM model that explain the repurchase intentions (RPIs). We utilize constructs from the literature of technology acceptance model (TAM), customer satisfaction (CS), and MC-specific features as the lens to examine MC consumers’ RPIs. Many practical and the theoretical models of customer retention have explored CS as a key determinant in customers’ decisions to keep or discontinue a given product or service relationship (Bolton, 1998; Rust and Zahorik, 1993; Zeithaml et al., 1996). Several researches have proposed the integration of satisfaction and TAM in electronic commerce context (Devaraj et al., 2002; Shin, 2004). However, no empirical study to date has investigated the interrelationship among TAM, CS and RPIs in a single mCRM framework. We propose “contextual perceived value (CPV) of marketing offer” as a new construct to enhance the understanding of MC users’ RPIs. Consumers’ perceived value of MC should increase if mobile marketers can offer the users personalized message which is contextually relevant to them at the point of need. In that sense, we believe that CPV is not only a key driver of CS but also an important determinant of RPIs in MC context. We suggest CPV as a powerful tool for mCRM. 2. Literature review 2.1 mCRM The key theoretical basis for CRM comes from the relationship marketing (RM) literature (Reinartz et al., 2004). The term RM was initially coined by Berry (1983) who defined it as attracting, maintaining and enhancing customer relationships. According to Sinisalo et al. (2005), CRM is a holistic approach aiming at building and maintaining a profit-maximizing portfolio of customer relationships. As the uppermost purpose of CRM is the ability to communicate with customers on an individual basis, mobile medium represent an appealing additional channel that can complement the existing channels (Camponovo et al., 2005; McManus and Scornavacca, 2005). Since, MC environment has features not available in EC environment, such as mobility (Kalakota and Robinson, 2001), ubiquity, personal identity and localization (Kannan et al., 2001), enabling customers to interact with companies via mobile medium anytime, anywhere. As mCRM has only recently aroused interest among academics, no formal conceptualization of mCRM had been made before. Sinisalo et al. (2006) defined it

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“as utilizing mobile medium (i.e. mobile phone, smart phone or PDA) for the purpose of managing customer relationships and activate customers to start dialogue with company via mobile medium.” Lam and Chan (2003) examined CRM features as implemented on the internet (eCRM) and the mobile channel (mCRM). They proposed a framework to analyze the current eCRM and mCRM practice. As mobile channel has the advantage of its high reach, low cost and high-retention rates (Clickatell, 2002), many companies seem to be ready for more sophisticated mCRM (Sinisalo et al., 2005). Although there are a few conceptual papers on mCRM (Camponovo et al., 2005; Sinisalo et al., 2006) empirical research is still very rare. Several researches have addressed the issue on mobile/SMS marketing. According to Barnes and Scornavacca (2004), mobile marketing allows through effective targeting and tailoring of messages to customers to enhance the customer-business relationship. Carroll et al. (2005) explored consumer’s perceptions and attitudes towards mobile marketing via SMS through a sequential, mixed methods investigation. According to their research, four factors were identified and proven as all having a significant impact on mobile marketing acceptance – permission, content, wireless service provider control and the delivery of the message, which guided the development of a revised and empirically tested model of mobile marketing acceptance. 2.2 Technology acceptance model Davis (1989) and Davis et al. (1989) suggested technology acceptance model (TAM) to explain and predict the individual’s acceptance. According to TAM, system usage behavior is determined by the intention to use a particular system, which in turn, is determined by the user’s beliefs about the system. The TAM further suggests that two beliefs – perceived usefulness and perceived ease of use – are instrumental in explaining the variance in users’ intentions. Perceived usefulness is defined as the extent to which a person believes that using a particular system will enhance his or her job performance, while perceived ease of use is defined as the extent to which a person believes that using a particular system will be free of effort (Davis, 1989). While TAM initially focused on system usage in the workplace (Adams et al., 1992; Gefen and Straub, 1997), recent research has applied it to understand web site use (Lederer et al., 2000; Moon and Kim, 2001) and consumer acceptance of e-commerce (Pavlou, 2003). Several studies have modified the basic TAM in MC or mobile service context (Koivumaki et al., 2006; Pagani, 2004; Wang et al., 2006; Wu and Wang, 2005). Koivumaki et al. (2006) have shown that usefulness, user guidance and support, and user skills are significant factors in explaining the acceptance of mobile services. Wang et al. (2006) validated an integrated model for predicting consumer intention to use m-service by adding one trust-related construct (perceived credibility) and two resource-related constructs (“self-efficacy” and “perceived financial resources”) to the TAM’s nomological structure and re-examining the relationships between the proposed constructs. However, none of them have incorporated the MC-specific feature, contextual factors in the model specification. TAM’s fundamental constructs do not fully reflect the context-mediated RPIs in MC. Therefore, to increase external validity of TAM, it is necessary to further explore the nature and specific influence of contextual factor.

2.3 Context The term “Context” has been extensively used in the research of mobile-related technology. Chen and Kotz (2000) defined context in mobile computing as “the set of environmental states and settings that either determines an application’s behavior or in which an application event occurs and is interesting to the user.” Kim et al. (2002) define mobile context as “any personal and environmental information that may influence the person when he/she is using Mobile Internet.” Their definition focuses on two aspects of context: personal context (emotion, physical state) and environmental context (location, the number of people nearby the user). Schilit et al. (1994) divided context into three categories: computing context (network connectivity, communication costs, etc.), user context (user profile, location, etc.), and physical context (lighting, noise, etc.). Chen and Kotz (2000) added time context (time of day, week, month, and season of the year) as a fourth context category. Figge (2004) introduces “situation dependency” as a new concept to adapt MC applications according to the spatial, personal, and temporal context in which the user accesses a service. Figge (2004) conceived situation dependency as a three-dimensional space, with user identity (personal profile, background, preferences, etc.), access position, and access time. 2.4 Customer satisfaction and customer retention The trend in marketing toward building relationships with customers continues to grow, and marketers have become increasingly interested in retaining customers over the long run (Lemon et al., 2002). Many researches suggest that CS is a key determinant of customer retention (Bolton, 1998; Rust and Zahorik, 1993; Zeithaml et al., 1996). According to Reichheld (1996), satisfaction measures have accounted for up to 40 percent of the variance in models of customer retention. Customer retention is regarded as essential factor in CRM (Hoekstra et al., 1999; Reichheld, 1996). Increasing CS and customer retention leads to improved profits, positive word-of-mouth, and lower marketing expenditures (Reichheld, 1996). CS is a consumer’s post-purchase evaluation and affective response to the overall product or service experience (Oliver, 1992). CS is regarded as a necessary precondition for customer loyalty, which is in turn a key driver of profit growth and performance (Heskett et al., 1997; Reichheld, 1993). 2.5 Contextual perceived value of marketing offer A significant advantage of MC is that it can deliver personalized message to a user on the basis of user profile and location-awareness. For example, the mobile service provider can transmit to a car driver the information about the location of available gas stations; send a traveler well-targeted information about suitable accommodations; or inform an investor about the latest changes in stock prices. This implies that contextual factors are very important in the MC environment. According to Leppa¨niemi and Karjaluoto (2005), location awareness and personalization enabled by mobile technology can influence positively consumers’ willingness to accept mobile advertising. Users who receive personalized and contextually relevant marketing offer will think it is valuable even though he or she has never recognized the value of MC before. Perceived value is broadly defined as the results or benefits customers receive in relation to total costs (McDougall and Levesque, 2000). According to Zeithaml (1988),

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perceived value is a customer’s overall assessment of the utility of a product (or service) based on perceptions of what is received and what is given. On electronic markets, firms can create value for customers in a manner that is different from that which has been achieved in conventional business (Han and Han, 2001). Correspondingly, MC not only extends the benefits of the web, but also allows for unique services and additional benefits when compared to traditional e-commerce applications (Tsalgatidou and Pitoura, 2001). According to Keen and Mackintosh (2001), the demand side of MC is a search for value, and hence there is a need to build an understanding of the elements and special features of wireless electronic channels that are value-adding from the consumer’s point of view. We propose “contextual perceived value of marketing offer” as MC-specific additional benefits to understand consumers’ RPIs in MC context. In this study, we define CPV of marketing offer in the MC context as “the degree to which a person believes that receiving context-relevant information or services would enhance his or her purchase performance.” Following Figge (2004), we decompose CPV of marketing offer into three-dimensional constructs: user profile, location and time. By using the location, time and user profile information, a service provider can reach consumers at the point where and when they are ready to do business (Kenny and Marshall, 2000; Leppa¨niemi and Karjaluoto, 2005). It captures the very moment when somebody’s need for merchandise or a service emerges, and promotes goods and services that are best suited to such person’s tastes and interests. 3. Research model and hypotheses Figure 1 shows the proposed model, referred to as the RPIs in MC context. CPV of marketing offer, the extended part of the model, is the construct of interest because it addresses the question of how contextual factors affect the individual’s RPIs in MC. H1

Contextual Perceived Value H3

Perceived Usefulness

H2

H4

H5 H6

Figure 1. Research model and hypotheses

Perceived Ease of Use

Customer Satisfaction

H7

Repurchase Intention

3.1 Contextual perceived value of marketing offer Perceived value was found to be a primary factor influencing purchase intentions (Cronin et al., 1997; Sweeney et al., 1997). In MC environment, the concept of “perceived value” could be thrown into continual flux, depending on the contextual marketing offer. Because marketers can reach consumers at the point of need by using the location, time and user profile information (Kenny and Marshall, 2000; Leppa¨niemi and Karjaluoto, 2005). This implies that the primary factor influencing MC consumers’ RPI is not constant perceived value but CPV activated by relevant marketing offer. Therefore, the concept of CPV of marketing offer that applies features specific to MC is important in explaining MC consumers’ RPIs. Users can be provided with optimal information or services that are contextually relevant to them based upon where they are, what they are doing and what they are interested in at the point of need. In other words, CPV of marketing offer can act as point of purchase (POP) promotion. For example, when a consumer enters a NIKE store, he or she can be provided with sale information for NIKE shoes or coupons. The POP is an ideal time to communicate with consumers because this is the time at which many product and brand choice decisions are made. It is apparent that POP materials represent very important determinants of consumers’ product- and brand-choice behaviors (Shimp, 2000). Cue compatibility is also useful for explaining the relationship between CPV of marketing offer and MC consumers’ RPIs. It means an overlap in memory with favorable brand associations (Keller, 1991). The cue compatibility principle maintains that successful recall of communication effects from ad exposure occurs when there is congruity or a “match” between the type of information stored at encoding and the type of information available as cues at later retrieval (Keller, 1991). The context-relevant offering by mobile marketers may be regarded as high cue-compatible if a consumer can be provided with a lunch coupon at the point of need, based on his or her tastes. And CPV of marketing offer will be increased by these kinds of context-relevant marketing communication, which leads to MC consumers’ RPIs. Following the previous arguments, we predict that CPV of marketing offer will activate favorable association of MC and thereby, lead to MC consumers’ RPIs. Therefore, we propose the following hypothesis: H1. Contextual perceived value of marketing offer will have a positive effect on the RPIs. Perceived value is considered a cognitive-based construct which captures any benefit-sacrifice discrepancy in much the same way disconfirmation does for variations between expectations and perceived performance (Patterson and Spreng, 1997). CS, meanwhile, is defined as an affective evaluative response (Oliver, 1992). Woodruff (1997) argues that perceived value represents customer cognition of the nature of relational exchanges with their suppliers, and satisfaction reflects customers’ overall feeling derived from the perceived value. Behavioral model points out that affect is significantly influenced by cognition (Fishbein and Ajzen, 1975). There is also empirical evidence that perceived value exhibits a significant impact on CS (Anderson and Mittal, 2000; Patterson and Spreng, 1997). We predict that CPV activated by contextual marketing offer will have a positive effect on CS. Therefore, we propose the following hypothesis:

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H2. Contextual perceived value of marketing offer will have a positive effect on the CS. Providing contextual information to customers at the right time is in line with the theory of real-time marketing (McKenna, 1995; Rust and Lemon, 1999). Real-time marketing refers to the extent to which the firm can offer products and services at the customer’s location, in real-time, based on the customer’s choices and actions (Rust and Lemon, 1999). In the dynamic, turbulent MC market, the value of information depreciates quickly and, thus, its time-sensitivity should be even greater. This means that capability for context-specific and real-time marketing communication may enhance customers’ perceived usefulness of MC, leading to CS for using MC. We expect that “context-specific information” such as “special menu of the day” will be more attractive to customers than “established information” such as “regular restaurant menu” in MC environment. Following the previous arguments, we predict that CPV of marketing offer will activate favorable attitude toward MC and thereby, lead to perceived usefulness of MC. Based on these arguments, we propose the following hypothesis: H3. Contextual perceived value of marketing offer will have a positive effect on the perceived usefulness of MC. 3.2 Perceived usefulness In the setting of online services, CS can be explained by the conceptual paradigm, TAM (Yang and Peterson, 2004). We predict that CS in MC context can also be explained by perceived usefulness, which is the key construct of TAM. If the usefulness of MC does not outweigh customer losses occasioned by factors such as technical difficulties and learning effort, then customers may simply revert to the traditional channels. This being the case, the perceived usefulness of MC plays an important role in CS. Previous research provides empirical evidence of the significant effect of the perceived usefulness on CS (Adams and Shine, 2003; Devaraj et al., 2002). Thus, the following hypothesis is proposed: H4. Perceived usefulness of MC will have a positive effect on the CS. 3.3 Perceived ease of use Previous research has found that perceived ease of use has significant effect on perceived usefulness (Davis, 1989; Davis et al., 1989). This finding has also been validated in internet technology use (Lederer et al., 2000; Gefen and Straub, 2002; Moon and Kim, 2001). Recent findings suggest that CS in the online environment is significantly higher than that in traditional channels due to the ease of use in acquiring information (Shankar et al., 2000). This implies that perceived ease of use of MC can play a pivotal role in CS. There is some empirical evidence that perceived ease of use has a significant effect on CS (Adams and Shine, 2003; Devaraj et al., 2002). Based on these arguments, we propose the following hypotheses: H5. Perceived ease of use will have a positive effect on the perceived usefulness of MC. H6. Perceived ease of use will have a positive effect on the CS.

3.4 Customer satisfaction Extensive research has shown that CS is a reliable predictor of RPIs (Bitner, 1990; Caruana, 2002; McDougall and Levesque, 2000; Olsen, 2002). This implies that CS is an important determinant of RPIs, which in turn is expected to affect the firm’s future profitability. Thus, the following hypothesis is proposed: H7. Customer satisfaction of MC will have a positive effect on the RPIs. 4. Research methodology 4.1 Sample The subjects for this study were confined to the mobile users who have experienced MC. Based on Harris et al. (2005), we grouped MC experience into three categories, transaction (mobile shopping, ticket purchasing, stock trading), information (news, location/traffic information) and entertainment services (download ring tone, download movie). An interview survey (face-to-face) was conducted in Seoul, Korea. The sample consisted of 296 respondents including 171 (under)graduate students and 125 business workers in Korea. The male/female ratio of the sample was 53.7 and 46.3 percent, respectively. In the sample, 56.1 percent were in their 20s and 43.9 percent were in their 30s. 4.2 Measure development Measures of the constructs were developed in several stages. In the first stage, based on the defined constructs, tentative measures were either borrowed or developed from the existing literature. In the second stage, to establish content validity, a list of defined constructs and measures was submitted to a panel of six marketing, e-commerce academicians, who were recognized as authorities on the subject of MC. We requested the panel members to assign each measure to the construct they believed was appropriate and note whether they thought the construct could be represented by any other measures. In the third stage, faculty and doctoral students reviewed a preliminary version of the instrument for precision and clarity. Finally, a pretest was conducted among 20 consumers. During all the stages, the questionnaire was progressively refined, simplified, and shortened. Scale reliabilities and measurement items are provided in the Appendix. All items used seven-point scale (1 ¼ very strongly disagree, 7 ¼ very strongly agree). 4.3 Measurement model results Following Anderson and Gerbing (1998), we conducted confirmatory factor analysis to establish the reliability and discriminant validity of the multi-item scales. Although the x2 value for this model was significant (181.940 with 109 degrees of freedom (df), p ¼ 0.00), this statistic is sensitive to sample size and model complexity; as such, the goodness-of-fit index (GFI), Tucker-Lewis index (TLI), and comparative fit index (CFI) are more appropriate for assessing model fit here (Bagozzi and Yi, 1988; Bearden et al., 1982). GFI (0.933), AGFI (0.905), TLI (0.975), CFI (0.980), SRMR (0.039) and RMSEA (0.048) indicate satisfactory model fit. Furthermore, all the individual scales exceeded the recommended standards proposed by Baggozi and Yi (1988), in terms of construct reliability (i.e. greater than 0.60) and average variance extracted (AVE) by the latent construct (greater than 0.50). And all the item’s loadings indicated significant t-values, suggesting convergent validity was achieved.

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The squared correlation between the two constructs is less than all the AVE for each construct (Tables I and II), suggesting discriminant validity was achieved (Fornell and Larcker, 1981). In addition, we checked the confidence interval for each pairwise correlation estimate (Anderson and Gerbing, 1988). As shown in Table II, the confidence interval for each pairwise correlation estimate does not include the value of 1. These results suggest that discriminant validity was achieved. Measure validation was also examined for internal consistency by computing Cronbach’s a coefficient. As shown in the Appendix, Cronbach’s a was found to be greater than 0.70, in accordance with Nunnally’s (1967) standard.

Construct/items

Table I. Confirmatory factor analysis results

Contextual perceived value CPV1 CPV2 CPV3 CPV4 Perceived usefulness PU1 PU2 PU3 PU4 Perceived ease of use PE1 PE2 PE3 Customer satisfaction CS1 CS2 CS3 Repurchase intention RPI1 RPI2 RPI3

t-value

0.813 * 0.764 * 0.887 * 0.897 *

16.936 15.628 19.698 20.064

0.735 * 0.922 * 0.940 * 0.731 *

14.112 21.002 21.331 14.150

0.806 * 0.882 * 0.895 *

16.278 18.618 19.059

0.839 * 0.898 * 0.550 *

17.046 19.076 9.962

0.810 * 0.848 * 0.804 *

16.798 17.838 16.106

Construct reliability

AVE

Cronbach’s a

0.907

0.709

0.916

0.903

0.702

0.902

0.896

0.743

0.894

0.815

0.604

0.803

0.861

0.674

0.872

Note: *Parameter estimates are significant at the 0.001 level

CPV CPV PU PE CS RPI Table II. Correlation matrix

Unstandardized loading

PU 0.269

0.519 0.412 0.458 0.464

(0.047) (0.054) (0.052) (0.052)

0.554 (0.045) 0.595 (0.043) 0.612 (0.042)

PE 0.170 0.307 0.531 (0.049) 0.581 (0.054)

CS 0.210 0.354 0.282

RPI 0.215 0.375 0.338 0.475

0.689 (0.039)

Notes: CPV, contextual perceived value; PU, perceived usefulness; PE, perceived ease of use; CS, customer satisfaction; RPI, repurchase intentions. Construct correlations (and standard errors) appear below the diagonal. Squared correlations appear above the diagonal

5. Results 5.1 Chi-square difference test x 2 difference tests were conducted in order to examine the contribution of CPV of marketing offer in explaining MC consumers’ RPIs. Results are presented in Table III. The results indicate that the addition of CPV of marketing offer improves the model fit. Thus, MC consumers’ RPI is best described by the hypothesized model in which CPV of marketing offer is included.

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5.2 Goodness of fit of the overall model The hypothesized relationships were tested using the technique of structural equation modeling (SEM). Covariance structure analysis (AMOS 4.0) testing the proposed model (Figure 1) resulted in a x 2/df ratio below 2.0, indicating a good fit between the theoretical model and the data. Other goodness of fit indices is also indicative of a good fit: GFI (0.923), AGFI (0.894), TLI (0.967), CFI (0.973) (Bagozzi and Yi, 1988; Bearden et al., 1982). 5.3 Results of hypotheses tests The results of the hypotheses test are summarized in Table IV, which shows that all proposed relationships received strong support. Restricted model

2

x df GFI AGFI TLI CFI SRMR RMSEA X 2 difference test

Proposed model

Three path (CPV ! PU, CPV ! CS, Allow all parameters to be free CPV ! RPI) were fixed zero 263.489 ( p ¼ 0.00) 209.483 ( p ¼ 0.00) 114 111 0.905 0.923 0.872 0.894 0.951 0.967 0.959 0.973 0.107 0.054 0.067 0.055 2 2 Dx ¼ 54.006, Ddf ¼ 3, x /df ¼ 18.002 ( p , 0.01)

Notes: CPV, Contextual perceived value; PU, perceived usefulness; CS, customer satisfaction; RPI, repurchase intentions

H1 H2 H3 H4 H5 H6 H7

Hypothesized path

Coefficient (t-value)

Result

! ! ! ! ! ! !

0.186 * * (3.038) 0.164 * (2.305) 0.433 * * * (6.050) 0.365 * * * (5.706) 0.477 * * * (6.902) 0.313 * * * (4.356) 0.579 * * * (9.626)

Adopt Adopt Adopt Adopt Adopt Adopt Adopt

CPV CPV CPV PU PE PE CS

RPI CS PU CS PU CS RPI

Notes: *p , 0.05; * *p , 0.01; * * *p , 0.001. CPV, contextual perceived value; PU, perceived usefulness; CS, customer satisfaction; PE, perceived ease of use; RPI, repurchase intentions

Table III. Chi-square difference test

Table IV. Results of hypotheses test

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Specifically, we find a positive relationship between CPV of marketing offer and RPIs (coefficient ¼ 0.186, t ¼ 3.038, p , 0.01), supporting H1. CPV of marketing offer also had significant positive relationships with CS (coefficient ¼ 0.164, t ¼ 2.305, p , 0.05) and perceived usefulness of MC (coefficient ¼ 0.433, t ¼ 6.050, p , 0.001), bolstering H2 and H3. As predicted by H4, perceived usefulness of MC had a significant and positive relationship with CS (coefficient ¼ 0.365, t ¼ 5.706, p , 0.001). H5 and H6 predicted that perceived ease of use would directly influence perceived usefulness of MC and CS. As predicted both perceived usefulness of MC and CS had a significant relationship with perceived ease of use (perceived usefulness of MC: coefficient ¼ 0.477, t ¼ 6.902, p , 0.001; CS: coefficient ¼ 0.313, t ¼ 4.356, p , 0.001). As predicted by H7, we found a significant relationship between CS of MC and RPIs (coefficient ¼ 0.579, t ¼ 9.626, p , 0.001). 6. Discussion and implications In this paper, we contributed to the CRM literature by empirically validating the effect of MC-specific variable (CPV of marketing offer) on both CS and RPIs in MC context. The results of this study reveal that including the CPV, which is proposed as MC-specific variable, has improved the overall fit of the model. This suggests that integrating CPV with CS and TAM in a single model can better explain and predict MC consumers’ RPIs. Consequently, the proposed model can serve as an initial blueprint for understanding the effects of contextual marketing offer on customer retention in mCRM perspective. 6.1 Managerial implications Our results show that context-based marketing communication at the point of need is a key component in enhancing MC customer retention. Conveying context information could be very interesting for the users. Although contextual marketing has been effective in creating purchases (Luo and Seyedian, 2004), marketers could not fully exploit its advantages because communication channel for doing that was not fully developed. Mobile devices are an excellent medium to deliver contextually valuable messages to users. Average mobile users may not fully understand how much value they can get through MC until they receive a marketing offer relevant to their needs through the mobile device. A marketing offer through mobile devices could enhance perceived usefulness of MC, CS, and RPIs if it brings context-specific value for the customer. In order to deliver contextual value to customers, marketing communication for mCRM needs to be highly personalized. To make a personalized offer, marketers may need a lot of user information inclusive of user profile (sex, age, personal anniversary, and favorites, etc.) and context information such as location-type, time-based and mode of spending time, etc. The Kontti project is one of leading research in context-aware services. Marketers need to keep sending situation specific offers to customers to make them perceive MC useful, and be satisfied with MC, but irrelevant offers may annoy customers and even destroy customer relationships. Even a relevant offer should be carefully made not to invade privacy. Therefore, minimizing the number irrelevant offers is a must and for that purpose marketers may need a feedback system and adaptation of marketing practices. Achieving CS is the primary goal for most firms today (Jones and Sasser, 1995), because CS is a necessary precondition for customer loyalty, which is in turn a key

driver of profit growth and performance (Reichheld, 1993). In order to increase CS, marketers may need to design strategies to enhance customer’s CPV at the point of need. Marketers can also achieve high CS by increasing perceived usefulness of MC and perceived ease of use. Therefore, usability of MC should be improved. Usable and useful services on phones could be ones that give the user key, summarized information with very few keystrokes or text entry. Also highly adaptive interfaces will be necessary because of limited screen display. MC developers need to be fully aware of the importance of usability issues. 6.2 Limitations and future research One limitation of the study is that the proposed model did not consider traditional drivers of customer retention by focusing on TAM and MC-specific variable. Future research could explore other related constructs that better predict customer retention of MC, calling for a comprehensive model to explain RPIs in MC context. Several researches suggest that privacy factor is important in MC acceptance (Milne and Rohm, 2003; Wu and Wang, 2005). According to Milne and Rohm (2003), the benefits of MC must be weighed against the potential for privacy violations. Wu and Wang (2005) also suggest that privacy protection, security, and a risk-free environment are the breakpoints for MC popularity. The main purpose of this study was to empirically validate significant role of the “CPV of marketing offer in explaining MC consumers” RPIs compared with traditional TAM. So, this study did not consider privacy factor in the model. Although privacy factor is excluded in the model specification, it is likely that most respondents answered the question after considering the privacy issues. Therefore, the significant effect of CPV on CS and RPIs is likely to be underestimated rather than overestimated. We suppose that the effect of CPV on CS and RPIs will increase if the privacy factor is controlled. Future research could address potential clash between context-specific mobile marketing communications and a customer’s concerns about privacy and investigate how that might impact the CS and RPIs of MC. Although all the measures used in the study are modified through in-depth interviews and pretests, further analysis of the items is needed to establish definitive proof of reliability and validity. In addition, this research applied a cross-sectional research design. Given the cross-sectional design of the study and the inability to perfectly observe actual behavior, the relationship between RPI and actual repurchase behavior needs further research. Future research could take a longitudinal perspective. Besides, these limitations, several further research directions follow from this study. Subsequent research could address the classification of CPV of marketing offer according to temporal, spatial, and personal components of the construct. And much work remains to be done regarding the relationship between CPV of marketing offer and other potential drivers of customer retention in MC context. References Adams, I. and Shine, J. (2003), “Extending the new technology acceptance model to measure the end user information systems satisfaction in a mandatory environment: a bank’s treasury”, Technology Analysis & Strategic Management, Vol. 15 No. 4, pp. 441-55.

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Appendix PE (adapted form Davis, 1989; Davis et al., 1989; Moon and Kim, 2001; Pavlou, 2003) (a ¼ 0.89)

814

PU (adapted form Davis, 1989; Davis et al., 1989; Pavlou, 2003) (a ¼ 0.90)

CS (adapted from Devaraj et al., 2002) (a ¼ 0.80)

CPV of marketing offer (developed for this study based on Mort and Drennan, 2002; Kenny and Marshall, 2000; Figge, 2004) (a ¼ 0.92)

RPI (adapted form Yi and La, 2004; Pavlou, 2003) (a ¼ 0.87)

Table AI. Scale reliabilities and measurement items

(1) I think using MC is easy (2) I find it clear and understandable to learn how to use MC (3) It is easy for me to become skillful at using MC (1) Overall, I find using MC is useful (2) I think using MC is valuable to me (3) Using MC would improve my performance on the purchase (4) Using MC in purchase decision would enable me to accomplish tasks more effectively (1) The MC experience met my needs (2) It was possible for me to buy the product of my choice easily (3) Overall, I was satisfied with the MC experience (1) Offering timely packets of information (e.g. restaurant coupon for lunch) is valuable to me (2) Providing me with packets of information I am interested in (e.g. news or NASDAQ information) is useful to me (3) Offering location-specific packets of information to me (e.g. sale information for coats when I enter the department store) would improve my performance on the purchase (4) Offering optimal information or a service that is contextually relevant to me, based upon where I am and what I am interested in, would enable me to accomplish a purchase more effectively (1) I have intention to repurchase product or service via MC (2) It is likely that I will use MC for repurchase (3) I expect my use of MC for repurchase to continue in the future

Notes: CPV, contextual perceived value; PU, perceived usefulness; PE, perceived ease of use; CS, customer satisfaction; RPI, repurchase intentions

Corresponding author ThaeMin Lee can be contacted at: [email protected]

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SMS advertising, permission and the consumer: a study

SMS advertising, permission and the consumer

Fatim Bamba and Stuart J. Barnes Norwich Business School, University of East Anglia, Norwich, UK

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Abstract Purpose – This study aims to examine the phenomenon of consumers’ willingness to give permission to receive short message service (SMS) advertisements. The purpose of this research is threefold: to better understand the phenomenon of consumers’ willingness to give permission to receive text message (SMS) advertisements, to provide empirical data that supports our understanding, and to develop and test a basic model of consumers’ willingness to give permission to receive SMS advertisements. Design/methodology/approach – The study utilised a multi-method research approach with both qualitative and quantitative data – via focus group and scenario-based survey. Findings – The results show that even if the relevance of the advertisement is high it does not on its own make consumers give permission; it needs to be combined with the control over opt-in conditions to assure consumers and gain permission. Regarding brand familiarity, this appears to have little impact on consumers’ willingness to give permission to receive SMS advertisements. The opt-in conditions valued the most are: the possibility to withdraw at any time, personal data disclosure only with consent, and mobile phone operators as a primary advertising filter. Originality/value – The principal contribution of the paper is in furthering our understanding of the concept of permission as related to the emerging topic of SMS advertising. The paper provides evidence and data triangulation in an area that so far has had little empirical investigation. Keywords Mobile communication systems, Advertising, Consumer behaviour Paper type Research paper

Introduction From the radio transmitter using Morse code for maritime applications developed by Guglielmo Marconi in the 1890s, to Motorola’s “walkie-talkie” developed for the US Army during the World War II, to the current third generation of mobile telephones for the consumer, a long journey has been made. Mobile phones have become apparently ubiquitous; they are seen everywhere – from huge cities to remote villages. The growth and convergence of distributed networking, mobile computing and mobile telecommunications has created significant commercial opportunity. Mobile commerce, defined as transactions with direct or indirect monetary value over wireless handheld devices, is expected to reach 1.67 billion users by 2008 (Dickinger et al., 2005). The value of mobile commerce is expected to reach $88 billion by 2009 ( Jupiter Research, 2004). The growth of the market, the profusion of new technologies and their convergence has opened many new opportunities for marketing promotions and advertisements. One of those new modes of advertising is via short message service (SMS) to handheld devices, notably mobile phones. SMS, known as text messaging, is a store-and-forward communication system for the mobile phone. Recent variants, such as multimedia message service have added multimedia capabilities. According to the GSM Association, cell phone users send more than 10 billion SMS messages each month, making SMS the most popular mobile data service (Dickinger et al., 2004).

Business Process Management Journal Vol. 13 No. 6, 2007 pp. 815-829 q Emerald Group Publishing Limited 1463-7154 DOI 10.1108/14637150710834578

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With companies fighting over the emerging market – and global variation in wireless data communications policy – the consumer is not always asked for his or her permission before receiving SMS advertisements. However, in European countries, legislation requires advertisers to obtain explicit permission before contacting customers via electronic channels such as e-mail or SMS. Here, permission could be seen as the ability for the consumer to specify – before receiving it – whether or not he or she is interested in a message. Despite the increasing importance of SMS advertisement as a marketing and advertising channel, as yet there is relatively little academic research and empirical support for it. It is the noticeable gap in the literature regarding permission marketing and SMS advertising that has attracted our attention for this research. Thus, our study aims at addressing this issue by determining: . how consumers perceive SMS advertisements and permission; . how consumers are willing to give permission; . the profile of information consumers are willing to give and to receive; and . key factors affecting consumer permission. One may question why permission to send an advertisement actually matters. Permission matters because unsolicited advertisements may lead to consumers’ frustration and unanticipated results (Barnes and Scornavacca, 2003); cellular phones are intimate so sending SMS advertisements without the consumers’ consent is a violation of privacy. If we could better understand what affects consumers’ willingness to give permission this may better equip practitioners to approach this sensitive issue; marketers, managers and advertising companies may be able to offer better services to consumers and increase their competitiveness while consumers will benefit from tailored services that specifically answer their needs and requirements. Related to this, our insights could be of some value to mobile communication service providers that seek to efficiently manage the opportunities that SMS technology and their database of customers may offer them. In the next section, we provide some background literature on SMS advertising and permission. This is followed by a brief description of our mixed-method research approach. Fourth and fifth sections examine the findings from the focus group and survey, respectively. Finally, the last section provides conclusions and directions for future research.

The foundations of SMS advertising Electronic-marketing (e-marketing) refers to “the achievement of marketing objectives through the use of electronic communications technology” (Chaffey, 2003, p. 318). E-marketing is often used as a tool of direct marketing, i.e. “Marketing through advertising media that interact directly with consumers, generally calling for the consumer to make a direct response” (Kotler et al., 2002, p. 784). Mobile marketing or wireless marketing is a subset of e-marketing and is defined by Dickinger et al. (2005) as “. . . using a wireless medium to provide consumers with time-and-location-sensitive, personalized information that promotes goods, services and ideas, thereby benefiting all stakeholders”. Mobile marketing can also be seen as:

All activities required to communicate with customers through the use of mobile devices in order to promote the selling of products or services and the provision of information about these products and services (Ververidis and Polyzos, 2002).

Mobile advertising has typically been categorised into push- and pull-models (Barnes, 2002). In the pull-model campaign, the marketer sends the information requested by the consumer; whereas in the push-model campaign, the marketer takes the initiative to send messages to the consumer. The latter model includes much of SMS advertising and raises the issue of consumers’ permission, since it is the marketer that initiates contact and communication. Permission marketing refers to the asking of consumers’ consent to receive commercial messages while giving the individual and opportunity to stop receiving them at any time (Tezinde et al., 2002). This approach can considerably reduce individuals’ privacy concerns (Sheehan and Hoy, 2000); it can act as a trust-building alternative to more effective information control (Milne et al., 1999). Unfortunately, some marketers manipulate consumers’ inattention and cognitive laziness to get their consent. Bellman et al. (2001) affirm that: “Using the right combination of question framing and default answer, an online organisation can almost guarantee it will get the consent of nearly every visitor to its sites.”

Privacy Privacy is defined as “the right of an individual to control the information held about them by third parties” (Chaffey, 2003, p. 146). Dickinger et al. (2005) observed that: “The mobile phone cannot distinguish between spam and genuine communication automatically.” They also found that consumers fear registration on SMS-based information services because of privacy concerns. Permission-based mobile advertising (PBMA) is considered to be the easiest way to tackle the privacy issue (Godin, 1999). In a study of 16 to 30 year-olds in the USA, evidence suggests that 51 per cent of respondents were “very satisfied” and 42 per cent were “fairly satisfied” by PBMA. Some 72 per cent agreed that PBMA was relevant to them and 84 per cent were willing to recommend it (Barwise and Strong, 2002). On the other hand, there is a negative relationship between the volume of ads received and the attitude towards direct marketing (Phelps et al., 2000). If the consumer is interrupted during his or her daily activities this can severely damage brand image (Hoyer and MacInnis, 2004). Petty (2000) describes this cost as an involuntary cost borne by the consumer who faces an unselected exposure. The major privacy violations in term of information capture are demographics and purchase-data disclosure without consumers’ consent, click stream patterns and browsing history, and physical location and purchase context (for example, via GPS – the global positioning system). For this reason, the notion of control over the wireless service provider (WSP) is pertinent (Barnes and Scornavacca, 2003). In the UK, under Privacy and Electronic Communication Regulations, permission is a requirement of SMS ads, as is opt-out and data protection from misuse and inaccuracy. Similar legislation is found in other parts of the EU; for example, in the Nordic countries you cannot approach clientele with SMS in any way before obtaining permission and so other media must be used to attract attention.

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SMS campaign features Barwise and Strong (2002) identify six ways of using SMS for advertising: brand building, special offers, timely media “teasers” competitions, polls/voting, products, services and information requests. Text message ads have been found to boost consumers’ inclination to purchase by 36 per cent, which partly explains its growing popularity among marketers (Enpocket, 2005c). According to Enpocket (2005a), text message campaigns also deliver a 15 per cent response rate, which they estimate is twice as much as direct mail or e-mail campaigns; apparently, text messages are 50 per cent more successful at building brand awareness than TV and 130 per cent more than radio (Enpocket, 2005c). The push-model campaigns involve unsolicited messages, usually via SMS alerts, while pull-model campaigns promote information requested by the consumer (Dickinger et al., 2004). A third type of campaign, as suggested by Jelassi and Enders (2004), revolves around the mobile dialogue model, where the marketer tries to build a long lasting relation with the consumer. The wireless channel benefits from the potential for detailed user information and personalisation; the message can be tailored for each customer to enable better targeting. Since, mobile phones are personal objects marketers can specifically address the person targeted, as well as recognising their social context, individual preferences, time, and location. Context-sensitive systems such as Ad-me (advertising mobile e-commerce) provide examples of the potential of this channel – equipping consumers with tailored, relevant information according to the context where they are (Hristova and O’Hare, 2004). SMS location-based services are likely to become increasingly valued as a marketing tool (Ververidis and Polyzos, 2002). Via the mobile channel, the response can be nearly immediate, interactive and the consumer can be reached everywhere at anytime because the service is typically ubiquitous ( Jelassi and Enders, 2004). SMS permission issues We define consumers’ permission in the context of SMS advertising as agreeing to receive SMS ads. Consumers’ acceptance refers to the adoption of SMS advertising as a part of our everyday lives. A number of academic authors have attempted to examine the success or acceptance of SMS advertising, related m-commerce applications, direct and permission marketing. A number of models and theories related to our investigation are summarised in Table I. The first three models relate specifically to mobile marketing. The other papers come either from a general m-commerce or marketing perspective. Barnes and Scornavacca (2003) establish that mobile-marketing acceptance depends on users’ permission, WSP control, and brand trust; the results of this exploratory research have been empirically confirmed by Carroll et al. (2005) who also examines message content and personalisation issues. For a matter of brand trust there is a strong preference for the network operators to become the definitive media owners and permission holders (Enpocket, 2005b). Dickinger et al.’s (2005) model of success factors for SMS marketing are divided into two categories: the message and the media. Message factors include: message content, i.e which type of advertisements, such as polling, competitions, and special offers; personalisation according to time (i.e. time of day and frequency of advertisements),

Theories

Authors

Influential factors

Acceptance of mobile marketing

Barnes and Scornavacca (2003) and Carroll et al. (2005)

Brand trust Control over WSP Permission Message content Message content Message personalisation Consumers’ control and privacy Consumers’ attitude toward advertising Perceived utility Perceived risk Social norms Consumers existing knowledge Perceived risk Cost Compatibility Perceive usefulness Ease of use Volume of advertisement Past direct experience Message relevance Monetary benefit Personal information entry and modification cost Message processing cost Privacy

Dickinger et al. (2005) Bauer et al. (2005)

Acceptance of mobile commerce

Wu and Wang (2005)

Direct marketing

Akaah et al. (1995)

Permission marketing

Krishnamurthy (2001)

location (including real-time location-specific offers) and consumers’ preferences; and consumer control, permission and privacy, which as been identified as the strongest negative influence on consumer attitudes toward SMS advertising. Media factors include issues regarding the device, transmission, product fit (the media appears to better suit low budget items, young people and services rather than goods), and media cost (which suggests that the medium is cheaper and more effective than other alternatives). Bauer et al. (2005) test a model, based on the theory of reasoned action (Ajzen, 1991), and find that the most important factors that affect attitude toward mobile marketing are: consumers’ attitudes toward advertising in general; perceived utility (in terms of information, entertainment, and social aspects); perceived risk (in terms of privacy and data security); consumers’ knowledge about the technology; and social norms that impact on consumers’ behaviour. A more general study examining drivers to mobile commerce, based on the theory of planned behaviour is given by Wu and Wang (2005). They examine perceived risk (e.g. privacy and security issues), cost (e.g. hardware and service fees), compatibility (e.g. with user’s existing values, previous experiences and needs), and ease of use. This model omits to address the social influence that can impact on the decision to acquire mobile devices.

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Table I. Summary of models and theories related to SMS permission marketing

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These last two papers are based on compensatory model of decision making which implies that consumers choose the option that offers more positive features. Those models of decision making are based on mental-cost-benefit analysis. However, consumers may base their choice on a non-compensatory model where a specific attribute is valued and any negative information from this attribute will leads to a rejection of the offer (e.g. consumers can refuse permission if an ad is not relevant without even considering social aspects). Finally, let us examine two general marketing studies that are of relevance. First, Akaah et al. (1995) found that the factors that influence attitude toward direct marketing most are the volume of advertisements and past direct experience. Second, Krishnamurthy (2001) found that the factors affecting consumer willingness to give permission to receive advertisement were: message relevance (e.g. message fit and advertiser attractiveness); monetary benefit (e.g. the incentive); personal information entry/modification cost; message processing cost (e.g. cognitive load in reading messages); and privacy cost (e.g. uncertainty of information misuse). Taken as a whole, the factors examined in these studies provide the basis for a research model investigating SMS permission. Summary model To construct a research model we have regrouped all the factors impacting on m-commerce, m-marketing and permission marketing into five general themes that could be applied to the specific topic of SMS ad permission: mobile technology knowledge, attitude toward SMS ads, relevance of SMS ads, control over opt-in conditions, and brand familiarity. This is shown in Figure 1. The factors identified can be classified into two categories: (1) Unconscious factors. This includes attitude towards SMS ads and mobile technology knowledge. For these variables, the consumer is not aware of the effects on his/her decision to give permission. These factors indirectly influence the decision to give or not to give permission. (2) Conscious factors. This includes the relevance of SMS ads, control over opt-in conditions and brand familiarity. Here, consumers can analyse factors before

SMS ad relevance

Brand familiarity

Knowledge Permission

Figure 1. Summary research model

Attitude toward SMS advertising

Control over opt in conditions

making their choices. These factors directly influence the decision to give or not give permission. In this study, we will focus our efforts on conscious factors impacting on permission. We will also limit our investigation to push-based advertising. Methodology The strategy of enquiry is sequential and exploratory (Creswell, 2003) and this strategy includes three phases (Figure 2). The first phase is a literature synthesis of factors impacting on consumers’ willingness to give permission to receive SMS advertisements. The second phase is an investigation of consumers’ perceptions of the phenomenon and the development of a research model via a focus group. The focus group provided us with fresh insights into the phenomenon and allowed us to make adjustments in the light of these findings. The third phase is the validation of the research model using empirical data from a survey questionnaire.

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Focus group The sample frame consisted of master’s students enrolled on a business degree in the UK in a single university. We used purposive heterogeneous sampling to select specific cases to see the impact of different factors on the phenomenon (Saunders et al., 2003). The focus group was composed of four people: two males and two females and in each gender category an expert (a person with good knowledge and high usage of mobile technology/communication) and a novice (a person with low knowledge and usage of mobile technology/communication). This design was aimed at examining whether gender or familiarity (i.e. use and/or knowledge) with mobile technologies had an impact on consumers’ willingness to give permission. Although our sample was small, Patton (2002) observes that this sampling method’s strength is the emergence of particular patterns. The questions focused on experience with SMS ads, definitions of permission, control over sending ads and personal information, and why and to whom respondents might give permission, along with contract requirements. After collecting the data from the focus group via audio-recorder, analysis consisted of the following: transcribing; coding of the text; clustering instances together into categories; analysing categories in a narrative presentation; and making adjustments to the research model. Questionnaire survey The same sampling frame was used for the survey as in the preceding phase. We collected a total of 50 questionnaires, all of which were usable. Phase 1: Literature review Synthesis of factors affecting the phenomenon

Phase 2: Qualitative research Focus group: Revisit research model in light of qualitative data

Phase 3: Quantitative research Survey questionnaire: Test of final research model

Figure 2. Research strategy

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The data was collected via online questionnaire. We used a five-point Likert scale to rate the respondent’s attitudes, opinions, and behaviour (where 1 ¼ strongly disagree, 3 ¼ neutral, and 5 ¼ strongly agree). The questionnaire used various descriptive items and eight scenarios in a similar manner to Carroll et al. (2005). Descriptive items included demographics, uses of text messaging, attitudes toward SMS ads and sources of SMS ads, contract and opt-in requirements, personal information and privacy, and preferences for information received. The scenarios tested high or low permutations of each of the three conscious variables in the research model: control over opt-in conditions, SMS ad relevance and brand familiarity. The analysis was partly descriptive. The inferential part of the statistical analysis examined the factors that impact on willingness to give permission to receive SMS ads. This aspect is shown in the analysis of the eight scenarios below. Qualitative findings In general, the focus group participants did not like SMS ads without permission. They all emphasized the need for permission. In our study, the major differences in the willingness to give permission appeared to be linked with gender and knowledge about mobile telecommunications. The discussion can be analysed according to the perceptions of SMS advertising without consent, how respondents wanted to give permission, to whom they wanted to give it and finally, the information that they were willing to receive. Perceptions of SMS ads SMS is typically private therefore all the participants found it annoying to receive unsolicited SMS ads. First, they found their privacy violated. For example, one participant suggested: Personally I think it is bad, mobile is private. I give my number to my number to friends but I don’t want to share it with everybody (P).

Second, they found themselves abused and harassed by mobile operators that send irrelevant texts to them: I didn’t sign anything with that company. I just bought the SIM card and then they start using my mobile . . . they could have something formal like a contract to specify you can or are going to receive some text (S). A bit annoying especially when travelling . . . For example, for my contract with O2 if I travel to Germany or another country I will receive a message like “Welcome to Italy and bla bla bla” . . . not only one thing but like 2 or 3 messages and they just remind you that you have to top up your mobile. I don’t like it (S).

Finally, the respondents agreed that SMS ads may disturb consumers in their everyday activities and interfere with important communications: . . . once I got like 3 texts but in five minutes. . . I was like ok what is going on may be it is something important (F).

Opt-in conditions The first step here is the way the permission is obtained, followed by the conditions required to receive that permission.

Obtaining permission. For the participants, the pre-emptors to permission were that it should be given and refused at no charge to the consumer, opt-in and opt-out should be easy, and should be allowed whenever the consumer decides. The participants were concerned about the different ways permission is asked for. They explored various alternatives including e-mail, text messages, or a formal hard copy contract. Those with less mobile knowledge preferred the formal hard copy option, whilst those with more knowledge were more adventurous and chose electronic or SMS versions. For example, responses included: I don’t mind signing electronically if they can send me an e-mail to confirm, like a receipt (P). How could they ask for your permission? I think by text, no? Or maybe the contract, no? At the beginning when you sign the contract (F). I prefer a formal contract because at the end of the day you know what you sign really. I don’t really trust it if it is just sort of electronically . . . I would like to have evidence of what I sign (R).

The first forms of permission imply that the advertiser already has access to personal information (i.e. an e-mail address or mobile phone number), whereas the formal contract leaves the consumer with more control over the information he or she is willing to provide to the advertiser. WSPs could act as a filter between customers and the different advertising companies, but should reassure them about the privacy of their SMS. A participant expressed this concern: I would be scared about a filter because it means that they are going to look at the SMS you are going to receive. If they can do that without looking at the text message it would be fine (F).

As said above, all the participants agreed that the contract should be signed with their existing WSP. The participants recognized that they would feel safer with their WSP than with an advertising agency or any other company or service operator. Contract requirements. The main contractual boundaries that the participants mentioned were regarding personal information and their disclosure and the time and frequency of SMS ads. In general, participants did not mind giving personal demographic information or indirect contacts such as e-mail addresses: . . . e-mail address because I’ve got so many [e-mail addresses] . . . I have some just for advertisements . . . so I don’t care about e-mail but definitively not telephone number (P).

However, when it comes to information that can give direct access to them such as a telephone number (in particular, a landline) or information concerning their finances (such as the mode of payment, e.g. credit card or debit card) or bank details, they are more reserved or not at all willing to provide information. The disclosure of personal information is a sensitive issue. All focus group participants agreed that they would not like to have their information disclosed without their consent. For example: If they do not write the option on the contract, when you sign the contract you do it under the confidence that they are not going to give your information to anybody else. It’s not right for them to pass your information to any advertising company unless you give them the permission (R).

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There will be another condition . . . if they [the third party] respect exactly the same conditions as the company you sign your contract with. Because when you sign the contract you accept for example ads from 10am to 6pm, I would expect them to do exactly the same (P).

The time when the ad is received is of particular concern to the respondents. The participants agreed that SMS ads should be sent at specific hours, according to consumers’ activities. This means that preferences would be different for each individual. The participants emphasized that the volume of ads should also be limited. It appeared that even one ad a day can be considered excessive; on average a maximum of 2-4 ads per week seemed to be acceptable. Information preferences. Most of the participants enjoyed the idea of location-based services, because it is relevant to them as well as personalised, even if it could generate intrusion. For example: It can be convenient as well because if you go to foreign place you don’t know where the bus stop is, to get a message would be able to look at where you’re going . . . it is easy to use (R). Sometimes you go for shopping just to enjoying your time you don’t want to be disturbed. For me receiving SMS is more like disturbing me than attracting me (P).

Other participants added that they would not mind giving permission for personalised ads and even paying for services when they are highly relevant to them or clearly beneficial: If you are in the middle of a traffic jam and you want to know the road you could take, I’d pay for that. I don’t mind it is very useful (S). I’ve got a friend who receives scores about football matches . . . For me it would be like movies because I love movies, to know which kind of movie is out this week (P). There is a thing on Teletext – you can sign for a thing like golf news. I’m quite interesting in golf. I’d do that one and I’d pay for it (R). It’s depends on the situation. I’ve sometimes text messaged regarding night clubs “If you share this message you get a free entre´e” [or] “if you want to make a reservation call this number”. Those are the messages where you could call the number because you want to have a night out. But not if it is for a product (R).

Summary of factors affecting willingness to give permission From the focus group findings, our participants confirmed the impact of the factors identified in the literature synthesis above. Based on their answers, we can express to some degree the expected results of the quantitative analysis concerning the conscious variables. We made no changes to the research model. Quantitative findings In this section, we summarise the statistical analysis from the survey. First, we examine the descriptive statistics. Second, we test the scenarios in the model. Descriptive statistics The respondents were typically aged in their early 1920s and with an approximate balance of male and females. In our sample, respondents used text messaging largely for personal communication (72 per cent), followed by competitions and polls (Figure 3).

SMS advertising, permission and the consumer

7% 4% personal communications 17%

competitions

825

polls

72%

general information (weather, news…)

Figure 3. Uses of text messaging

It was important for 87.8 per cent of survey respondents to give permission before receiving text messages ads. Some 83 per cent of respondents delete unsolicited ads and only 11.7 per cent like them. Moreover, 78 per cent of respondents are not willing to pay even if the ad is relevant to them. The favourite channel for SMS advertising is the cell phone operator (82 per cent), followed by specialised information service companies (12 per cent), and agencies (6 per cent). The preferred form of the contract is mainly divided between online and SMS-based (both 41.8 per cent) versions (Figure 4). Table II presents the findings for contract requirements. The most important conditions for opt-in are the possibility to withdraw at anytime and the applicability of the term of the contract to an eventual third party. Time and location are less important although still notable. 2%

15%

formal hard copy 42%

online contract direct SMS telephone contract

Figure 4. Preferred form of contract

41%

Possibility to withdraw at any time The possibility to choose whether or not your personal data can be given to a third party The frequency of the ads The applicability of the same term of contract to the eventual third party The time when you would receive ads The location where you would receive ads

Percentage of respondents

Rank

95.2

1

95.0 89.2

2 3

88.6 71.0 58.2

4 5 6

Table II. Contract requirements

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The personal information that consumers are most willing to surrender are their gender (26.9 per cent), age (23.8 per cent) and occupation (16.3 per cent). The personal information that they are not willing to provide include bank details (0 per cent), form of payment (1.3 per cent) and their telephone number (1.3 per cent). The information that respondents are most willing to receive are, respectively, weather (16.8 per cent), traffic (12.9 per cent), sport (10.9 per cent), news (10.9 per cent) and entertainment (7.9 per cent). Scenario-based analysis This part of our analysis relates to the conscious factors affecting consumers’ willingness to give permission (as identified in the previous phases). Overall, the willingness to give permission was much lower than expected (Table III), averaging only 1.56 for all scenarios. Only scenario 1 was supported by the data. The highest willingness to give permission to receive SMS ads occurs when consumers have a high control over opt-in conditions, when the SMS ad is relevant and when the brand is familiar. Scenario 1 was found to be acceptable on average, although 20 per cent of respondents were still reluctant to give permission and 10 per cent refused. At the opposite end of the spectrum, the lowest willingness to give permission was when all the variables were low (scenario 8), with on average 90 per cent of respondents refusing to give permission. According to these results, the most important variable for consumers appears to be the relevance of the SMS ad, as confirmed by scenarios 4 and 7 and the total score (which refers to the sum of means for all “high” variable scenarios). The respondents were more likely to refuse permission when the ad was irrelevant and to accept when the ad was relevant despite unfamiliarity with the brand and low control over opt-in conditions. The second most important variable was control over opt-in conditions, as shown in scenarios 3 and 5. The participants were more likely to refuse permission when they had no control over opt-in conditions, even though the brand was familiar and the ad relevant to them and to accept permission even if the ad was irrelevant and the brand unfamiliar.

Table III. Scenario analysis

Scenario

Control opt-in SMS ad Brand conditions relevance familiarity Expected

1

High

High

High

2

High

High

Low

3 4 5

High High Low

Low Low High

Low High High

6 7

Low Low

Low High

High Low

8 Total score

Low 7.58

Low 7.66

Low 6.62

Mean Rank Obtained

Accept enthusiastically Accept

2.82

1

Accept

2.2

2

Refuse Refuse Accept reluctantly Refuse Accept reluctantly Refuse

1.24 1.32 1.36

6 4 3

Accept reluctantly Refuse Refuse Refuse

1.12 1.28

7 5

Refuse Refuse

1.12

8

Refuse

Finally, the least important variable in our study brand familiarity, as illustrated in scenarios 6 and 2. When the brand was unfamiliar, the respondents still gave permission because they had control over opt-in conditions and the ad was relevant to them. However, they refused permission even if the brand was familiar as soon as they had low control over opt-in conditions and low relevance from the ad.

SMS advertising, permission and the consumer

Conclusions Overall, the findings show us that consumers’ perceptions of SMS ads are rather negative. The negative attitude toward SMS ads, especially when unsolicited, implies that marketers have a lot of work to do to make SMS ads more popular and attractive to young people. When designing an opt-in contract, marketers should avoid asking for information that consumers are not willing to provide – which our study suggests may include landline telephone numbers or financial details – in order to avoid a negative attitude or raising consumers’ suspicion. The disclosure of personal information without the customer’s consent is a major concern and can easily damage company image. To appeal to respondents, marketers must adapt their ads to individual use of text messaging and to areas of interest. Marketers should try to find a single point that regroups all of the permission threads for ads from different sources so that consumers will not have to repetitively answer whether or not they wish to give permission for every ad they receive. Companies that launch an opt-in SMS advertising campaign should register with cell phone operators or specialised SMS information services to reach the maximum number of consumers. These companies can act as filter for unsolicited SMS ads. By design, the study is limited in its scope. While the student population is a core target market for operators and advertisers, further studies should examine a broader sample both in the UK and overseas. Further, the unconscious variables omitted from this study are clear candidates for future investigation, as are issues of pricing, given that ads are usually free but may have implicit value to the recipient.

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References Ajzen, I. (1991), “The theory of planned behaviour”, Organizational Behavior and Human Decision Processes, Vol. 50, pp. 179-211. Akaah, I.P., Korgaonkar, P.K. and Lund, D. (1995), “Direct marketing attitudes”, Journal of Business Research, Vol. 34 No. 3, pp. 211-9. Barnes, S.J. (2002), “Wireless digital advertising: nature and implications”, International Journal of Advertising, Vol. 21 No. 3, pp. 399-420. Barnes, S. and Scornavacca, E. Jr (2003), “Mobile marketing: the role of permission and acceptance”, Proceedings of the Second International Conference on Mobile Business, Vienna, Austria. Barwise, P. and Strong, C. (2002), “Permission-based mobile advertising”, Journal of Interactive Marketing, Vol. 16 No. 1, pp. 14-24. Bauer, H., Barnes, S.J., Neumann, M. and Reichardt, T. (2005), “Driving consumer acceptance of mobile marketing: a theoretical framework and empirical study”, Journal of Electronic Commerce Research, Vol. 6 No. 4, pp. 181-92. Bellman, S., Johnson, J. and Lohse, G.L. (2001), “To opt-in or opt-out? It depends on the question”, Communications of the ACM, Vol. 44 No. 2, pp. 25-7.

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Carroll, A., Barnes, S.J. and Scornavacca, E. Jr (2005), “Consumers’ perceptions and attitudes towards SMS mobile marketing in New Zealand”, Proceedings of the Fourth International Conference on Mobile Business, Sydney, Australia, 11-13 July, pp. 434-44. Chaffey, D. (2003), E-Business and E-Commerce Management, Prentice-Hall, London. Creswell, J.W. (2003), Research Design: Qualitative, Quantitative, and Mixed Approaches, Sage, London. Dickinger, A., Scharl, A. and Murphy, J. (2005), “Diffusion and success factors of mobile marketing”, Electronic Commerce Research and Applications, Vol. 4 No. 2, pp. 159-73. Dickinger, A., Haghirian, P., Murphy, J. and Scharl, A. (2004), “An investigation and conceptual model of SMS marketing”, Proceedings of the 37th Hawaii International Conference on System Sciences, Hawaii, January. Enpocket (2005a), “Direct Response Report”, available at: www.enpocket.co.uk (accessed 10 February 2006). Enpocket (2005b), “Consumer Preferences Report”, available at: www.enpocket.co.uk (accessed 10 February 2006). Enpocket (2005c), “Brand performance of SMS advertising”, available at: www.enpocket.co.uk (accessed 10 February 2006). Godin, S. (1999), Permission Marketing: Turning Strangers into Friends, and Friends into Customers, Simon and Schuster, New York, NY. Hoyer, W.D. and MacInnis, D.J. (2004), Consumer Behavior, Houghton Mifflin, New York, NY. Hristova, N. and O’Hare, G. (2004), “Ad-me: wireless advertising adapted to the user location, device and emotions”, Proceedings of the 37th Hawaii International Conference on System Sciences, Hawaii, January. Jelassi, T. and Enders, A. (2004), “Leveraging wireless technology for mobile advertising”, Proceedings of the 12th European Conference on Information Systems, Turku, Finland, 14-16 June. Jupiter Research (2004), Wireless Market Forecast, 2004 to 2009, available at: www. jupiterresearch.com/ (accessed 7 February 2005). Kotler, P., Armstrong, G., Saunders, J. and Wang, V. (2002), Principles of Marketing: European Edition, Prentice-Hall, London. Krishnamurthy, S. (2001), “A comprehensive analysis of permission marketing”, Journal of Computer Mediated Communication, Vol. 6 No. 2, available at: www.ascusc.org/jcmc/vol6/ issue2/krishnamurthy.html (accessed 10 February 2006). Milne, G.M., Boza, M.E. and Rohm, A. (1999), “Controlling personal information in marketing databases: a consumer perspective”, Proceedings of the American Marketing Association Winter Meeting. Patton, M.Q. (2002), Qualitative Research and Evaluation Methods, Sage, Thousand Oaks, CA. Petty, R.D. (2000), “Marketing without consent: consumer choice and cost, privacy and public policy”, Journal of Public Policy & Marketing, Vol. 19 No. 1, pp. 42-53. Phelps, J., Wowak, G. and Ferrell, E. (2000), “Privacy concerns and consumer willingness to provide personal information”, Journal of Public Policy & Marketing, Vol. 19 No. 1, pp. 27-41. Saunders, M., Lewis, P. and Thornhill, A. (2003), Research Methods for Business Students, Prentice-Hall, London. Sheehan, K.B. and Hoy, M.G. (2000), “Dimensions of privacy concerns among online consumers”, Journal of Public Policy & Marketing, Vol. 19 No. 1, pp. 62-73.

Tezinde, T., Smith, B. and Murphy, J. (2002), “Getting permission: exploring factors affecting permission marketing”, Journal of Interactive Marketing, Vol. 16 No. 4, pp. 28-36. Ververidis, C. and Polyzos, G. (2002), “Mobile marketing using location-based services”, Proceedings of the First International Conference on Mobile Business, Athens, Greece. Wu, J. and Wang, S. (2005), “What drives mobile commerce? An empirical evaluation of the revised technology acceptance model”, Information & Management, Vol. 42 No. 5, pp. 719-29. Further reading Faulkner, X. and Culwin, F. (2005), “When fingers do the talking: a study of text messaging”, Interacting with Computers, Vol. 17 No. 2, pp. 167-85. Milne, G. and Gordon, M. (1993), “Direct mail privacy-efficiency trade-offs within an implied social contract framework”, Journal of Public Policy & Marketing, Vol. 12 No. 2, pp. 206-16. Corresponding author Stuart J. Barnes can be contacted at: [email protected]

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Ragnar Schierholz, Lutz M. Kolbe and Walter Brenner Institute of Information Management, University of St Gallen, St Gallen, Switzerland Abstract Purpose – The bursting of the e-bubble affected expectations with regard to mobile initiatives and willingness to invest in them very negatively. Business managers request detailed and thorough analyses prior to engaging in mobile initiatives. The paper aims to present a method, with which mobile business can be introduced to the customer relationship management (CRM) field. Design/methodology/approach – The paper follows the design science paradigm as outlined by March and Smith, and Hevner et al. Findings – The findings provide a framework for the definition of a mobile CRM strategy derived from the corporate strategy, suggest a method for the identification and exploitation of the mobilization potential in CRM processes in line with the strategy, and provide guidance for the design of mobile information systems to support these processes. Research limitations/implications – The proposed method extends the body of available methods with a method for the introduction of mobile ISs into marketing, sales and service organizations. As design research, it does not strive for statistical generalization. The level of detail given in the elements of the method is to be increased in further research. Practical implications – The method helps to reduce risk and uncertainty of mobile CRM initiatives, since it provides a structured and consistent procedure for the definition of goals, the identification of potentials for the fulfillment of these goals as well as recommendations for the systematic exploitation of these potentials. Originality/value – With the application of this structured method, an organization should be able to avoid the pitfalls of technology-driven information technology initiatives which various companies have experienced, particularly with mobile technologies. Keywords Mobile communication systems, Relationship marketing, Customer relations, Business planning Paper type Research paper

Business Process Management Journal Vol. 13 No. 6, 2007 pp. 830-852 q Emerald Group Publishing Limited 1463-7154 DOI 10.1108/14637150710834587

Introduction In the late 1990s, at the peak of the e-commerce boom, overly optimistic expectations were geared towards internet-based commerce’s next level: mobile commerce (MC) or m-commerce (Feldman, 2000). After the e-commerce bubble had burst, m-commerce, too, failed to meet those expectations, a prominent example being the Wireless Application Protocol (WAP) (Ramsay, 2001). Recently, mobile business (MB) and MC have begun to re-emerge as a promising field (Urbaczewski et al., 2003). Businesses now question the effectiveness of their (mobile) activities and investments more stringently than before. To ensure mobile activities’ success, a structured method is required in respect of mobilization. A common approach to managing problems’ complexity, is the division of the problem space into multiple subspaces with limited, manageable interdependencies

(Scheer, 1995; Ferstl and Sinz, 1998). The business engineering (BE) approach as ¨ sterle (1995, p. 353) is a framework that is specifically geared towards the defined by O subdivision of problems regarding business models’ transformation in order to adapt to the information age. An important aspect of designing business models is the interaction between businesses and their customers, which includes the management of customer-related information and business activities. This field of business is often referred to as customer relationship management (CRM). The nature of business-to-customer interaction includes business processes spanning multiple locations (e.g. back office functions within the business’ offices and direct customer contact at the customer’s site). Applying MB principles and technologies to the CRM field does therefore seem to have reasonable potential. No structured method has yet been defined for the design of mobile solutions in the CRM field that will cover all of a comprehensive framework’s perspectives, such as the BE framework. In this paper, we analyze different approaches to the design of MB, each of which address a different part of the BE framework, and from these synthesize a comprehensive method. Research methodology and structure Since, the research goal is the construction of a new method, we follow the design science approach as described by March and Smith (1995) and Hevner et al. (2004). “Design science [. . .] creates and evaluates IT artifacts intended to solve identified organizational problems”: In the design-science paradigm, knowledge and understanding of a problem domain and its solution are achieved in the building and application of the designed artifact. [. . .] Such artifacts are not exempt from natural laws or behavioral theories. To the contrary, their creation relies on existing kernel theories that are applied, tested, modified, and extended through the experience, creativity, intuition, and problem solving capabilities of the researcher (Hevner et al., 2004).

We applied an inductive approach to the design of the method that we present in this paper. The current need for a structured method in respect of mobilization was revealed in an empirical study conducted by the authors’ team: 60 percent of the respondents indicated that they were planning, or already implementing, a mobile CRM extension (Salomann et al., 2005). None of these respondents indicated that they would use or had used a structured method in the process. We used the BE framework to structure such a method’s requirements, subsequently analyzing the existing literature for contributions. The analysis yielded several approaches, each addressing a subset of the identified requirements. These approaches do not fit together smoothly because there are missing links between the different elements, e.g. business process analysis approaches do not indicate how benefits should be prioritized to provide a strategy-aligned solution. Following Hevner et al. (2004), we begin with a description of the problem space in the second section. This includes a description of our BE research framework, a description of the CRM concept and MB concepts in general as well as, specifically, MB and CRM’s potential intersections. As suggested by March and Smith (1995), we analyze existing research that is relevant to our problem space in the third section. In the fourth section, we present a comprehensive method for the mobilization of CRM

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that covers all of the BE approach’s perspectives by combining and linking the elements described in the third section. In the fifth section, we summarize the results and the possible implications. The last section concludes the paper and outlines options for further research. Background Business engineering BE is a structured approach to managing the transformation of businesses into a business model suitable for the information age (O¨sterle, 1995, p. 13). It divides a business transformation exercise into discrete projects, or a project portfolio, and separates the project into the conceptual design and the management of the change involved. The conceptual design is then again subdivided into three levels (O¨sterle and Blessing, 2003): (1) On the strategy level, decisions regarding an enterprise’s long-term development have to be made. This comprises decisions regarding strategic alliances, the company structure, market services offered, customer segments addressed, and the distribution channels. (2) Within the processes level, strategic decisions are implemented. Processes produce a company’s products and services through the execution of a number of tasks with defined inputs and outputs. Questions to be answered in process development concern the planned process outputs, the optimal sequence and distribution of tasks, and the process management. (3) The execution of processes is supported by information systems (ISs) in the form of application software. The basis of ISs is information technology (IT), consisting of hardware, networks, and operating systems software. Spanning all three levels, change management considers, among other things, the stakeholder groups, the profitability of the solution (the ROI analysis) and the project management (O¨sterle and Blessing, 2003). Although he does not refer to BE, Chen (2005) suggests similar building blocks for a methodology with which to build mobile computing applications, without specifically focusing on a particular type of mobile application (such as mobile CRM). Customer relationship management We define CRM as a complex set of interactive processes that aims to achieve an optimum balance between corporate investments and the fulfilling of customer needs in order to generate maximum profit. CRM’s origins can be traced to the relationship marketing (RM) management concept (Levitt, 1983), which is an integrated effort to identify, build up and maintain a network with individual customers for the mutual benefit of both sides (Shani and Chalasani, 1992, p. 34). RM is of largely strategic character, and lacks a holistic view of business processes, although they are regarded as important (Parvatiyar and Sheth, 2000). Strategically, we consider CRM as viewing customer relationships as an investment that will contribute to the enterprise’s bottom line. Customer relationships’ design and management are aimed at strengthening an enterprise’s competitive position by increasing customers’ loyalty. While this extends beyond the use of IT, IT is still an important enabler of modern CRM.

Apart from strategy-oriented approaches such as RM and other systems-oriented concepts, there are several CRM approaches with a special focus on business processes (Schulze et al., 2000). Generally, CRM processes not only require transactional data, which can be automatically collected and stored in relational databases, but also a significant amount of knowledge. Furthermore, CRM processes are usually complex and only structured to a certain extent. Consequently, they can be considered knowledge-intensive processes (Eppler et al., 1999; Schwarz et al., 2004). Besides, developing an integrated view of CRM processes, it is therefore critical to address the management of knowledge flows from and to the customer across all communication channels as well as to enable the use of the knowledge about the customers. A detailed classification and description of business processes in the CRM field, with a particular emphasis on knowledge intensity, is provided by Geib et al. (2005). In the past, advances in IT had a significant influence on CRM. Obviously, these were mainly focused on the IS layer and neglected their connections to CRM processes and strategy. The goal was to support the existing, isolated approach to dealing with customer relationships. With CRM philosophy aiming at creating an integrated view of the customer across the enterprise, these systems were connected and today form the building blocks of comprehensive, integrated CRM systems. According to the Metagroup, CRM systems can be classified into the following three sub-categories: (1) Operational CRM systems improve CRM delivery’s efficiency and support processes. They comprise solutions for marketing, sales and service automation. (2) Collaborative CRM systems manage and synchronize customer interaction points and communication channels. (3) Analytical CRM systems store and evaluate knowledge about customers for a better understanding of each customer and his behavior. Mobile business and mobile CRM Technological advancements in mobile communications enable new ways of doing business (Raisinghani, 2002), often referred to as “mobile business” or “mobile commerce”. While Turowski and Pousttchi (2003) do not distinguish between the two but rather use the term “mobile commerce,” Lehner (2003) and Zobel (2001) define “mobile business” as the application of mobile technologies to improve or extend business processes and open new market segments. They differentiate between “mobile business” and “mobile commerce,” the latter being a rather subordinate MB field focusing on the handling of transactions. With a similar understanding of the term, Mo¨hlenbruch and Schmieder (2001) conceptualize MB in analogy to electronic business and distinguish fields such as mobile supply chain management, mobile procurement, mobile CRM, etc. We follow this more general understanding and concentrate on mobile CRM, which we define as mobile technologies’ application in order to support CRM processes (mCRM). There is a plethora of publications regarding typical benefits of mobile technologies and MB or MC. The subject has been approached both from a more technical point of view as well as from a business perspective. Therefore, we derive two classifications of typical benefits from available literature. The first classifies the technical advantages of MB over web-based e-commerce as known so far (Table I).

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Benefit

Definition

Ubiquity

Clarke (2001), Wohlfahrt (2001), Anckar and D’Incau (2002a, b), Balasubramanian et al. (2002), Lehner (2003, 11ff.), Pousttchi et al. (2003), Laukkanen (2005) and Laukkanen and Lauronen (2005) Clarke (2001), Wohlfahrt (2001), Mobile technologies allow for the contextualization of ISs. The context Lehner (2003, 11ff.), Pousttchi et al. may include the identification of the (2003, 11ff.), Wamser (2003), Siau et al. individual user as well as geographic (2004b), Laukkanen (2005), Laukkanen and Lauronen (2005) and Skelton and position and physical environment Chen (2005) Mobile technologies allow for greater Clarke (2001), Hartmann and Dirksen (2001), Anckar and D’Incau (2002a, b), interactivity in ISs, since they typically provide an “always online” Lehner (2003), Laukkanen (2005, 11ff.) connectivity and have shorter set up and Laukkanen and Lauronen (2005) times (e.g. for booting, “instant on”) For certain tasks, mobile technologies Kenny and Marshall (2000), Perry et al. (2001), Wohlfahrt (2001), Anckar and can offer a higher degree of convenience as compared to standard D’Incau (2002a, b), Gebauer (2002, van der Heijden and Valiente (2002), desktop or laptop PCs. This is partially due to limited functionality, Lehner (2003, 11ff.), Gebauer and thus reduced complexity and higher Shaw (2004) and Siau et al. (2004b) ease of use. For example, most users are capable of using most features of their cell phones (voice and text communication, address book, etc.) while most users only use a fraction of their PCs functionality Pousttchi et al. (2003), Wamser (2003), Mobile technologies have gained Han et al. (2005), Wolf and Wang multimedia functionality over the (2005) and Kung et al. (2006) years, e.g. most cell phones shipped today include a digital camera, current models even with sufficient resolution for quality snapshots

834 Context sensitivity

Interactivity

Convenience and familiarity

Multimediality Table I. Overview of technical benefits of mobile technologies

References

Mobile technologies allow for ISs to become accessible from virtually any place and at virtually any time

These technical advantages do not yet contribute any business value as such, but they need to be transformed to some business process improvements. Typical types of such business process improvements realized by applying MB technologies are listed in Table II. Typical examples of mCRM are mobile marketing (MM), mobile sales force automation (MSA) and mobile field service (MFS), or mobile customer service (MCS). MM takes advantage of the ubiquity, context sensitivity and interactivity to make campaigns more entertaining and effective (Balasubramanian et al., 2002; Reichold et al., 2003). MSA and MFS support sales agents and field service agents (Turowski and Pousttchi, 2003, p. 196; BenMoussa, 2004), leveraging ubiquity and interactivity resulting in higher organization efficiency and individual productivity. MCS usually leverages ubiquity and interactivity, resulting in higher effectiveness and higher process transparency (Looney et al., 2004; Mallat et al., 2004; Kadyte, 2005).

Benefit

Definition

Flexibility

The ubiquity and interactivity of MB applications allow for the break-up of process structures. Activities in processes, which were previously bound to location or time constraints, can now be dispatched more flexibly. Unforeseeable events can be responded to more flexibly and timely, since decision makers and action takers can be informed and immediately wherever they are and can be involved in the emergency response interactively

Organizational efficiency

Individual productivity and effectiveness

Transparency

References

Fleisch (2001), Hartmann and Dirksen (2001), Perry et al. (2001), Wohlfahrt (2001), Anckar and D’Incau (2002a, b), Fleisch and Bechmann (2002), Fleisch et al. (2002), Gebauer (2002), Humpert and Habbel (2002), Reichwald and Meier (2002), van der Heijden and Valiente (2002), Wamser (2003), Gebauer and Shaw (2004), Nah et al. (2004), Siau et al. (2004b), Laukkanen (2005), Laukkanen and Lauronen (2005) and Nah et al. (2005) Hartmann and Dirksen (2001), The ubiquity and interactivity of MB Perry et al. (2001), Wohlfahrt applications allows for higher operational efficiency since the gaps between information’s (2001), Anckar and D’Incau (2002a, b), Fleisch and Bechmann point of creation and its point of action can be bridged, e.g. field agents can enter information (2002), Fleisch et al. (2002), electronically and directly to corporate ISs, thus Gebauer (2002), Humpert and duplicate entry can be eliminated and backend Habbel (2002), van der Heijden and Valiente (2002), Wamser processing of the information can begin (2003), Gebauer and Shaw (2004), immediately. Information is available ubiquitously and immediately and can be used in Nah et al. (2004), Siau et al. (2004b), Kadyte (2005), geographically dispersed processes and Laukkanen (2005), Laukkanen activities and Lauronen (2005), Nah et al. (2005) and Skelton and Chen (2005) Perry et al. (2001), Wohlfahrt Context sensitivity, interactivity as well as convenience and familiarity of MB applications (2001), Anckar and D’Incau (2002a, b), Gebauer (2002), van allow for a greater level of effectiveness of der Heijden and Valiente (2002), business processes and a higher individual Wamser (2003), Gebauer and productivity. Interactive and context sensitive Shaw (2004), Nah et al. (2004), offerings can increase the effectiveness of Siau et al. (2004b), Kadyte (2005), marketing campaigns. Interactive and Nah et al. (2005) and Skelton and ubiquitous control mechanisms can increase Chen (2005) effectiveness of machines since they can send alerts in case of errors. Similarly individual productivity of employees can be increased since they can use waiting time more effectively (e.g. in airport terminals Wohlfahrt (2001), Reichwald and Ubiquity and interactivity of MB processes allow for the increase of process transparency. Meier (2002), Wamser (2003), Chen (2005), Kadyte (2005), This decreases costs for process control and Laukkanen (2005) and customer satisfaction. Transparency of Laukkanen and Lauronen (2005) information can lead to higher market transparency and thus more efficient market mechanisms, e.g. customers can compare prices online while in a retail store (continued)

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Table II. Overview of business benefits of MB and MC

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Benefit

Definition

References

Entertainment

Especially, multimediality but also ubiquity and interactivity increase the entertainment gained from MB applications. Entertainment content typically is multimedia-based in nature, thus entertainment devices need to be multimedia-enabled. Additionally, mobilization of everyday life leads to more mobile and spontaneous entertainment needs

Anckar and D’Incau (2002a, b), Humpert and Habbel (2002), Reichwald and Meier (2002), Han et al. (2005), Wolf and Wang (2005), Wong and Hiew (2005), Dickinger et al. (2006) and Park (2006)

Related work In this section, we analyze existing approaches which contribute to the mobilization of CRM. Following the BE framework, the analysis will be structured into strategy, process and ISs. Change management is supposed to be an ongoing effort associated with activities on all these layers (see above). In order to explicitly analyze change management approaches, we will deal with these in a separate section. Strategy perspective Zetie (2002) outlines a mobile enterprise strategy’s essential elements: identification of business values, identification of essential mobile services, definition of the required level of mobility and “wireless-ness” a strategic choice of devices and platforms, including an integration architecture, and, finally, a set of system management and usage policies. The choice of devices and platforms as well as that of policies will most likely be closely linked to a general IT strategy rather than being specific for a mobile CRM strategy. The business values and core services can obviously be specific to CRM, while a clear understanding of the required level of mobility and “wireless-ness” also depends on the application domain. Clarke (2001), for example, envisages four types of general value propositions of MC and MB (ubiquity, localization, personalization, convenience) that have specific instantiations in CRM, e.g. ubiquity could be a sales agent having access to a customer’s history from anywhere. A classification of MB value propositions is listed in Table II. Colgate and Danaher (2000) point out the importance of not only having a customer relationship strategy, but also executing it properly. Following the BE framework, the strategy is implemented by choosing proper processes and by redesigning them in compliance with the strategy and also by suitably communicating the strategy to the relevant stakeholders. Lockamy and Smith (1997) suggest linking strategy, processes and IT and provide principles with which to do so. Following these principles and building up on the works of Treacy and Wiersema (1994), Crawford and Mathews (2001) and Schierholz et al. (2005) outline a framework of customer-oriented strategy goals and provide recommendations regarding what to look for in processes to be mobilized. This framework identifies five high-level value propositions. Companies are advised to select one primary and one secondary goal and focus on the mobilization of processes with specific properties: (1) Price. Companies offering a low, transparent and fair price in comparison to others in the market should mobilize processes in which the business

(2)

(3)

(4)

(5)

information’s point of creation and point of action differ. This approach to mobilization avoids breaches in time and space, or media. Customer intimacy. Companies offering an uncomplicated service on a personal level, thus establishing a one-to-one relationship with customers, should mobilize processes which support the customers’ needs in spontaneous and unforeseeable situations. Accessibility. Companies offering simple, anytime-anywhere-anyhow access to products should mobilize processes which extend the communication channels between them and their customers. Innovativeness. Companies that are perceived as innovators or early-adopters of new, innovative technologies should mobilize processes with a strong external visibility. Product quality. Companies offering the best product features in the market cannot support their strategy easily through mobilization unless they offer products closely related to mobile technology or knowledge-intensive services.

This approach provides a starting point for a mobile CRM method which covers Zetie’s (2002) first two prerequisites and should be completed with elements for process analysis and design, system design and selection as well as change management. Business processes perspective Valiente and van der Heijden suggest a five-step method with which to analyze business processes in order to identify mobilization potential (van der Heijden and Valiente, 2002). Basically, they suggest mapping existing processes with a standard process modeling method, adding location and mobility information to all activities and identifying the information dependencies between location and mobility. Afterwards, the mobility of the actors in the model is increased (or “complicated” as Valiente and van der Heijden call it), which is then supposed to indicate potential for mobilization, if there are dependencies between the mobile actors or actors at differing locations. In a final step, these potentials should be evaluated for exploitability by means of mobile ISs. However, Valiente and van der Heijden do not suggest a way of transforming the artificially complicated process model into realizable processes. Moreover, their method does not cover the focus on specific goals which should be derived from a pre-set strategy. The compliance with desired goals only occurs in a final step. Therefore, virtually all processes within an organization would need to be analyzed, which seems impracticable. With their mobile business process landscaping (MBPL) method, Gruhn et al. aim to overcome this weakness (Gruhn and Book, 2003; Ko¨hler and Gruhn, 2004). They suggest the multi-layered modeling of business processes, beginning on a macro layer that describes the core business processes on a level such as “there is a sales process” (Ko¨hler and Gruhn, 2004, p. 242). They suggest identifying dependencies between processes and organization units by adding location and mobility attributes, similar to that suggested by Valiente and van der Heijden. The next levels of analysis are the function level, the activity level and, finally, the information object level. After modeling each level, only those elements of the model in which a mobility potential has been identified, need to be investigated further. In our opinion, there is the risk that, in the beginning, potentials will be overlooked in MBPL due to the abstraction level being

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too high, which means that the dependencies between units will be internalized into a larger unit and will, consequently, not appear in the model. For example, on the level of “there is a sales process,” the dependencies between the field sales agents and their back-office functions are internalized. There is obviously a conflict between the goals of practicability and the accuracy of the modeling method. Davenport et al. (1996) focus specifically on the reengineering of knowledge-intensive processes and find that the involved individuals will most likely not accept an overly structured approach. Since, we have already identified CRM processes as knowledge intensive, this should also be applied in our context. A designed solution’s acceptance is more likely to be achieved if the final users are involved in the design process. Peffers and Tuunanen (2005) thus suggest applying participative methods, such as the critical success chains method, to leverage the available knowledge within the organization. Processes consist of activities and often it is not the entire process which is mobilized, but only certain activities within the process. This is reflected in the goal of breaking down the process as declared by Valiente and van der Heijden as well as by Gruhn et al. Several authors suggest task characteristics to be included when modelling mobile applications or services. These can be combined to the following framework depicted in Table III. Information systems perspective Traditional IS are typically designed for stationary use and are thus based on highly standardized hardware components such as desktop and laptop PCs. Hence, the IS design can focus on the software components and consider the hardware given and consequently external to the system (this even applies to parts of the software such as the operating system). However, this does not hold true for a mobile IS. The choices for access devices are numerous and heterogeneous in features and functionality. The choice made impacts the further design decisions, since the devices are not standardized to a level equal to that of desktops. The options include the laptop, already known from stationary IS, or its “twin,” the TabletPC. More common choices are handheld devices such as personal digital assistants and cellular phones as well as a combination of the latter, the so-called smartphones. Analysts such as Forrester Research regularly provide overviews and classifications of such devices (Golvin et al., 2004). The choice of device should obviously be made with respect to the intended application context (Allen and Wilson, 2004; Haugset, 2004). As far as the software platform is concerned, the device decision usually determines the device platform as well, but for a mobile IS there are still further multiple choices. Vendors such as SAP, Siebel and Microsoft offer mobile clients for their CRM products, which can either be run locally on different platforms, such as PalmOS or Windows Mobile (in connected or disconnected mode), or on a mobile web browser as a thin client (only in connected mode). This already implies suitability in respect of different tasks as defined in the process analysis. Obviously, applications which can also be run in disconnected mode support a wider range of locations and mobility requirements, since despite all ubiquity promises wireless networks (cellular or other) are not reliably available in every situation.

Characteristic

Definition and values

References

Intention to use

The intention for the usage of an application or service can be information access, data processing, notification, or two-way communication The task for which the mobile application or service is applied can be of the type leadership, routine task, need for exception handling, interactivity, interdependence, or mobility The mobile application’s or service’s delivery or usage is either predictable or unpredictable (i.e. in reaction to exceptional events) A mobile application or service can be offered for one specific user group or customer segment, for several or all users or customer segments. Sometimes it is provided for several user groups or customer segments with different parameter values The mobile application or service is either initiated by the enterprise’s system (push), or by the customer (pull). A mobile application or service architecture can be, e.g. of the type smart client, which is installed on the customer’s device, messaging via SMS, or wireless internet via WAP This attribute depends on various mobile application characteristics. We suggest the focus to be laid on the amount of text the customer needs to type in, the number of interactions, the difficulty and number of parameters to remember (e.g. username, password). Values are high (one interaction, nothing or small volume text to type in, nothing to remember), medium (multiple interactions, medium to high-volume text to type in, few parameters to remember) and low (multiple interactions, high-volume text to type in and more parameters to remember Categories of technical benefits are ubiquity, context sensitivity, interactivity, convenience and familiarity as well as multimediality as explained in Table I, business process benefits are flexibility, efficiency, effectiveness, transparency and entertainment as explained in Table II

Gebauer (2002) and Gebauer et al. (2004, 2005a, b)

Task type

Predictability

Customer segment or user group

Communication type Application type

Ease of use

Benefits to the user

BenMoussa (2004) and Gebauer et al. (2004, 2005a, b)

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Anckar and D’Incau (2002b) and Schierholz et al. (2006) Schierholz et al. (2005, 2006)

Gebauer (2002), Gebauer et al. (2004, 2005a, b), and Schierholz et al. (2005) Gebauer (2002), Mallick (2003, pp. 89-111) and Gebauer et al. (2004, 2005a, b) Gebauer (2002), Gebauer et al. (2004, 2005a, b), Lee et al. (2004) and Siau et al. (2004a)

Tables I and II

Table III. Characteristics of mobile applications and services

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Besides, clients for mobile users, their integration with the backend enterprise applications is crucial to fully exploit the mobile potential. Standard offerings, such as SAP, Siebel or Microsoft’s mobile CRM, integrate via their enterprise’s CRM systems. However, examples from the industry are often based on custom-developed solutions, for which there are multiple technical approaches to integration. Sairamesh et al. (2004) propose an architecture which specifically takes disconnection, synchronization and application context into consideration. A prototypical implementation of their architecture, based on Java technologies, promises a generic and flexible applicability. Mobile middleware is already available as well, examples being the Java-based IBM everyplace product family, or the.NET-based Microsoft framework which is also available in a compact edition suitable to mobile devices. An implementation that integrates a complex domain-specific enterprise application such as CRM, is, however, still lacking. Shepherdson et al. (2003) suggest a framework called “mPower” which is based on multi-agent technology and provides a reference implementation that supports a mobile workforce. Another approach is to extend stationary workflow management approaches to distributed and mobile workflows, thus providing a formal method with which to model these workflows based on the business process execution language. None of these approaches provide a link to the process analysis as described above, though. Consequently, the activities used in the system model have not been methodologically derived, and the attributes included in the description are mostly technology driven instead of reflecting business requirements. Change management perspective Multiple studies on consumer acceptance of mobile services and applications have been performed. It has been suggested that consumers’ attitude towards MM is dependent on marketing messages’ informativeness (enhanced by personalization and localization) and entertainment (defined by perceived joy, perceived playfulness and flow). Anckar et al. (2003) analyzed consumers’ adoption of MC applications and found that adoption/rejection decisions were determined more by the perceived benefits than by the perceived barriers on which models, such as the technology acceptance model (Davis, 1989), focus. Constantiou et al. (2004) support this by finding that the price of mobile services (obviously the counterpart of its value) “remains the most important attribute.” Very little research investigates the adoption of mobile applications in a business context. In this context, factors such as employer policies can obviously override individual preferences. Nevertheless, user acceptance is a critical issue. Haugset (2004), for example, finds that smaller devices are not necessarily better and that “supporting nomadic work must be done in agreement with the overall work context.” Allen and Wilson (2004) support this as well as a result of experiences with a mobile IS for a UK police force. In both works, case studies reveal that failing to analyze mobile workers’ actual work contexts leads to the unintended use of the mobile IS, or even flat refusal to use it. Lee et al. (2004) apply Goodhue and Thompson (1995) task-technology-fit model to explain mobile applications’ performance. They find that individual user characteristics play an important role in mobile applications’ adoption and resulting performance. None of these models provide recommendations on how to address

mobile applications’ critical design or change management factors during their introduction. Glissmann et al. (2005) propose a participative method for the design of mobile user interfaces which emphasizes the importance of involving the end-user in the design, and covers the choice of devices, client type (online vs offline vs hybrid) and integration platform according to the task requirements. Nevertheless, measures that should accompany the transformation, such as communication and employees’ modified objectives, have not as yet been conceptualized.

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A method for the mobilization of CRM In the previous section, we analyzed existing works that could contribute to a comprehensive method with which to mobilize CRM. In this section, we will synthesize a comprehensive method from these approaches and fill the identified gaps by linking the different pieces. Since, change management is an ongoing task that accompanies the activities at all other BE levels, the change management aspects adapted from section four will be described within the strategy, process and ISs’ perspective. Figure 1 shows an overview of the method.

- Explicate the customer value proposition - Define primary and secondary focus - Derive strategic mobilization goals - Derive process properties for the identification of potentials - Select process(es) with highest mobilization potential

System

Process

Strategy

Strategy perspective To cover Zetie’s (2002) first two essential requirements, we apply the approach as suggested by Schierholz et al. (2005). The business values to be realized by the mobilization of CRM should be derived from the general market strategy and the company’s customer value proposition: one primary value proposition and one secondary should be selected. With regard to the primary proposition, the company should strive for an undisputed market leadership in customers’ perception, while, it is sufficient to be better than the market average as far as the secondary proposition

- Model the business processes, including activity descriptions covering location, time and information dependencies - Describe mobilized activities and the information requirements - Derive task-technology-fit short lists for technology choices - Match existing CRM capabilities to mobile requirements - Select a device, platform and client type for the mobilization of information objects

Figure 1. Overview over the proposed method

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is concerned. In all other categories, it is necessary to maintain market average. This customer value proposition must be clearly communicated to all employees in order for them to act accordingly (Colgate and Danaher, 2000). This can be achieved by explicating the market strategy as used in the framework and according to which Schierholz et al. (2005) classify their cases. By following these authors’ recommendations, the properties which qualify business processes for mobilization can be derived from the strategic focus. To allow for the best possible match of these goals as well as the best possible common understanding of their explication, key people from all stakeholder groups should be involved in this process as suggested by Peffers and Tuunanen (2005). This includes the general management, who sets the corporate strategy, the sales and service personnel, who will eventually have to execute the strategy using the newly designed mobile IS, and the IT management, who will be responsible for the mobile IS’s implementation, operation and maintenance. Since, the customers are (or should be) the focus of all CRM activities, it would be ideal if key customer representatives could also be involved. This could prevent business models or value propositions being defined which customers do not desire or are unwilling to pay for. For obvious reasons, this will be hard to implement in mass markets though. It should be explicitly mentioned that the values which were not chosen as primary or secondary propositions, should still be taken into consideration, because a mobile initiative might be required to maintain the market average. All the above stakeholders should define and prioritize the mobilization initiative’s goals. The final document of the strategy analysis is the explicit customer strategy, including the prioritized customer value propositions, along with a prioritized list of macro-level processes with potential for mobilization (selected according to the qualifying properties identified by Schierholz et al. (2005)). Business process perspective This prioritized list of processes for mobilization should be the input for the further business process analysis. By beginning with the strategic selection of processes, the extensive analysis and modeling of all processes in the enterprise can be avoided. We suggest using the MBPL approach as defined by Gruhn et al. as a methodology for the further process analysis, because its layers of abstraction allow manageable process modeling by drilling down from a rather strategic macro-level to an operational micro-level (Gruhn and Book, 2003; Ko¨hler and Gruhn, 2004). We do suggest, though, including stakeholders from the operational business unit and IT staff in the business processes’ modeling and in the identification of mobilization potentials. This is to prevent potentials from being overlooked due to the high-abstraction layers in the beginning. Consequently, staff members who are operationally involved in the processes should have an in-depth knowledge of the processes and should be able to point out dependencies that are underneath a level of abstraction early enough. To encourage staff members’ acceptance of newly designed processes, it appears important that they be allowed to influence the design process (Davenport et al., 1996). Beginning with a high level of abstraction, the selected business processes are modeled by using an extended standard process design language as suggested by Gruhn et al. The extension includes activities’ location and mobility requirements as well as the dependencies between model elements (e.g. actors, activities).

Time constraints should also be modeled to allow conclusions on how up-to-date the information in the process must be, e.g. having the previous day’s data could be sufficient; this would allow the nightly synchronization of data in pull communication while the requirement of real-time accuracy would require online access and possibly a push communication. Dependencies which connect elements in different locations, or with externally determined mobility (i.e. not self-chosen mobility are indicative of a mobilization potential). Mobility potentials should be modeled in increasing detail until the flow of information objects is modeled on the last level. The information objects used in these flows should then be described again, using a standard modeling language such as UML-class diagrams. These information objects also need to be connected to the ISs which handle them. Calendar entries are, for example, handled by a personal information management application as well as a corporate scheduling application while data warehouses usually hold customer master data. Once potentials have been identified, the involved information objects and ISs can be assumed to be mobile, and activities bridging the dependencies can be removed from the process. If, for example, an existing process involves a sales agent who begins his work day by picking up the latest customer histories as well as his daily schedule at the office, visits the customers on his schedule, makes appointments with them, modifies contracts, signs new contracts, etc. and finally returns to the office to enter the modified and new data into the enterprise systems, there are dependencies between the “visit customer” activity and the “customer histories” information objects, while the “visit the office” activities are bridging activities. By mobilizing the information objects, the bridging activity could be eliminated. The value of this mobilization potential should also be assessed in cooperation with the employees who are involved in the modified processes. The mobilization’s value lies in different dimensions (Clarke, 2001). It is possible that not all of these values could be easily converted into a financial benefit. The involved employees’ inputs should therefore be used to prioritize the potentials relatively. Furthermore, the values’ priorities should be matched with the strategic goals from the analysis described above. The final document of the process analysis stage should be a prioritized list of modified processes that includes the models as well as a detailed description of the newly designed activities (using the framework in Table III), the affected ISs and the required functionality within these ISs. Ideally, an explicit list of the modifications made should be compiled. Information systems perspective The description of the new mobile activities, as well as the information objects and IS functionality should be the input for the system design or system choice stage. In many cases, there will be some form of CRM system for stationary use, since a mobile CRM initiative is unlikely to be the first step in CRM. Consequently, the design of a mobile IS for CRM is usually the extension of an existing IS with a mobile interface. This is exactly the goal of the generic method developed by Glissmann et al. (2005), which now needs to be customized for CRM and connected to the process analysis described above. As a first step, Glissmann et al. (2005) suggest a requirements analysis to identify the mobile users, their personalization needs (e.g. a sales agent might want an overview of only those customers for whom he is responsible) and their information needs.

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These data could be taken directly from the documents produced in the business process analysis. Subsequently, the conceptual design includes decisions about the devices as well as the client type. These are dependent on the mobility and “wireless-ness” classification as well as the mobile activities’ time constraints as specified in the process analysis. A high degree of mobility, for example, requires small devices which allow single-hand use to enable usage on-the-go. Time constraints have an impact on the decision whether online access is required, or whether scheduled synchronization is sufficient. The activities’ location properties also influence both the device selection (e.g. in certain rough locations a ruggedized device is necessary) and the type of software client (e.g. in remote locations cellular or even W-LAN networks are not available, which therefore requires offline use of software). Finally, the physical design must take the information flows as described by the process analysis into consideration and must match these to produce user interfaces specifically geared towards the activities that are to be supported. With mobile devices’ typically limited input/output capabilities, certain functions’ low complexity and high specificity specifically lead to the user interface’s good task-technology-fit. Both the device and platform decision gain another level of complexity if the mobile IS under design targets consumers or other people external to the implementing company. Usually, there are no policies or standards governing these users’ choice of device or platform, which means that the client software is required to support virtually all devices and platforms available on the market, both now and in the foreseeable future. A customer would most probably be very dissatisfied if a service which he has subscribed to is not available on his device and/or platform, and a MM campaign’s effectiveness would be very limited if only a certain device or a certain platform is supported. In such cases, it is therefore highly recommended to focus on providing the client using widely available standards such as mobile e-mail, an short message service (SMS) service, mobile browsers, or the micro edition of the Java industry standard (J2ME). Similarly, constraints regarding choices increase if the stationary CRM solution is based on a standard product such as SAP, Siebel or Microsoft. These products all have a mobile edition which offers a standard set of features. The customization options are, however, far more restricted. This problem has already been noted in the literature on the sourcing of IT services, both in general contexts as well as specifically in the CRM context. If standard software is deployed, it is highly recommendable to adapt the processes as intended by the standard software vendor, since the costs of customization might exceed the benefits of cheaper standard software in these cases. During the design and implementation, we again highly recommend that end-users should be frequently involved in the early stages, e.g. by doing usability tests with early prototypes. The details of knowledge-intensive activities, which are also characteristic of CRM, are especially difficult to describe in a few structured attributes, thus the task-technology-fit and a mobile IS’s suitability for these activities can best be estimated by the people who actually perform these activities (Haugset, 2004). Summary The synthesized method that we presented in section four covers all aspects of the BE research framework. The method provides a framework for the analysis of corporate strategies and the derivation of goals for a mobile initiative and links them to a

goal-oriented business process analysis method. This method extends existing business process analysis methods with mobility-specific aspects and identifies mobilization potentials in process and IS design. The output of the business process analysis is used as the input for a conceptual and physical system design, for which a structured procedure model is also presented. The proposed method focuses on the analysis and design of business processes and activities as well as the corporate benefits which can be realized by their mobilization. Nevertheless, the method could be applied to mobilize consumer services as well. Then different considerations should be taken into account when choosing devices and platforms, since a wider variety has to be supported. This speaks in favor of the use of “least common denominator” standards such as SMS (currently) or MMS (in the near future). Figure 2 shows an overview of the benefits of the proposed method.

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Conclusions and further research In this paper, we analyze a multitude of approaches in the field of mobilizing business processes, focusing on their applicability and application in the CRM context. The method helps business managers to design mobile CRM solutions which are in line with the goals defined by the corporate strategy. By applying this method, the risk of mobile initiatives in the CRM context is reduced, since it provides a structured and consistent procedure for the definition of goals, the identification of potentials for the fulfillment of these goals as well as recommendations for the systematic exploitation of these potentials. The application of this structured method should avoid the pitfalls of technology-driven IT initiatives which various companies have experienced, particularly with mobile technologies. Further, research should increase the described method’s level of detail in order to ensure a recipe-like applicability in a business context. The activities on each level should be broken down into further detail and the output documents of each step should be described in a template-like manner. Further research should also provide sample questionnaires for interviews with end-users and documentation templates for the analysis results, e.g. based on the description framework for the processes and activities (Table III). Decision criteria should also be compiled for the design decisions to ensure a more stable and faster application of the method.

Perspective

Strategy

Processes

Systems

Contributions • Derivation of goals for mobilization efforts from corporate strategy • Derivation of attributes that qualify processes for strategy aligned mobilization • Process analysis targeting the goals defined in the strategy • Identification of mobilization potential in process activities and information systems • Recommendations for system selection and design decisions for the exploitation of the identified potentials

Figure 2. Benefits of the proposed method

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Finally, in accordance with the design science research approach, the method requires evaluation. This evaluation should demonstrate the utility, quality and efficacy. Design science theory suggests multiple methods for the evaluation of designed artifacts. In order to cover all the required elements of a mobile IS design process in the CRM context, the evaluation should specifically cover the method’s organizational fit, usability in transformation projects as well as its completeness and consistency. We suggest that the method be evaluated by means of case studies in which a transformation of CRM occurs in order to adapt to the mobile world. Alternatively, detailed scenarios could be constructed in which the utility and applicability of the method could be demonstrated. References Allen, D. and Wilson, T.D. (2004), “Action, interaction and the role of ambiguity in the introduction of mobile information systems in a UK police force”, in Lawrence, E., Pernici, B. and Krogstie, J. (Eds), Mobile Information Systems, Springer, New York, NY, September 15, pp. 15-36. Anckar, B. and D’Incau, D. (2002a), “Value creation in mobile commerce: findings from a consumer survey”, Journal of Information Technology Theory and Application, Vol. 4 No. 1, pp. 43-64. Anckar, B. and D’Incau, D. (2002b), “Value-added services in mobile commerce: an analytical framework and empirical findings from a national consumer survey”, in Sprague, R.H. (Ed.), Proceedings of the 35th Annual Hawaii International Conference on System Sciences, Hawaii, IEEE CS, Washington, DC. Anckar, B., Carlsson, C. and Walden, P. (2003), “Factors affecting consumer adoption decisions and intents in mobile commerce: empirical insights”, Proceedings of the 16th Bled Electronic Commerce Conference, Bled, Slovenia, June 9. Balasubramanian, S., Peterson, R.A. and Jarvenpaa, S.L. (2002), “Exploring the implications of m-commerce for markets and marketing”, Journal of the Academy of Marketing Science, Vol. 30 No. 4, pp. 348-62. BenMoussa, C. (2004), “A task-based framework of styles for mobile applications to enhance salespersons’ performance”, in Lawrence, E., Pernici, B. and Krogstie, J. (Eds), Mobile Information Systems, Springer, New York, NY, September 15, pp. 51-64. Chen, M. (2005), “A methodology for building mobile computing applications: business strategy and technical architecture”, International Journal of Electronic Business, Vol. 2 No. 3, pp. 229-43. Clarke, I. III (2001), “Emerging value propositions for m-commerce”, Journal of Business Strategies, Vol. 18 No. 2, pp. 133-48. Colgate, M.R. and Danaher, P.J. (2000), “Implementing a customer relationship strategy: the asymmetric impact of poor versus excellent execution”, Journal of the Academy of Marketing Science, Vol. 28 No. 3, pp. 375-87. Constantiou, I.D., Damsgaard, J. and Knutsen, L. (2004), “Strategic planning for mobile services adoption and diffusion: empirical evidence from the Danish market”, in Lawrence, E., Pernici, B. and Krogstie, J. (Eds), Mobile Information Systems, Springer, New York, NY, September 15, pp. 231-44. Crawford, R. and Mathews, R. (2001), The Myth of Excellence: Why Great Companies Never Try to be the Best at Everything, Crown Business, New York, NY.

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Wolf, H. and Wang, M. (2005), “A framework with a peer fostering mechanism for mobile P2P game”, in Brookes, W., Lawrence, E., Steele, R. and Chang, E. (Eds), 4th International Conference on Mobile Business (mBusiness), Sydney, July 11, IEEE Computer Society, Washington, DC, pp. 109-15. Wong, C.C. and Hiew, P.L. (2005), “Mobile entertainment: review and refine”, in Brookes, W., Lawrence, E., Steele, R. and Chang, E. (Eds), 4th International Conference on Mobile Business (mBusiness), Sydney, 11 July, IEEE Computer Society, Washington, DC, pp. 187-92. Zetie, C. (2002), Essential Elements of a Mobile Enterprise Strategy, Giga Information Group, Cambridge, MA. Zobel, J. (2001), Mobile Business und M-Commerce – Die Ma¨rkte der Zukunft erobern, Hanser, Mu¨nchen. Further reading Bueren, A., Schierholz, R., Kolbe, L. and Brenner, W. (2005), “Improving performance of customer processes with knowledge management”, Business Process Management Journal, Vol. 11 No. 5, pp. 573-88. Heidrich, J. (2004), Technische Universita¨t Berlin, Berlin. Macintosch, A., Filby, I. and Kingston, J. (1999), “Knowledge management techniques: teaching and dissemination concepts”, Int. J. Human-computer Studies, Vol. 51, pp. 549-66. Rossnagel, H. (2004), “Mobile qualified electronic signatures and certification on demand”, in Sokratis, K. and Katsikas, S.G.J.L. (Eds), Proceedings of the 1st European PKI Workshop – Research and Applications, Samos Island, Greece, September 25, Springer, New York, NY, pp. 274-86. Schimmelpfeng, K. (2004), “Sicherung der Erfolgspotentiale hochautomatisierter Produktionssysteme”, in Braßler, A. and Corsten, H. (Eds), Entwicklungen von Produktionsmanagement: Festschrift zum 65. Geburtstag von Univ. – Prof. Dr habil. Herfried Schneider, Vahlen, Mu¨nchen, pp. 77-88. About the authors Ragnar Schierholz works as a Researcher at the Institute of Information Management of the University of St Gallen, Switzerland. He is a member of the Competence Center Customer Management (CC CM), in which large European companies do joint research on CRM and knowledge management. His research focus is on the application of mobile business technology in the field of CRM. Prior to his work in St Gallen, he has worked as an IT consultant for IBM Germany, Lotus Professional Services Germany and as an IT service engineer for ONEstone GmbH Germany. He earned degrees as Master of Science in Computer Science from the Western Michigan University, Kalamazoo, USA and as Diplom-Wirtschaftsinformatiker (equivalent to a Master of Science in Information Systems) from the University of Paderborn, Germany. Ragnar Schierholz is the corresponding author and can be contacted at: ragnar. [email protected] Lutz M. Kolbe, Since, July 2002, heads the Competence Center Customer Management (CC CM) and teaches at AACSB-accredited University of St Gallen, Switzerland. His research interests are CRM, security management as well as advanced technologies in the residential environment. After having worked as financial consultant he studied information management at Brunswick Technical University, Germany, where he received a master’s degree. He went on working on his dissertation at Freiberg Technical University, Germany, and the University of Rhode Island, USA. He received his PhD in 1997. After that he worked at Deutsche Bank in Frankfurt and New York where he became Managing Director in 2001.

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Walter Brenner is a Professor of Information Systems at the University of St Gallen and Managing Director of the Institute of Information Management. After earning his graduate, his doctorate degree and his venia legendi from the University of St Gallen, he worked for several years for the Alusuisse-Lonza AG based in Basel, Switzerland, among other positions as the Head of Application Development. From 1993 to 1999, he was a Professor for Business Administration and Information Management at the TU Bergakademie Freiberg, Germany and subsequently Professor for Information Management and Business Administration at the University of Essen, Germany. His research focus is on integrated information management, CRM and innovative technologies.

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Mobile technology in field customer service

Mobile technology

Big improvements with small changes Matti Rossi and Virpi Kristiina Tuunainen

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Helsinki School of Economics, Helsinki, Finland, and

Marju Pesonen Philip Morris Finland Oy, Helsinki, Finland Abstract Purpose – The paper aims to look at the development of a mobile information system for a tobacco wholesaler in the Baltic region, focusing on understanding the issues involved in deploying a new system into a traditionally operating work force in a transition economy. Design/methodology/approach – To overcome the problems in billing cycle in the case company, an action research approach was used to develop a new process for sales documentation and employed advanced mobile technologies in the process. The research approach followed an action research cycle of diagnosis, action planning, action taking, evaluation, and specifying learning. Findings – The findings highlight the importance of the change in the mind-sets of the employees when using a new technology, and the obstacles of the use of advanced mobile technologies. They also stress the problems encountered while considering more or less experimental technologies for day-to-day operations of a business. The key finding is that new technology is much easier to take into use, when it is accompanied with a small but visible enhancement in both the work routines of individuals and the operations of the organization. Practical implications – The Amer case highlights the importance of considering technological implications of mobile technology already in planning stage of the new solution. Furthermore, there are special features related to mobility including, for instance, usability of advanced mobile technology, reliability, transmission mode, level of auxiliary devices and user adaptability. Originality/value – This paper describes a unique case of business use of mobile technology in connection to re-engineering field sales processes, and can be of use both to practitioners as well as researchers and students in the field. Keywords Mobile communication systems, Customer relations, Action research, Baltic States Paper type Research paper

Introduction Mobile technologies have been seen as a panacea for solving problems of the mobile work force, and field customer service is a classic example of this (Beulen and Streng, 2002; Chiu et al., 2002; Kakihara and Sørensen, 2002). Mobility in field sales work can be interpreted either as being independent of time or location (Lee and Sawyer, 2002). The advent of new technologies, such as 3G services is seen by many researchers to profoundly change the way mobile workers can perform their tasks. Mobile technologies are expected to enhance business efficiency by distributing information to the workforce, and by offering new communication channels with customers (Leung and Antypas, 2001). In earlier studies, mobile applications have been seen suitable for truck drivers, service teams, travelling salesmen and so forth (Bruegge and Bennington, 1995; Berger et al., 2002). There are, however, limitations in

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each case, related to the technology-based changes: resources, timetable, acute need, current infrastructure, such as, IT equipment and software, development of mobile technology, the pace of the change, organisation culture and, in particular, old habits and resistance to change (Lee and Clark, 1997; Caron et al., 1994). Furthermore, mobile fieldwork makes it challenging for management to coordinate sales people, particularly in terms of information transfer (Watson-Manheim and Be´langer, 2002). In this action research study, we looked at the re-engineering of field sales processes of Amer, a Finnish tobacco company operating in Estonia until the end of 2004, when the change of the owner of Amer’s business unit in Estonia took place. Importance of increased focus on mobilising the workforce, adopting mobile technologies and providing mobile information access integrated into the enterprise IT systems as well as applications for field force professionals is highlighted by Gupta and Moitra (2004), who picture this as an initial stage of evolution from traditional enterprise IT towards pervasive enterprise IT. The case company, Amer, employed mobile field sales personnel that worked in remote locations most of their weeks and some of them needed to come to the central office only once in a month. The challenge was that while the sales and delivery of the goods took place during a single client meeting, there was no possibility of checking the status of the customer with the back-office systems. To solve the problems of document delivery and to enhance customer support, the company decided to launch a project to solve the problems of work and document flows and to empower the field sales staff. It was decided early on that the work processes of the field sales personnel have to be modelled so that the processes could be supported by advanced information technology. The main objective was to create a solution to document production in the field, which would result in faster document flow, while keeping in mind the dispersion of work in terms of time and place. The initial approach taken was based on process re-engineering. Furthermore, a decision was made early on to employ mobile communications technologies based on cellular phone networks. There were two main reasons for this: firstly, the mobility of the workers and the need to cut down the document cycles forced the company to seek solutions that can be used anywhere; and secondly, a real-time process was seen essential to overcome the process inefficiencies that disturbed client service. As there was no previous experience with applications of this kind of technology in any reasonable scale, we found it natural to follow an explorative research approach, where prototypes were employed. We focus in this study on re-engineering Amer’s order-delivery process for increasing efficiency in reporting of field sales by using wireless mobile technology. The objective was to implement a new mobile solution to support field sales by using available packet solutions and standard mobile services provided by telecom operators. The implemented solution shows that mobile technology has a lot of potential for simplifying field sales processes as both the network and mobile terminal technology mature. In this study, the company was able to reduce its billing cycle and number of steps in its invoicing process so that the billing cycle was cut from a week into one day. Furthermore, the mobile solution provides much more visibility into the inventory and invoicing, for both the field sales workers and their managers in the back office. The paper is organized following the action research cycle. In the second section, we describe the research problem and methodology, in the third section we explain the case situation and in the fourth section we develop the solution to the problem.

In the fifth section, we discuss the implications of the process for practice and research and we finally conclude with our findings in section seven. Research problem and objectives of the study An action research approach was used on a project with an aim to re-engineer the ordering and sales processes of the case company. The goal of this project was to streamline and shorten the ordering and billing cycles of the company’s field sales. Efficiency gains were sought through recording information at its source and delivering it immediately to the back-office systems of the company. The starting point was to be able to use mobile technologies by mobile employees in such a way that the data created in the field could be entered in real time to the enterprise resource planning (ERP) system of the company, thus replacing several error-prone manual steps with one data-entry procedure. Thus, the initial objective of the study was to answer the following questions: . How can mobile technologies be used to change the order-delivery process of field sales? . Which efficiency gains and other effects can be realized when mobile technology is implemented in the order-delivery process of field sales? . How can the mobile technologies be chosen and implemented in such a way that the systems are reliable and easy enough for day-to-day operations by field sales persons? These research questions arose from the case company’s specific problems in the field sales process. Research method The field sales process had been identified as the key problem and risk for the operations of the company. To re-engineer these processes was a major change process with a lot of open questions and unknown variables. Consequently, it was decided early on to use an approach, where the changes would be developed through incremental prototyping of systems (McConnell, 1996). As the technology in focus was mostly very new and some processes and systems needed to be designed from scratch at the same time, the results of the project could not be fully anticipated in advance. Several things were expected to change simultaneously, involving complex changes into the work of the field sales personnel and to the technologies used. As several things changed at the same time, it would not have been easy to reduce this case into a controlled experiment and it would have been difficult to try to isolate individual dependent variables. Thus, an action research approach was chosen as the most viable method. Another reason for selecting this kind of approach was that one of the authors had been deeply involved in the process. She had established the subsidiary for Amer in Estonia in 1995 and had been actively involved in all the operations of the unit since the beginning as its managing director. In the case project, she had worked as a project manager, participating in planning, analysing, solution development and coordinating the project. She was also responsible for acquiring financing for the project, selecting the project team, as well as communicating with the management team. Being so deeply involved in the process, it was impossible for her to “distance” herself from the

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changes to act as an external observer. This was seen as strength, as she could act as a bona fide internal change agent to initiate the change and also to provide the needed management support to instigate the change at the same time. According to Baskerville (1999), this kind of active involvement of a researcher is one of the important characteristics of an ideal setting for action research. The other issues are related to immediate applicability of the knowledge obtained and the cyclical nature of the research process linking theory and practise (Baskerville, 1999). We argue that the use of prototyping and critical reflection on the results of the research, leading into subsequent new research cycles, fulfilled these criteria. The research approach of this paper followed an action research cycle of diagnosis, action planning, action taking, evaluation and specifying learning (Baskerville, 1999) (Figure 1). The diagnosing, action planning and action taking parts are described in subsequent sections. The learning phase forms the discussion and conclusions of this paper. The diagnosis involved careful evaluation of the situation of the case company, which is subject of the next section. After the problems had been identified, a solution was proposed, together with measures for its success and a new system was implemented that would solve the problem. There parts were the action planning and action taking. Finally, we evaluated the developed system in use and specified learning based on it. The process took place between January 2002 and February 2003.

Diagnosing

Action Planning

Specifying Learning

Evaluating

Client-System Infrastructure

Figure 1. Action research cycle

Source: Baskerville (1999)

Action Taking

Diagnosis: the problems of the field sales process The case company: Amer Tobacco Amer Tobacco AS (hereinafter Amer) was a part of Amer Tobacco Ltd that belonged to the Finnish concern Amer Group until the end of 2004. Amer had started its operations in Estonia in 1995, and conducted its business through active field sales and deliveries of products to retailers and wholesalers. Amer’s clients in Estonia were food businesses. About 40 per cent of sales were generated from wholesale and contract customers that were administered by key account managers. The rest (60 per cent) of sales were generated from field sales. Amer’s field sales personnel handled sales to stores, kiosks and restaurants. The company served altogether around 1,500 customers, two thirds of which by the field sales representatives. For the most important store chains deliveries were made from the central warehouse. The operations of Amer were organised into business functions. Key business functions included sales, marketing, administration and warehousing. Efforts had been made to simplify administration to the largest possible degree, and the same staff members often carried out several phases in different processes. All Amer’s operations were managed by an ERP system called Hansa. The Hansa modules in use were accounting, stocks, ledgers, purchase and sales orders, invoicing and cash register, and client management. Centralized data management in the Hansa system made working regimes more structured, and reporting more standardized and thus more unambiguous. Extra reporting for the management purposes was prepared mainly with Microsoft’s Office tools. Old field sales processes All business processes in Amer evolved around the customer and customer service teams, of which the field sales representatives were part of. These field sales representatives operated in different parts of Estonia and were responsible for their clientele in the respective areas. They visited 15-25 customers a day, negotiated with customers with the objective of getting an immediate order, delivered the products to the customer and invoiced the sale. The functions of the field sales representatives included keeping record of receivables from his or her customers. In case there had not been a payment, the objective of the visit was no longer sales, but collection of receivables. Ordering, invoicing and delivery from a van took place during the same customer contact. Invoicing was completed by writing an invoice by hand on a carbon copy paper pad. After closing the deals, the sales representatives sent invoices and other documents required for reporting purposes to the Amer office by mail once or twice a week. Invoicing data was handled and entered in the office to an ERP system by the office secretary. Problems with the old processes The main problem of the old order-and-delivery process was its long flow time. Firstly, because of the delay between the date of the invoice and date it was entered to the ERP system, and because for several clients the payment term was short (typically seven days), the accountant had received payments in the bank before the invoice was even entered to the system. Collection of overdue receivables could start only after the keying in into the system was completed. A delay in the collection could further slowed

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down the continuous business with the same customer, thus weakening the quality of customer service. Secondly, entering sales information was time-consuming for both the field sales representatives as well as for the office staff. Furthermore, the same sales information was recorded twice: first, a sales representative issued a hand-written receipt to the customer and then, an office employee entered the information in the system. Entering the same data twice also created increased possibilities for errors. Despatching these hand-written receipts to the office created another factor weakening the flow. The fact that the receipts were delivered to the office twice a week, created a significant delay in recording information. It was also realized, that the process flow regularly contained operating irregularities that weakened the level of service quality. For instance, sales needed to be put on hold while taking inventory to ensure validity of the results, and reporting was even more delayed if the paper receipts were lost in transportation. It was not unusual for the check pads to be late from the printing house and invoicing was interrupted. In the course of time, additional activities had been developed to correct these irregularities. An example of this was checking information on customer payments. Because of a delay in recording, sales representatives were forced to check payment information directly from the customer. After receiving the invoice data from sales representatives, an office staff member entered it to the ERP system as a collection run. The same person also handled possible error messages before the confirmation run, after which the stock inventory information was updated in the EPR-system. Action planning: the mobile sales solution Basis of the IT solution The basis of Amer’s existing ERP system, Hansa, was a client/server system that had been adapted to changes in operations over time. Hansa offered online and off-line client versions to log on to a Hansa server across any wide-area network that supported TCP/IP. This would have allowed for developing a solution, where field sales personnel could use the system by mobile terminals. There were, however, security risks with a connection over public internet. Additional challenge with this solution would have been the user interface: screens would have been needed to be customized to fit to the small Nokia Communicator (NC) terminals. Moreover, even if Hansa system was actively used by the offices staff, the field sales people were not familiar with it, which would have meant a longer learning period. Technical alternatives for the new solution Network technology. Cellular network technology was, and still largely is, in a transitional stage as network operators were preparing for more comprehensive support for non-voice data transmission over mobile networks. The major operative networks in Baltic region were GSM networks. The network operators were starting to deploy networks based on enhanced General Packet Radio Service (GPRS) over GSM networks. GPRS is often regarded as the so-called 2.5 G transition stage between a GSM service and third-generation Universal Mobile Telecommunication System (UMTS). That kind of speed can enable new services and support more extensive

mobility of operations. However, most of these services were still in experimental stage and not available for public use during the time of this study. The operators see the features of the GPRS network superior to the previous generation. However, the coverage of the updated networks was at the time still very limited. The first solutions offered by operators were internet-based services with GPRS-connectivity, that is, technology still in early stages of development. Even though GPRS-services are based on continuous network connection, the first experiences had revealed problems in providing a stable connection. Once a connection is lost, it is necessary to restart all the systems due to problems of the modem drivers. Another challenge with GPRS services is poor compliancy and compatibility of services between mobile operators. A service chosen from one operator leads to full dependence on that operator. Because of all these facts, Amer regarded the GPRS-based operator solutions too risky to implement. Data services. There are a handful of options available today for delivering data over cellular networks. First, a cellular phone can be used as a modem for a computer. The transfer speed is 9.6 kpbs in optimal conditions, but the services used could be same as over fixed lines. Second option is to use short message service (SMS) based messaging. SMS services are virtually independent of the level of network load and thus very reliable. SMS also enables the use of interactive solutions (Holmes, 2001). In addition to SMS, also WAP services for mobile phones are increasingly available in the European market (Coyle, 2001). Multimedia message service (MMS) messages can include limited live images and sound, and, in practice, require the use of GPRS or UMTS device. MMS creates a heavier load on the network than SMS: a message requires from 10 to 100 kB, increasing also the messaging costs. Based on the current limitations of WAP as well as MMS, these technologies were rejected by Amer at that point of time. GSM-based SMS-services. One of the two mobile operators in Estonia offered SMS-service over GSM network to open link between the client server and operator’s SMS-centre to allow forwarding of messages to the back-office systems. A group messaging program allowed for sending messages from Windows-based programs to mobile terminals and Open-net software enabled a push-pull service from mobile terminals to the company’s server. The client’s server was linked to operator’s SMS-centre through a fixed line connection. The other operator’s solution was called the Multi-SMS service. Also, this service included two components: customer’s software provided by the operator and the server for connection to operator’s SMS-centre. Secure sockets layer (SSL) served as the sending tunnel and transmission was achieved by UCP/EMI protocol commands. In multi-SMS service, messages were transmitted between the server and the service centre via internet. Both services had similar problems. They did not include SMS-connectivity to the client’s software or to any standard programs. Also, both services were unique to the specific operator, thus selecting one service would have meant committing to the operator. Additionally, there were still only few experiences with these SMS-services and their reliability was thus questionable. Action taking: developing a mobile field sales system After a careful analysis of the available technical options (both, network and user interface), a solution was designed. The decisions were made so that the risks of and

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learning curve for the new technology were minimized. Thus, it was decided that the solution would be based on a spreadsheet interface for invoicing on a mobile terminal, and on SMS messaging-based communication between the mobile client and the ERP systems at the back-office.

The mobile messaging solution Amer decided on an operator-independent solution that uses standard SMS messaging over the GSM network (Figure 2). This solution was chosen mainly because of its simplicity and low costs. When sending information as SMS, the user does not need to connect separately to the main system. Furthermore, all Amer employees were familiar with SMS as a communication technology: secretaries sent group messages to sales representatives directly from an e-mail system and most employees used SMS routinely, both in their work as well as private lives. The solution needed middle-ware for efficient data transfer between the NCs and the Amer Estonia office in Tallinn. GSM-Control SMS gateway software supplied by Klinkmann Ltd and GSM modem that connected the office PC into a GSM network and the terminal devices of sales representatives were installed. PC that handles data communication at the office was connected to the company’s IT network and to other applications, including the ERP package, Hansa. The selected GSM Control software was compatible with Microsoft Excel, which served as a bridge to the ERP-system. The bridge allowed automatic securing of wireless communication messages (sent/received) and indexing of messages, which allowed handling of messages in case of operational malfunctions. If and when there were changes in the order-delivery process or its functions, configurations to the solution would have been relatively easy to complete.

PC GSM-Control SMS sw Excel other applications SMS

Office / Stock LAN

GSMmodem

Figure 2. Structure of the mobile Amer IT solution

FIELD SALES PERSONS

The mobile sales solution The chosen mobile terminals, NCs, include a standard user interface based on Excel. NCs were chosen over portable computers because of their smaller size and corresponding significantly better portability, as well as for their greater battery capacity. For enquiries and orders the NC had a set of Excel-based forms to be filled out by the sales representatives. After printing an invoice, the field sales representative sent a copy of it to the main office over the GSM network by a SMS transmission. To keep the message short, the SMS message included only coded information: client number, invoice number, price list code, date, payment time, product code and quantity and the sender’s id-code, which was added to keep record of the orders by different sales representatives. Control gateway software transferred the Excel spreadsheet data as SMS messages over the GSM network. If necessary, the software split the information into 160 character SMS messages. Only the data that had been changed was transferred, limiting the length and number of the SMS messages. This was important also for keeping the costs down. A GSM modem installed at the office PC received the message. The GSM-Control SMS messaging software then checked that the message was correct and, if necessary, notified the sender whether the message was accepted or if it contained errors. Then the software combined the individual messages into one string and updated the pre-defined cells in the Excel spreadsheet with data received. Information from the Excel spreadsheets was then imported into Amer’s ERP-system. New processes In the new system, during a customer sales process, the order could be stored directly on the NC terminal of the field sales representative, eliminating the need to make notes separately on a paper. Changing invoicing details was also made simpler and quicker. Despatch of invoicing information remained double: after the invoice was printed out, the invoice data were sent to the office in real time as an SMS message through the mobile GSM network. The printed invoice document signed by the customer, however, was still sent by mail to the office afterwards, as a delivery confirmation. The new process is shown graphically in Figure 3. Business impacts of the project In terms of event flow, the new and old processes were very similar. Even though the old process had not been modelled and analysed earlier, it had been refined along with the changes in the client structure. As the modifications in the process flow were not radical, the change was well accepted and employed by the staff quickly. This made it possible to complete the pilot project in the planned schedule of five months. The implemented IT solution removed a lot of inefficient and overlapping functions. The new solution significantly reduced document handling at the back-office (Table I ). The only manual work remaining was archiving, since the invoice information was entered directly in real time by the mobile users and transferred to the back-end systems automatically. This significantly reduced typing errors as well as the amount of clerical work needed. Another enhancement was the single direction of the document flow. Even though invoice copies still needed to be dispatched to the office, the sales representatives now had more flexibility in choosing the most convenient time of a week for the dispatch. The information about the orders and invoices was entered into the ERP system in real time. Thus, sales and stock reports

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SECRETARY

ASSISTENT 21. sales ledger payment bookings

1. payment situation analysis 2. collection of receivables/ move to next client

22. receivable reporting

23. collection of receivables

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3. negotiation 4. acceptance of order entering of order to NC

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14. delivery by courier

15. collection of invoice copies form courier company

5. printing of order 6. sending of order as SMS

16. ERP run of invoices 17. error message clarif. 18. confirmation run

O M E

7. collection of order 8. Merchandising material collection

19. org. of invoice copies 20. filing of invoice copies

R 9. checking of order 10. invoicing 11. handing over the order 12. merchandising work

Figure 3. The new sales process

13. dispatch of invoice copy to office

Measure Table I. Measures of the project success

Invoice verification Billing cycle

Before

After

7-9 days Week

1 day 3 days

were updated practically in real time, and the representatives could review the regional stock levels anytime throughout the day. Furthermore, since the office assistants no longer needed to manually enter the data, they could concentrate their efforts in collection of receivables as well as other duties. Epilogue The case company used the described re-engineered order-delivery process exploiting mobile technology until the business unit was sold to a new owner. No major modifications were needed into the solution during its operation time. Nevertheless, NC terminals were updated to a newly launched version in 2004, mainly due to their improved memory capacity, which allowed a sales person to preserve all the day’s sales orders in the NC for reviewing purposes. Evaluation and learning from the project The order-delivery process was the most important and critical process for the case company. The reported process re-engineering project took into account process risks, and the old model was maintained in case the results of the re-engineering would turn out to be unsuccessful. The focus in the project was solely on increasing the efficiency of invoice documentation, but it also enhanced the process transparency and overall performance. This is largely in line with what, for instance, Schierholz et al. (2006)

propose with their method for mobilization of CRM: focus on the analyses of business processes and the corporate benefits which can be realized by their mobilization. Lessons learned about the process change The new process model improved the level of customer service quite noticeably. Credit monitoring in real time reduced credit risk, because the field sales representatives now received payment information on real time, making sure that all customer visits focused on the sale process and customer care. In addition, the new process and solution increased the efficiency of collecting receivables and handling temporary interruptions in deliveries. The increase in the quality of process output reduced the need of phone inquiries for information from the customers and field sales representatives on payment details. Stock management and all sales information in the ERP-system was now available in real time. Freeing working time from paperwork routines and clarification of errors was seen as a factor that motivated both the field personnel as well as the office staff. Mobile technology together with process re-engineering brought noticeable efficiency gains to Amer, both in terms of significantly improved process flow-time and reduced delay time. Mobility also enabled true independence from time and place: a field sales representative is now able to send the documentation immediately after completing sales deal, irrespective of his or her location and office hours. It is notable that the changes to the processes were designed to cause minimal overhead and learning curve to the users. We believe that this made the change resistance far easier to handle and minimized implementation risks. In this case, we can claim that the process can be made simpler and less error prone and at the same time customer service can be enhanced. In several cases, companies have integrated wireless technology with their business processes in an attempt to enhance efficiency and improve service lead times. As an example, companies have found opportunities in using mobile technology in maintenance work, where field staff has been connected with maintenance service centre or directly with the objects of maintenance with a facility of send and receive messages (e.g. BT service technicians in Westelius and Valiente (2004)). Benmoussa, 2005 has reported a similar application in pharmaceutical sales force automation. Lessons learned about mobile technology in use The Amer case highlights the importance of considering technological implications of mobile technology already in planning stage of the new solution. Furthermore, there are special features related to mobility including: usability, reliability, transmission mode, level of auxiliary devices and user adaptability of the chosen technology. For example, the NCs used by Amer did not provide the ideal platform for connecting with auxiliary devices or for wireless printing. Since, the display of the device is fairly small and transfer capacity is relatively low, data format must be as simple and as focused as possible. To be of real business value and not just “advanced toys” the mobile terminals and their applications must be able to be integrated with corporate back-office systems. Text messaging technology familiar to all participants and ready-made package software turned out to be the best solution for Amer. The system is reliable and response times are sufficient since GSM network can buffer SMS messages, if necessary. The operation can be later expanded to other mobile development platforms such as EMS, MMS, GSM data or GPRS technology, as their functions are improved

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and organisations learns to use them. The use of packaged software made it possible to quickly reach the implementation stage, with which an evolutionary delivery model was used; the development was continued until the application was considered satisfactory by the project team, and any needs for changes identified during the development and piloting phases were rapidly communicated and new specifications and improvements carried out flexibly. Often, these solutions are similarly based on tested technologies and package software solutions minimizing process risks and increasing the usability and reliability of the new model. Conclusions The objective of this study was to explore the possibilities of increasing the efficiency of sales reporting that forms part of the order-delivery process and relevant documentation flows by using mobile technology. The study aimed at answering the question of how implementation of mobile technology changes the operating processes of a company and what impacts it has on these processes. We claim that in the Amer case the company was able to have efficiency gains through simplified processes and at the same time the company could serve the customers better through more transparent stock and sales information. As mobile operators have focused their efforts mainly to consumer markets, there are still relatively few business-to-employee mobile solutions. The few applications that have been reported on are typically related to integrating e-mail and calendar systems. The operators also like to promote the latest innovations, even if they have little field experience on them. In the Amer case, the operators recommended the use of service packages that were based on mobile internet services, an area that had not been tested in production environments. There are risks in changing critical processes, and changing technology used at the same time increases the risk level further. To lower the risk level, the solution was based on popular, tested and reliable technology and packaged solutions that integrated wireless mobile solutions into the organisation. In spite of radical efficiency gains, it was possible to keep the operating model largely the same. References Baskerville, R.L. (1999), “Investigating information systems with action research”, Communications of AIS, Vol. 2. Benmoussa, C. (2005), “Supporting sales representatives on the move: a study of the information needs of pharmaceutical sales representatives”, paper presented at 18th Bled e-Conference, Bled. Berger, S., Lehmann, H. and Lehner, F. (2002), “Mobile B2B applications – a critical appraisal of their utility”, Proceedings of the 1st International Conference on M-Business 2002, Athens, Greece. Beulen, E. and Streng, R-J. (2002), “The impact of online mobile office applications on the effectiveness and efficiency of mobile workers’ behavior: a field experiment in the IT services sector”, in Applegate, L., Galliers, R. and Degross, J.I. (Eds), 23rd International Conference on Information Systems, Barcelona. Bruegge, B. and Bennington, B. (1995), “Applications of mobile computing and communication”, IEEE Journal on Personal Communications, Vol. 3. Caron, J.R., Jarvenpaa, S.L. and Stoddard, D.B. (1994), “Business reengineering at CIGNA corporation: experiences and lessons learned from the first five years”, MIS Quarterly, Vol. 18, pp. 233-50.

Chiu, D.K.W., Cheung, S-C. and Kafeza, E. (2002), “Three-tier view-based mobile workflows”, Proceedings of the 1st International Conference on M-Business 2002, Athens. Coyle, F.P. (2001), Wireless Web 2001: A Managers Guide, Addison-Wesley, Boston, MA. Gupta, P. and Moitra, D. (2004), “Evolving a pervasive IT infrastructure: a technology integration approach”, Personal and Ubiquitous Computing, Vol. 8 No. 1, ACM. Holmes, S. (2001), Wireless Economy: The Text Generation, Horizon House, Indianapolis, IN. Kakihara, M. and Sørensen, C. (2002), “Mobility: an extended perspective”, paper presented at 35th Hawaii International Conference on Systems Sciences, Big Island, HI. Lee, H.G. and Clark, T.H. (1997), “Market process reengineering through electronic market systems: opportunities and challenges”, Journal of Management Information Systems, Vol. 13, pp. 113-36. Lee, H. and Sawyer, S. (2002), “Conceptualizing time and space: information technology, work, and organization”, in Applegate, L., Galliers, R. and Degross, J.I. (Eds), 23rd International Conference on Information Systems, Barcelona. Leung, K. and Antypas, J. (2001), “Improving returns on m-commerce investments”, Journal of Business Strategy, Vol. 22 No. 5, pp. 12-13. McConnell, S. (1996), Rapid Development: Taming Wild Software Schedules, Microsoft Press, Redmond, WA. Schierholz, R., Kolbe, L. and Brenner, W. (2006), “Mobilizing customer relationship management – a journey from strategy to system design”, in Sprague, R. Jr (Ed.), Proceedings of the 39th Hawaii Conference on Systems Science, Kauai, Hawaii, 4 January, IEEE Computer Society, Los Alamitos, CA. Watson-Manheim, M.B. and Be´langer, F. (2002), “An in-depth investigation of communication mode choises in distributed teams”, in Applegate, L., Galliers, R. and Degross, J.I. (Eds), 23rd International Conference on Information Systems, Barcelona. Westelius, A. and Valiente, P. (2004), “Bringing the enterprise system to the frontline – intertwining computerised and conventional communication at BT Europe”, in Suomi, R. and Saarinen, S. (Eds), 12th European Conference on Information Systems, Turku. Further reading Jing, J., Sumi, A. and Elmagarmid, A. (1999), “Client-server computing in mobile environments”, ACM Computing Surveys, Vol. 31, pp. 117-57. Olson, D.L. (1996), Decision Aids for Selection Problems, Springer-Verlag, New York, NY. Salo, S. (2000), Information Technology Enabled Change: Dramatic Improvement and Perceived Change, Management, Helsinki School of Economics, Helsinki. Venkatraman, N. (1994), “IT-enabled business transformation: from automation to business scope redefinition”, Sloan Management Review, pp. 73-87. Corresponding author Matti Rossi can be contacted at: [email protected]

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The role and impact of business process management in enterprise systems implementation Abdullah S. Al-Mudimigh Department of Information Systems, College of Computer and Information Sciences, King Saud University, Riyadh, Saudi Arabia Abstract Purpose – The purpose of this paper is to investigate the role and impact of business process management (BPM) in successful enterprises system (ES) software package implementation. Design/methodology/approach – A literature review was conducted to understand the critical success factors in successful ES implementation. The review covered numerous published books and articles, and looking at the experiences of several organizations. Findings – ES is far from being an IT project, and is more of an integrated organizational development approach that changes the way organizations do business, and the way work is done. Consequently, to implement ES successfully, organizations must treat it like a change management project and focus on an integrated approach of BPM. Originality/value – This paper addresses the role and impact of BPM in successful ES implementation to improve the experience of many organizations that are undertaking or plan to undertake this effort to improve performance, undertake better decision making, and achieve a competitive advantage. Keywords Business planning, Computer software, Change management, Critical success factors Paper type Literature review

Business Process Management Journal Vol. 13 No. 6, 2007 pp. 866-874 q Emerald Group Publishing Limited 1463-7154 DOI 10.1108/14637150710834604

1. Introduction Enterprise systems (ES) software packages (synonyms are enterprise resource planning, integrated standard software packages, and enterprise application systems) seek to integrate the complete range of a business’ processes and functions in order to present a holistic view of the business from a single information and IT architecture. ES software packages have made a tremendous contribution to the world of business. They have made a wide range of business more efficient by providing them with much information they need (Sandoe et al., 2001). The popularity of integrated software package is steadily increasing. ES software packages are experiencing rapid worldwide growth. However, ES are huge and complex systems and warrant careful plan and execution to ensure successful implementation. They are not pure software systems; they affect how a business conducts itself. The value that ES packages can bring to companies is clear to many organizations, and few will dispute its potential. However, numerous organizations are not putting in place the procedures to manage the changes and customizations they need to make to ES packages for establishing a competitive advantage (Turban et al., 2005; Barnes, 1999). It has been estimated that at least 90 percent of ES

implementations end up late or over-budget, and almost half fail to achieve the desired results (Oracle, 2004; Martin, 1998). The success of an ES implementation has often been attributed to two facts; the ES is configured and running, and the whole project is (more or less) on time and within budget (Rosemann and Wises, 1999). However, this is a narrow view of ES implementation focusing on the hard aspects and reducing it to a mere software or IT project. Organizations are becoming engrossed in building and running the technical aspects of their ES to recognize the need, and long-term value, of change and business process management (BPM) (Bancroft et al., 1998). ES is the umbrella for integrating sets of business applications that allow a company to manage almost all aspects of operations. This in turn implies that successful ES implementation should be measured on a larger scale in terms of its effects on the organizational triple bottom line (product, people, and plant). The value of this holistic view extends well beyond application development, and, in fact, provides the backbone for successful installations and operation of an ES software package. Many ES implementation failures have been due to the lack of focus on “the soft issues”, i.e. the business process and change management (Ventura, 2003; Kelly et al., 1999; Sumner, 1999). The role and impact of BPM in successful ES implementation is crucial, and is the subject of our investigation here.

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2. ES critical success factors Owing to the complex and integrated nature of ES, the large investments involved (time and money), and the relatively high-implementation failure rates (Monk and Wagner, 2006; Gupta, 2000; Holland and Light, 1999; Martin, 1998), it is imperative for organizations to study the experiences of others, and learn from their practices and success factors. A literature review was conducted to understand the critical success factors in successful ES implementation. The review covered numerous published books and articles (Amoako-Gympah, 2005; Mandal and Gunasekaran, 2003; Ventura, 2003; Hong and Kim, 2002; Sandoe et al., 2001; Davenport, 2000; Gupta, 2000; Sumner, 1999; Bingi et al., 1999; Davenport, 1998) and secondary case studies. The review concluded the identified CSFs fall under one of four main categories, namely: commitment from top management, changing of the existing processes, the IT infrastructure, and deploying change management. These CSF categories are shown in Figure 1.

Top Management Commitment Change Management IT Infrastructure

Business Process Change

Figure 1. CSF Categories for successful ES

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The following is a brief overview of each of these categories: (1) Top management commitment. Management must be a part of ES implementations. The IT literature has clearly demonstrated that for IT protects to succeed top management support is critical (Bingi et al., 1999). However, top management in many organizations still view the installation of an ES as primarily a technological challenge and assign its responsibility to the IT departments. This is seen as a dangerous act (Davenport, 1998) due to ES’s profound business implications. “Only top management is equipped to act as the mediator between the imperatives of the technology and the imperatives of the business” (Davenport, 2000; Bingi et al., 1999). (2) Business process change (BPC). Implementing an ES involves changing the existing business processes to the best business process standard (Sandoe et al., 2001; Gibson et al., 1999). ESs are built on best practices that are followed in the industry, and to successfully install ES, all the processes in a company must conform to the ES model. During the ES planning phase, companies face a question as to whether to implement the ES software “as is” and adopt the ES’s built-in procedure or customize the product to the specific needs of the organization (Sandoe et al., 2001; Holland and Light, 1999). Research (Melymuka, 1998) has shown that even a best application package can meet only 70 percent of the organizational needs. An organization has to change its processes to conform to the ES package, customize the software to suit its needs, or not be concerned about meeting the balance 30 percent. In fact, this need to change the organization’s business processes is seen as one of ES’s major benefits (Bingi et al., 1999). (3) IT Infrastructure. Adequate hardware and networking infrastructure is required for ES application. ES cannot be without sophisticated information technology infrastructure. Three primary attributions of success were identified from the descriptive statistics: willingness to change to new computer applications, effort, and persistence (Amoako-Gympah, 2005; Sandoe et al., 2001; Kelley et al., 1999). In addition to the infrastructure, clearly, the software configuration has a critical influence on the implementation process and outcome (Holland and Light, 1999). (4) Change management. One of the main obstacles facing ES implementation is resistance to change. “About half of ES projects fail to achieve hoped-for benefits because managers underestimate the efforts involved in managing change” (Pawlowsiki and Boudreau, 1999). To successfully implement ES, the way organizations do business will need to change and the ways people do their jobs will need to change too (Koch, 1999). Thus, change management is essential for preparing a company for the introduction of an ES, and its successful implementation. However, change management has to be structured within an overall BPM methodology to achieve its goals. Clearly, three out of four of these main categories fall under the umbrella of BPM. If anything, this strongly reiterates the fact that ES is not merely software implementation or an IT project. Thus, to ensure successful ES implementation and running, an organization must pay sufficient attention to BPM.

3. What is business process management A business process is set of interrelated activities which have definable inputs and, when executed, result in an output that adds value form a customer perspective. Business processes are quite simply the way work is done in any organization. They are cross-functional and go across the organizational functions, e.g. order fulfillment which spans all organizational functions from customer order to final delivery. BPM is a structured approach to understand, analyze, support, and continuously improve fundamental process such as manufacturing, marketing, communications and others major elements of a company’s operations. BPM is a wide and encompassing system that starts with top management understanding and involvement, focuses on process improvement across the supply chain, instills a structured approach to change management, and emphasizes people management and development. 4. BPM for successful ES implementation The importance and impact of BPM on ES success will be demonstrated in this section through assessing the experiences of six organizations. 4.1 Case study organizations The case studies analyzed in this paper are shown in Table I. 4.2 BPM elements As noted earlier, BPM has several main pillars. The following are highlights to demonstrate their importance in successful ES implementation. 4.2.1 Top management commitment. The experience of AEC highlights the importance of having top management directly involved in planning and implementing an ES. AEC’s top management was instrumental in overseeing its ES project, and the entire board reviewed and approved the plans. At SABIC and Saudi Aramco, the decision to implement an ES was also made at the board level, and the senior management team input was very important when selecting a suitable vendor. Top management support and commitment does not end with initiation and facilitation, but must extend to the full implementation of an ES. AEC and Radwa Food Production noted that ES implementation is about people, not processes or technology. The organization went through a major transformation, and the management of this change was carefully planned (from a strategic viewpoint) and meticulously implemented. All the case studies analyzed have shown that the key to a smooth rollout is the effective change management from top. Intervention from management has been necessary to crucial for the adequate resourcing of the project, to taking fast and effective decisions, resolve conflicts and bring everybody to the same thinking, to promote company-wide acceptance of the project, and to build co-operation among the diverse groups in the organization, and in many times across national borders. Top management needs to constantly monitor the progress of the project and provide direction to the implementation teams. 4.2.2 Process management and improvement. The two main areas in process management and improvement that directly affected ES success were BPC, performance measurement, and putting in place the appropriate process management structure.

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Major ES results

Advanced Electronics Company (AEC)

Monthly books consistently closed in two days, instead of up to four weeks Real-time information from the consolidated database enables AEC managers to make faster, better informed decisions By moving its financial, human resources, and order management systems off legacy platforms, AEC saves in annual maintenance fees Control improvement through better integration Lower inventory holding Reduce operation cost Better decision Access to timely and complete information Cut the costs of operational systems, improved the reliability of customer service, and assured timely delivery and follow-up Data integration and standardization Improved inventory management and deliver on customer requirements Overhauled legacy computing environment Improved inventory record accuracy Improved accuracy of bill of material Reduction in costs Positive change sin company culture Integrated applications that have led to improved business processes and have provided a platform for future systems enhancements Achieved integration between its previously disparate logistics and financial operations Information can be accessed in real-time, meeting one of the prime objectives of the project Improved financial control Reduce administrative costs Enhanced data visibility

870 Al-Rajhi Group

Radwa Food Production

Saudi Arabian Mining Company (MA’ADEN)

Saudi Aramco

Table I. Case studies of successful ES

Saudi Basic Industries Corporation (SABIC)

.

BPC. The most common reason that companies walk away from multimillion dollar ES projects is that they discover that the software does not support one of their important business processes. At that point, there are two things they can do: they can change the business process to accommodate the software, which will mean deep changes in long-established ways of doing business (that often provide competitive advantage) and shake up important peoples’ roles and responsibilities. Or they can modify the software to fit the process, which will slow down the project, introduce dangerous bugs into the system and make upgrading the software to the ES vendor’s next release excruciatingly difficult, because the customizations will need to be torn apart and rewritten to fit with the new version (Sandoe et al., 2001; Koch et al., 1999). Without exception, all six organizations cited BPR is on of the main critical success factors for ES success. Rather than attempting to modify the software, ACE, Radwa Food Production, SABIC, and Saudi Aramco reengineered their business processes to

.

.

be consistent with the software. This has proved to be critical to the project’s success. The others undertook a mix of BPC and ES software re-adjustment. Within this context, AEC and Al-Rajhi Group have strongly emphasized on the criticality of structured project management approaches for ES success. Performance measurement. It has been said that you cannot manage what you do not measure, and this is especially true in the case of ES implementation. Organizations must be able to establish a clear and well defined performance measurement system to allow them to assess the development, and/or problems, that are occurring. AEC, Saudi Aramco, and SABIC noted that having a well established measurement system was crucial in their ES project management initiative to allow for measuring and publicizing success stories for motivation, assessing progress, assigning and redirecting resources, and instilling an overall system of continuous improvement for the ES life cycle. Process management structure. Radwa Food Production put someone “in charge” and centralized the management structure of the project in order to avoid duplication of effort. Radwa Food Production considered their project a success because of a centralized management structure. This has been implemented by Saudi Aramco, and MA’ADEN, and all saw this as an important factor in managing the ES implementation efficiently. However, even those with no “ES Process Leader” still maintained this focus by appointing a “champion”. The project leader for the ES project was clearly a “champion” for the project, and that role was critical to marketing the project throughout the organization.

4.2.3 Change management. The main hurdle faced by all the companies was resistance to change. Employees were reluctant to learn new techniques or the IT department was reluctant to change due to attachment to its product; this was one of the main hurdles faced during the ES implementations. For users, the implementation of ES s means that their computer-related job tasks are completed in totally different computer environment. The complexity of these systems results in enormous learning curves and behavioral changes for user, implementers, and organizations. A variety of reactions by individuals, ranging from resisting to enthusiastically embracing ESs, are demonstrated, and unexpected difficulties often arise during all phases of implementation. Consequently, ES users need to make sense of, and understand, their reactions to this technology, and their changing computer environment and computer-related job tasks. The attribution of ES performance are important because they can either positively or negatively influence user’s learning, confidence levels, effort, persistence, and use of these systems. Unfortunately, our understanding of individuals’ reactions to ESs, and why they elect to use or avoid them, is limited (Sandoe et al., 2001; Kelley et al., 1999). Four elements which can help reduce the resistance are tremendous top management support; training, placement of best people on implementation; and heavy involvement of people from the field (Gupta, 2000). The main approaches to achieve the sought-after people involvement and commitment is an open environment, characterized by open communication and trust. Radwa Food Production, AEC, SABIC, and Saudi Aramco agreed that effective communications should tell everyone in advance what is happening including the scope, objectives, and activities of the project, and admit that there will be change.

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MA’ADEN and Al-Rajhi Group saw an open and honest information policy helping the user to become acquainted with the new situation, to build up confidence in the project and its members, and finally to accept the project. Open communication and ethical behavior generate trust. Saudi Aramco highlighted the relationships of trust among the project members as a main success factor for ES. AEC noted that trust can be built up with intensive communication, coaching, delegation of responsibility, personal care and attention, among other things. 4.2.4 People management and development. People management is clearly a subset of change management. However, some specific issues have been shown to directly affect the success of ES implementation, and were mainly in the area of people development. The implementation of ES requires a whole new set of skills and expertise that organizations must pay extra attention to where these skills will come form. Two main streams have emerged and all six organizations have used a mix of both: (1) Training and re-skilling. Training is critical in an ES project. The most effective ES possible will not improve a company if its employees do not know how to use it. Installing an ES package without adequate end-user preparation could yield drastic consequences. In this respect, Saudi Aramco and SABIC noted that the costs of training and support are often under-estimated, and these costs may be many times greater than originally anticipated. At Saudi Aramco and MA’ADEN, one of the critical workforce requirements for the project was the ability to obtain and train analysts with both “business” and technology knowledge. Instead of 100 “programmers” with average skills, the ES project demanded and could be accomplished with ten of the “best and brightest” analysts. However, retaining these professionals was a significant problem because of their market value. Saudi Aramco and SABIC invested heavily in training and re-skilling their developers in SAP software design and methodology. Radwa Food Production considered their project a success because of investments in training and support required to overcome technical and procedural challenges in design and implementation. (2) Using external consultants. With new technology, it is often critical to acquire external expertise, including vendor support, to facilitate successful implementation. Hundreds of companies provide ES services. Those services may include all or some combination of these offerings: . ES selection; . business process planning or changing; . ES implementation; . end-user training; and . ES maintenance and support. Quite simply, when they did not have needed expertise internally, Radwa Food Production brought in the consultants they needed. SABIC stressed that good consultants improve throughput time and quality. The success of a project depends strongly on the capabilities of the consultants because the consultant is the only one with in-depth knowledge of the software.

5. Best practices for capitalising on BPM for successful ES . The success of a major project like an ES implementation hinges on the sustained commitment form top management. An overall commitment that is visible, well defined and felt is a sure way to ensure a successful outcome. . Implementing an ES is not a matter of changing software systems; rather, it is a matter of repositioning the company and transforming the business practices. . Training – whole departments must be retrained, jobs redefined, and procedures discarded or rebuilt from scratch. . Performance measurement – because the successful implementation of an ES is contingent upon an accurate assessment of the associated organizational changes, there is a need to investigate the organizational consequences of ES. . Selecting the right employees to participate in the implementation process and motivating them is critical for the implementation’s success. Overall, it can be concluded that ES is far form being an IT project, and is more of an integrated organizational development approach that changes the way organizations do business, and the way work is done. Consequently, to implement ES successfully, organizations must treat it like a change management project and focus on an integrated approach of BPM. References Amoako-Gympah, K. (2005), “Perceived usefulness, user involvement and behavioral intention: an empirical study of enterprise systems implementation”, Computer in Human Behavior, Vol. 41, pp. 731-45. Bancroft, N., Seip, H. and Sprengel, A. (1998), Implementing SAP R/3: How to Introduce a large System into a Large Organization, Manning Publications Co., Greenwich, CT. Barnes, M. (1999), “Customization of ERP Apps requires development skills”, Information Week, February 22. Bingi, P., Sharma, M.K. and Godla, J.K. (1999), “Critical issues affecting an ERP implementation”, Information Systems Management, Summer. Davenport, T. (1998), “Putting the enterprise into the enterprise system”, Harvard Business Review, Vol. 76 No. 4. Davenport, T. (2000), Mission Critical, Harvard Business Press, Boston, MA. Gibson, N., Holland, C. and Light, B. (1999), “A case study of a fast track SAP R/3 implementation at Guilbert”, Electronic Markets, Vol. 9 No. 3. Gupta, A. (2000), “Enterprise resource planning: the emerging organizational value systems”, Industrial Management & Data Systems, Vol. 100 No. 3, pp. 114-8. Holland, C. and Light, B. (1999), “A critical success factors model for ERP implementation”, IEEE Software, May-June. Hong, K. and Kim, Y.G. (2002), “The critical success factors for ERP implementation: an organizational fit perspective”, Information & Management, Vol. 40 No. 1, pp. 25-40. Kelly, S., Holland, C. and Light, B. (1999), “Enterprise resource planning: a business approach to systems development”, Proceedings of AMCIS, Milwaukee, WI, USA, August 13-15. Koch, C. (1999), “The most important team in history”, CIO Magazine, October 15. Koch, C., Slater, D. and Baatz, E. (1999), “ABCs of ERP”, CIO Magazine, December 22.

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Mandal, P. and Gunasekaran, A. (2003), “Issues in implementing ERP: a case study”, European Journal of Operational Research, Vol. 146, pp. 274-83. Martin, M.H. (1998), “An ERP strategy”, Fortune, Vol. 2. Melymuka, K. (1998), “ERP is growing from being just an efficiency tool to one that can also help a company grow”, Computerworld, September. Monk, E. and Wagner, B. (2006), Concepts in Enterprise Recourse Planning, 2nd ed., Thomson Course Technology, Bristol. Oracle (2004), “Oracle e-Business suite”, Presentation, Sheraton Hotel, Riyadh. Pawlowsiki, S. and Boudreau, M. (1999), “Constraints and flexibility in enterprise systems: a dialectic of system and job”, Proceedings of the Americans Conference on Information Systems (AMICS), Milwaukee, WI, USA. Rosemann, M. and Wises, J. (1999), “Measuring the performance of ERP software: a balanced scorecard approach”, paper presented at 10th Australasian Conference on Information Systems, Wellington, December 1-3. Sandoe, K., Corbitt, G. and Boykin, R. (2001), Enterprise Integration, Wiley, New York, NY. Sumner, M. (1999), “Critical success factors in enterprise wide information management systems projects”, Proceedings of AMCIS, Milwaukee, WI, USA, August 13-15. Turban, E., Aronson, J. and Liang, T. (2005), Decision Support Systems & Intelligent Systems, 7th ed., Prentice-Hall, Englewood cliffs, NJ. Venrura, P. (2003), “Poor project planning leads to ERP failure”, Arabian Computer News, Vol. 18. Further reading Gable, G. (1998), “Large package software: a neglected technology?”, Journal of Global Information Management, Vol. 6 No. 3. Oliver, D. and Romm, C. (2000), “Enterprise resource planning systems: an outline model of adoption”, Proceeding of GITM World Conference, Memphis, TN, USA, June 11-13. Corresponding author Abdullah S. Al-Mudimigh can be contacted at: [email protected]

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Awards for Excellence Outstanding Paper Award Business Process Management Journal

‘‘A knowledge centred framework for collaborative business process modelling’’ Emmanuel D. Adamides and Nikos Karacapilidis Industrial Management and Information Systems Laboratory, Department of Mechanical and Aeronautical Engineering, University of Patras, Rion-Patras, Greece Purpose – The paper aims to present the design rationale, the structure and the use of a web-based information systems framework for collaborative business process modelling. Design/methodology/approach – By viewing process modelling as a ‘‘problematic situation’’ that entails a considerable amount of social and knowledge activity in order to be resolved, a novel process modelling construct has been developed and a participative problem-structuring methodology adapted to the specific domain. The framework presented is the result of an action research study for process improvement and has been introduced in a real organizational setting as a pilot application. Findings – Experiences from the use of the framework presented indicate that it stimulates interaction and makes participants more accountable for their modelling contributions, as well as aiding them to define, understand, document, analyze and improve business processes in a holistic manner by interacting with one another and with the model under construction. Research limitations/implications – Currently, the application of the framework is limited by and depends on the availability and the technical abilities of a technical facilitator, but work is under way towards automating the inter-process communication between the system implementing the problemstructuring methodology and the modelling environment. Practical implications – The framework presented can be used in distributed organizational settings for business process management through a structured modelling process. Originality/value – The paper presents an IS framework for business process management that integrates a problem-structuring methodology, a knowledge management system and a modelling/ simulation environment in a consistent way. Keywords Business process re-engineering, Knowledge management, Modelling, Problem solving www.emeraldinsight.com/10.1108/09574090510634539 This article originally appeared in Volume 12 Number 5, 2006, pp. 557-75, of Business Process Management Journal, Editor: Professor Majed Al-Mashari

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