I

1. MOVING TOWARD E-BUSINESS: CUSTOMER
RELATIONSHIP MANAGEMENT ALIGNMENT
IN MALAYSIAN SMALL BUSINESS
Norshidah Mohamed (Presenter)
International Business School, Universiti Teknologi Malaysia
http://www.ibs.utm.my
Murni Mahmud, Abdul Rahman Ahlan, Umar Aditiawarman
International Islamic University Malaysia
Ramlah Hussein, Nor Shahriza Abdul Karim
Prince Sultan University, Kingdom of Saudi Arabia
International Conference on Ebusiness and Egovernment
Izmir, Turkey 27-28 April 2013

2. 2
OUTLINE
• Introduction
• Literature review
• Research methodology
• Findings
• Conclusion

3. 3
INTRODUCTION
• Customer Relationship Management (CRM)
• Relates to sales & marketing strategy
• The process of acquiring, retaining and
growing profitable customers on service
attributes that customers would value and
create loyalty to the organisation (Brown,
2000).

4. 4
RESEARCH AIM
Develop a research model on CRM alignment and
investigate the impact of CRM alignment on
performance.

5. LITERATURE REVIEW

6. 6
CRM ?
– process (Day and Van den Bulte, 2002)
– strategy (Parvatiyar and Sheth, 2001)
– capability (Peppers, Rogers and Dorf, 1999)
– technological tool (Shoemaker, 2001)
– Other organizations simply view CRM as a
help desk or call center.
What is CRM alignment?

7. 7
CRM ALIGNMENT ?
Conceptualize CRM alignment as:
• Business – IT strategic alignment
• CRM process – IT alignment

8. 8
BUSINESS-IT ALIGNMENT
• The latest annual survey on IT industry in 2010
shows that business and information technology
(IT) alignment (BIA) is still among the top five of
top management concerns

9. 9
BUSINESS-IT ALIGNMENT ..
cont’
Alignment is sometimes used differently in the BIA
literature. Terms include:
• Fit (Venkatraman, 1989; Chan, 1992; Henderson
and Venkatraman, 1993)
• Harmony (Luftman, 1993)
• Bridge (Ciborra, 1997)
• Fusion (Smaczny, 2001)

10. 10
BUSINESS-IT ALIGNMENT ..
cont’
• Integration (Weill and Broadbent, 1988)
• Linkage (Henderson and Venkatraman, 1993)

11. 11
CRM PROCESS-IT
ALIGNMENT
• Refers to processes on customer-facing level
(Reinartz et al. 2004)
• Involves coordination of information – thus
IT-enabled
• Key aspects in relationship management e.g.
initiation, maintenance & termination.

12. 12
BENEFITS OF CRM?
• Boulding et al. (2005) argued that the
benefits of CRM applications are perceived
differently across industries.

13. 13
BENEFITS OF CRM –
SOME SUGGESTIONS
Richards and Jones (2008) suggested CRM:
• improves pricing
• increases customer satisfaction and loyalty through better customer
service
• enhances product development and differentiation through
customization/personalization
• enhances ability to create long-term relationships and customer
segmentations
• improves customer acquisition and retention
• motivates employees to foster customer relationship
• reduces administrative and operational cost
• enhances decision-making process
• improves knowledge sharing among the selling companies

14. 14
BALANCED SCORECARD
• Based on four perspectives : financial,
customer, internal business process and
learning and growth (Kaplan and Norton 1992;
1996)
• Examples of studies using BSC for CRM include
Kim et al. (2003) and Kim & Kim (2008)

15. 15
HYPOTHESES
H1: CRM performance is positively related to
organizational performance
H2a: CRM process-information technology (IT)
alignment is positively related to CRM
performance
H2b: CRM process-IT alignment is positively
related to organizational performance
H3a: Business-IT strategic alignment is positively
related to CRM performance

16. 16
HYPOTHESES
H3b: Business-IT strategic alignment is positively
related to organizational performance
H4: Business-IT strategic alignment is positively
related to CRM process-IT alignment

17. 17
RESEARCH MODEL

18. RESEARCH METHODOLOGY

19. 19
CONTEXT OF STUDY
• Malaysian small and medium enterprises (SME)
• Malaysia’s SME has fewer than 50 employees
with turnover of below RM25 million
• In 2009, SME in Malaysia account for about
99% of total business establishments (552,849)
and contribute to 31.2% of the nation’s Gross
Domestic Product (GDP).

20. 20
CONTEXT OF STUDY .. cont’
• SME have provided 56% to total employment
and 19% exports of the country (SME annual
report).
• Total survey questionnaires distributed: 300

21. 21
SURVEY INSTRUMENT
SOURCES
Constructs Source of constructs and
items used in the research
Business-IT
alignment
CRM process-IT
alignment
CRM performance
Kearns and Sabherwal (2007);
Viaene et al. (2007)
Reinartz et al. (2004); Chen and
Ching (2004)
Kim et al. (2003); Chen and
Ching (2004)

22. 22
SURVEY INSTRUMENT
ITEMS
Business-IT alignment
1. Our strategic IT plan is well-aligned with the organisation’s mission, goals, objectives and strategies.
2. Our strategic IT plan contains quantified goals and objectives.
3. Business and IT management processes are strongly integrated.
4. We prioritise major IT investments by the expected impact on business performance.
CRM-IT alignment
1. IT in our organisation supports us in tracking of prospects. (initiate)
2. IT helps us to identify different offers for prospects based on prospects’ economic value. (acquire)
3. In our organisation, IT supports us in identifying customers lost to competitors. (regain)
4. IT helps us determine which of our customers are of the highest value. (maintain)
5. IT supports two-way communication with our customers. (retain)
6. IT helps us in tracking customers and the incentives for them if they intensify their business with us.
(cross-sell / up-sell)
7. IT helps us in tracking current customers and the incentives for them when they acquire new potential
customers. (referral)
8. IT supports us in tracking non-profitable, low value or problem customers. (terminate)

23. 23
SURVEY INSTRUMENT
ITEMS .. cont’
CRM Performance
In our organisation, IT has helped us improve in:
1. Customer satisfaction. (customer)
2. Customer loyalty. (customer)
3. Customer retention. (customer)
4. Increased return on investment (ROI) on IT-enabled CRM processes. (financial)
5. Tremendous reduction in customer transaction cost. (internal business process)
6. CRM process innovation and product / service innovation. (learning & growth)
Organisational performance
In our organisation, IT has
1. Return on investments (ROI).
2. Profitability
3. Competitiveness
4. Sales revenue

24. FINDINGS

25. 25
PROFILE OF SME
Industry Frequency Percentage
Automotive 8 3.5
Manufacturing 7 3.1
Direct selling 39 17.3
Travel and hospitality 6 2.7
Professional services (legal, accounting etc.) 71 31.4
Information and communication technology 12 5.3
Others (retail etc.) 80 35.4
Missing 3 1.3
Total used for analysis 226 100

26. 26
PROFILE OF SME .. cont’
• The minimum number of employees was one,
maximum was 150, and average was 15.
• Minimum duration in business, was fewer than
one year, maximum was 33 years and average
was four years.

27. 27
RELIABILITY ANALYSIS
Constructs No. of
items
Cronbach’s
Alpha
Business-IT alignment 4 0.687
CRM process-IT alignment 8 0.798
CRM performance 6 0.639
Organizational performance 4 0.682

28. 28
CORRELATION ANALYSIS
Organizational
performance
CRM
performance
CRM process
-IT alignment
Business
-IT
alignment
Organizational performance 1
CRM performance 0.713** 1
CRM process-IT alignment 0.653** 0.618** 1
Business-IT alignment 0.658** 0.628** 0.695** 1
**Correlation is significant at the 0.01 level (2-tailed)

29. 29
SUMMARY
CRM
PROCESS–IS
ALIGNMENT
BUSINESS–IS
STRATEGIC
ALIGNNMENT
CRM
PERFORMANCE
CRM
ALIGNMENT
IMPACT OF CRM
ALIGNMENT
H4:
0.695**
ORGANIZATIONAL
PERFORMANCE
H1:
0.713**
H2b:
0.653**
H3b:
0.658**

30. CONCLUSION

31. 31
CONCLUSION
• The research explores and proposes a model to
aid researchers and practitioners alike in
gaining insights into CRM alignment and its
impact on performance.
• The research has proposed a research
instrument and model for CRM alignment.
• The instrument has shown reliability while the
model demonstrated relationships in the
Malaysian SME context.

32. 32
CONCLUSION
• For researchers, the results provide a
starting point for future research
opportunities.
• For practitioners, the research provides an
insight into the components of CRM
alignment and impact of CRM alignment.
Future research areas include examining
antecedents of CRM alignment and
confirming the research model.

33. 33
ACKNOWLEDGEMENT
The research is supported by the
Fundamental Research Grant Scheme
Ministry of Higher Education Malaysia
(504/RES/G/14/3/2/2 FRGS).