• Technology
  • The Economist

Always-On People

A big part of running a real-time enterprise will be managing relationships.

Many pets already wear implantable biochips so they can be tracked. Will people be next? A search on the Internet yields a worrying several hundred finds, but a closer look reveals that most of these are websites maintained by overly sensitive souls who are bothered that the biblical “mark of the beast” might soon become reality. Others fret that a national ID card in America might one day be replaced by implanted ID chips.

It is unlikely that these kinds of tracking devices will soon become part of the real-time economy. But this does not mean that information about people will not play an important role. On the contrary: such data will be central to improving business relationships, be they with customers, partners or employees. In fact, “relationship management” software, in particular for customers (CRM for short), is among the few segments of the software industry that are still growing strongly. Siebel Systems, the market leader in this field, is weathering the economic storm better than most IT firms.

Relationship management is something of a fad, just as enterprise resource planning (ERP) was in the 1990s. Yet there is a real need as well. It is not much use speeding up your information flow if your customers defect to the competition, which they appear increasingly ready to do. And now that the supply chain is becoming more and more standardised and optimised, finding and keeping the most profitable customers and perhaps even dropping some of the loss-makers looks like the best way to improve margins.

The idea of relationship management is in some ways a throwback to a time when the world was still easily encompassed. A small-town shopkeeper, for example, knew that a certain customer always bought a bottle of beer on the way home from work, and could be talked into buying three on a Friday. He knew which farmer delivered consistently good-quality vegetables. And he knew which of his employees was good at dealing with which customers.

An Intimate Relationship

To recreate this intimacy, relationship-management software pulls together information from different departments of a firm. CRM systems collect data from any point where a customer “touches” a company (such as a store, a call centre or a website), and combines them with information from other sources (such as credit ratings or driving records). These data can then be used to improve a firm’s service, for example by relieving people of the tedious business of having to fill in a home-loan application. More complex uses include giving customers different levels of service, depending on how rich they are: if they have only $100 in their account, they might end up being told a dozen times that “your call is important to us”; if they are millionaires, a real person will probably pick up the phone right away. The highest art of CRM is to come up with a personalised offer, say a combination of a home loan and a college savings plan, that a customer is likely to accept.

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