a functional framework for integrating ecrm with workflow workflow management based on customer...

TSINGHUA SCIENCE AND TECHNOLOGYISSN 1007-0214 11/21 pp65-73Volume 11, Number 1, February 2006

A Functional Framework for Integrating eCRM withWorkflow Management Based on Customer Value*

W. H. Ip, CHEN Bocheng ( )†,**, Henry C. W. Lau, LIANG Bing ( )†

Department of Industrial and Systems Engineering,Hong Kong Polytechnic University, Hunghom, Hong Kong, China;

†School of Economics and Management, Tsinghua University, Beijing 100084, China

Abstract: eCRM ties customer relationship management with e-business. Very often, eCRM is interfaced

with other information systems to form a seamless integration and interchange of information both inside

and outside an organization—a work flow management system. This integration of business partners, sup-

pliers, and customers is essential in this global competitive market environment. An effective infrastructure

and hence an appropriate framework are required to provide the information exchange and data analysis

between eCRM and work flow management. This paper proposes a functional framework of eCRM based

on customer value to realize the win-win strategy for both the companies and their customers. Moreover, a

workflow management system also forms an integral part of this total solution to facilitate the implementa-

tion of a supply chain or extended enterprise.

Key words: customer relations management; work flow management; information system; supply chain

Introduction

No other inventions in recent years have had such a

deep influence on how companies manage their

customer relationships and how they do business as the

Internet. Use of the Internet has changed customers’

purchase expectations to a totally new way of doing

business. Many customers now purchase goods

through the Internet, but this is not the only influence

of the Internet or customer behavior. Customers also

search for information about products, services, and re-

lated information before they make a purchase. Today,

companies have to rethink how to tighten their rela-

tionship with their customers by creating an e-business

strategy. In fact, we call this eCRM—customer

relationship management with e-business. Many fore-

casts indicate that eCRM will experience rapid growth

in the near future[1]

. A successful eCRM should effec-

tively support the company and provide customer

value to realize the win-win strategy in the Internet era.

Moreover, eCRM must provide seamless data integra-

tion among various databases which is one of the ma-

jor concerns for building an efficient information infra-

structure[2]

. Since the late 1990s, data interchange and

integration techniques have attracted the attention of

many researchers in view of the proliferation of for-

mats and standards in various computing platforms[3]

.

In order to achieve efficient data interchange, data are

standardized by adopting extensible markup language

(XML) to facilitate data exchange among business

partners along the supply chain. This data interchange

implemented through a work flow management system

provides information to the corporate executives

and/or decision makers to make strategic decisions or

even foresee future opportunities and formulate their

Received: 2004-04-08; revised: 2004-08-26

Supported by the National Natural Science Foundation of China (No.

70231010)

To whom correspondence should be addressed.

E-mail: [email protected]; Tel: 86-10-62789940

Tsinghua Science and Technology, February 2006, 11(1): 65-7366

strategies. In order to provide valuable and helpful in-

formation to the decision makers, technological ad-

vances in data modeling, databases, and application

developments made it feasible to analyze data with a

common data source through an integrated system. In

this paper, we first state the customer value as the core

of eCRM. Then based on the customer value, a func-

tional framework for realizing customer value is pro-

posed; this model is integrated into the work flow

management system to provide a strategic information

system for an enterprise.

1 Literature Review: Supply Chain, CRM, and Work FlowManagement

CRM is a combination of business processes and tech-

nology that seeks to understand a company’s custom-

ers from multiple perspectives to competitively differ-

entiate a company’s product and services[4,5]

. People

usually classify CRM software products by their main

functionalities to three types: operational CRM, ana-

lytical CRM, and collaborate CRM. The operational

CRM is a customer-oriented application, which is

similar to the ERP’s (enterprise resource planning)

function. It not only strengthens the relatively weak

part of the sales function in the ERP, but also inte-

grates the marketing and customer service function as

a whole. The analytical CRM captures, stores, extracts,

processes, and analyzes the customer data using data

warehouse and data mining technology to discover

customer patterns and behaviors. The collaborate CRM

provides a collaborative working environment across

all the customer interfaces. With the advance of the

Internet and electronic communications, the distinction

is blurring between eCRM and supply chain manage-

ment in the business-to-business as well as business-to-

consumer markets. The broader context of commercial

exchange and work flow management in the supply

chain management has been the focus of information

systems research[6,1]

. Indeed, in today’s highly com-

petitive marketplace, companies are becoming more

information-oriented which depends on data to drive

the development of better products and services while

making more effective business decisions[7]

. Opera-

tional and strategic business decisions directly influ-

ence organization results of generating profit, cost sav-

ings, development of products and services, marketing,

and customer value and satisfaction[8]

.

We can see that both CRM and work flow manage-

ment become a common set of interrelated resources

and activities that transform inputs into outputs. In or-

der to implement and manage the workflow processes

accurately and efficiently, and track to and trace all the

necessary information in the supply chain, an informa-

tion system that collects, maintains, analyzes, and in-

terchanges data among the business partners is critical

to eCRM. Nevertheless, it is not uncommon that com-

panies operate in heterogeneous data sources with dif-

ferent platforms. This issue causes serious problems to

enterprises mainly due to the lack of ability to analyze

data efficiently and accurately. Therefore, it is neces-

sary to convert the collected data to a standard format.

XML, defined by Walsh, is a markup language for data

containing structured information with mechanism to

identify structures within data. Unlike HTML, the tag

semantics and the tag sets of XML are fixed. In general,

XML is a meta-language for describing a markup lan-

guage[9]

. With XML, the main purpose of which is to

add semantics to documents, data mining in such

documents is easier to be carried out. The meta infor-

mation, when added to the data, simplifies the pre-

processing of text and produces a document that can be

used for data mining activities. In addition, the data

warehouse becomes a strategic and important tool for

conducting business and execution of corporate strat-

egy, while enabling decision makers to make real-time

decisions[10]

. In the early 1990s, technological ad-

vances in data modeling, databases, and application

developments made it feasible for decision makers to

analyze data with a common data source. According to

the definition of the OLAP Council, OLAP is a “cate-

gory of software technology that enables analysts,

managers, and executives to gain insight into data

through fast, consistent, interactive access to a wide

variety of possible views of information that has been

transformed from raw data to reflect the real dimen-

sionality of the enterprise as understood by the

user[11]

.” In other words, OLAP converts data into use-

ful information by transforming raw data to meaning-

ful and organized information with its analysis features

so that it reflects the real dimensionality of the enter-

prise that is understandable by users. Most importantly,

OLAP has the ability to provide managers with infor-

mation that they need to make effective decisions

W. H. Ip et al A Functional Framework for Integrating eCRM with … 67

about an organization’s strategic directions. Devlin[12]

summarized the direction of information-based man-

agement as single information source, distributed in-

formation availability, information in a business con-

text, automated information delivery, and information

quality and ownership. The main purpose of adopting

OLAP is to analyze the aggregate data with a multi-

dimensional view, which collects distributed data

while performing as a single information source. The

OLAP tool assists the decision-maker to create appro-

priate knowledge and analysis models by browsing the

appropriate data groups, and defining the model rela-

tions between them[13,14]

.

Some earlier work, such as Hu and Zheng[15]

and Li

and Qi[16]

, attempted to understand customer value

with CRM. But literature review indicates that there is

no available publication related to an approach to

achieve efficient eCRM, data interchange, and work

flow management among business partners to enhance

customer value. The research concerned with their in-

tegration and hence the design of an appropriate

framework to provide better customer value is essential.

2 Customer Value: Core of CRM and Work Flow Management

Although there are many CRM and work flow man-

agement software available in the market, we can see

that most of them still function as marketing, sales, and

customer service automation. The automation and in-

tegration of marketing, sales, and customer service

contribute to a company’s front-office automation; it is

the basis to run the customer relationship management,

but not the core. Today’s market is changing from

product centric to customer centric. A customer-driven

business requires a clear awareness of the customer

value. CRM should benefit the company in several

ways: it should bring the capacity of “one to one mar-

keting” to the companies, i.e., companies should clas-

sify their customers based on the value that each cus-

tomer brings to the company, and provide different

services to them; based on the ABC principle, to keep

an old customer is more profitable than to acquire a

new customer; therefore, they should focus on retain-

ing their loyal customers as well as exploring new

markets.

CRM should not merely consider the value that the

customers provide to companies, but more importantly

what is the value that the customers require. Customers

will not maintain a close relationship with companies

if their requirements cannot be satisfied; this is more

prominent in today’s customer centric era. Therefore, a

successful CRM should first focus on the value that the

customer required, consider what value can the com-

panies provide to their customers and how these values

can be provided to their customers. CRM should first

manage customer value by providing customers with

their required value, and to gain customers’ return

value. This is the win-win situation for a successful

CRM. To manage and realize customer value should

be the core of any CRM.

In the eCRM environment, Internet provides the

convenience and flexibility for a customer or user to

browse information, purchase goods, and obtain ser-

vices; it also enables the companies to provide infor-

mation about products and services quickly to their

customers, and to monitor their customers online effec-

tively. In order to understand eCRM better, we analyze

customer value based on both customers’ required

value and their return value to the company.

When a customer purchases a product or obtains a

service, he has certain requirements in this process—

from product selection, purchase to usage, these

requirements form the customer’s additional value re-

quirements. We now describe the customer’s value re-

quirement by dividing the customer interaction process

into three periods: pre-purchase period, in-purchase pe-

riod, and post-purchase period.

Pre-purchase value The diversification of

products and the mass of information make it difficult

for the customers to make their decisions: customers

have to spend considerable quantity of time and energy,

sometimes even money to acquire the useful informa-

tion to help them choose the proper products. This is

the acquisition cost which contains the time, energy,

and money consumed.

In-purchase value Once a customer has made

a choice, the value that he requires will transfer to the

purchasing process. The common expectations to the

purchasing process are 1) convenience, that he can

place a purchase order through a convenient way, for

example, he can obtain the product or service through

the web; 2) simplicity, that the purchase procedure and

work flow should be easy to follow; and 3) timeliness


and accuracy.

Post-purchasing value This after-service is an

effort by companies to meet their customer’s post-

purchasing period value requirements. The post-

purchasing period value requirement is to pursue the

minimization of risk cost of the product or service

maintenance and repair.

The pre-purchase value requirement, in-purchase

value requirement, and post-purchase requirement

form the process value requirement. Figure 1 illustrates

the process to meet customer value.

Fig. 1 The components of customer value

On the other hand, customer return value is essential

to eCRM and the work flow management system. The

customer return value is the value that customer or user

contributes to the company after his own requirement

is fulfilled. The main ingredient of the return value is,

of course, the money value that the customer brings to

the company. The money value consists of three parts:

history value—the value that has been realized until

today; current value—the future value that the cus-

tomer can bring to the company if his current behavior

pattern remains unchanged; potential value—if the

customer’s purchasing enthusiasm can be raised by

company’s effective marketing and sales. A loyal cus-

tomer or user can bring more value to the company

than just increased profits, mainly including cost sav-

ing and advertisement through word of mouth. Cost

saving is the result of an effective cut down in market-

ing and transaction cost. A good word of mouth may

improve the company’s goodwill and enhance the im-

age of the company.

3 Integrated eCRM and Work FlowManagement Model

We have advocated that eCRM should well support a

company to realize its win-win strategy under Internet

environments, and most of all to provide customer

value. This integrated system is not simply designed to

present documents and static data on the Internet

through the corporate network. It is designed to inte-

grate with the distributed systems for workflow man-

agement and information interchange between the

company and the partners to achieve the customer val-

ues. There are mainly three components in the infor-

mation system—a common interface, a workflow man-

agement system, and OLAP tools. The structure of the

system allows collaboration and data sharing among

the supply chain participants with the ability to

complete business transactions, generate reports, and

dynamically update information through the common

interface. Working in the Internet environment, the es-

sential feature of this model is to provide both cus-

tomer support and customer segmentation functions for

the customer required value and the customer return

value. Figure 2 illustrates this model.

Fig. 2 A functional frame model of eCRM and workflow management

From Fig. 2, we can see that the customer value, the

functionality of eCRM should address customer sup-

port and customer segmentation to enhance customer

values. Moreover, the workflow management system

allows users to access and retrieve data of any database

format from distributed sources which is then proc-

essed according to the business logic; it is then fol-

lowed by the automatic assimilation of the data in the

participants’ own database system. In brief, both

eCRM and the workflow management system benefit

from an organization by allowing effective information

interchange among the members of the supply chain.

The purpose of XML is to enable data interchange in a

simple and standardized manner on the Internet. The

workflow management system encompasses the robust

XML data interchange open standard, so the informa-

tion infrastructure can be integrated virtually with all

the existing systems and the database in real time man-

ner while distributing information automatically to all


members. Besides data interchange is being done

through the workflow management system, it is also

responsible to automate the workflows and communi-

cate with the supply chain. In other words, with the

adoption of the workflow management system, the

company can automate the business processes that in-

teract with each other within the organization or to the

partners. Furthermore, the workflow management sys-

tem integrates with the enterprise applications to

achieve a consistent view of the data and applications

both inside and outside the organization for better cus-

tomer value.

The essential part of this model is to provide cus-

tomer value and process value for the company to gain

a competitive edge. Specifically, these functions or

modules are summarized as follows:

Customer decision support In most cases,

customers wish to lower their acquisition cost. Since

there is abundant information available on the Internet,

an effective approach is to lower a customer’s acquisi-

tion cost through a customer decision support system.

The customer decision support should help the cus-

tomer to identify the product or service that meets his

needs; become aware of the advantages of the com-

pany’s products compared to the competitors; and

choose a proper product from the company’s product

list. For example, include a purchase guide or service

guide, a comparison among the leading products, and a

final purchase recommendation. They all make infor-

mation collection, classification, and analysis for the

customer easier.

Purchase tracking and monitoring After

placing an order or request for service through the

Internet, a customer needs to wait for the deliverables.

To meet a customer’s purchasing requirement, tracking

must be provided. Tracking can be done effectively

through a work flow management system to link all

parts of the supply chain together. They are the work-

flow processes among the company and its business

partners in the supply chain.

Self-service The Internet can provide a true

24×7-service capacity for the company. The service

web sites can provide such functions as a knowledge

database, OLAP queries, frequently-asked questions

(FAQs), resource downloads, and E-mail answers for

questions.

Customer segmentation One of the important

methods to understand customer value is to segment its

customer base according to the value they provided:

identify the most valuable customers through OLAP

analysis. The differentiation of product or service can

lower the total service cost while ensuring the valuable

customers to enjoy better service. Customer classifica-

tion or customer value management suggest viewing

customers as an important asset for a company. The

method of classifying and managing customers based

on customer return value is an application of active-

based costing (ABC) analysis. Moreover, customer be-

havior analysis is used to analyze the customer’s pur-

chasing behavior. Applying the OLAP data mining

methods to customer data to segment the customer

base can define the product association rules, such as

the intention analysis. The user intention analysis is

used to forecast his future intention. The development

of the data warehouse and OLAP technology enables

the companies to segment and understand their cus-

tomers based on the demographic data. This segmenta-

tion is based on the customer behavior analysis and the

customer intention analysis can be more precise and

valuable. Finally, personalized configuration enables

the customer classification information and the cus-

tomer analysis result to form a comprehensive cus-

tomer profile. The personalized configuration is to

provide different service solutions for different users or

customer profiles, such as product/service suggestions,

pricing discount strategies, and after-sales contracts.

4 Implementation and Evaluation: Case Study

The following case study describes one of the largest

distributors of telecommunication equipment company

in Hong Kong and Mainland of China. It has a whole

range of subsidiaries, together with a large retail distri-

bution network. Products include mobile phones, tele-

phone fixed lines, board band cable networks, etc.,

which are marketed to both public and business sectors.

The company has grown substantially over the last few

years, which has been achieved through a variety of

business activities that combined to produce a complex

telecommunication infrastructure. To deliver the ser-

vices required from the technology, this company has a

large operation function divided into the traditional

technology hierarchies of Development, Operations,


Support, Planning, and Administration. A detail inves-

tigation revealed that the customer support centres

were run by different parts of the organization using

non-standardized procedures with no formal communi-

cation channels. There were also no plans to provide

different operating units with any additional technol-

ogy support; the perception from general staff was that

the old customer support centre was a low priority.

This view continued for a long period of time, which

had caused problems to accumulate. These problems

can be categorized under three headings of people,

processes, and technology. Low staff morale was evi-

dent in the customer support centre units as the staff

was continually under pressure to deal with internal

users who in turn were dealing with external customers.

As with the rest of the company, staff was regarded as

a resource to be tightly controlled with discipline im-

posed through many levels of management. Customer

support centre staff was a costly resource to train and

develop; there was also a high turnover and valuable

expertise was lost from the company, leaving them

vulnerable until new staff was recruited and retained.

This huge resource effort and associated costs were so

badly utilized that the quality of customer service

dropped rapidly. The Customer Relations Department,

which collected and analyzed the business’s com-

plaints, reported a 6-month period with the total vol-

ume of complaints rose by 60%.

In order to resolve the problems accumulated at the

customer support centres, a new eCRM system with

work flow management requires development and im-

plementation. To develop and accomplish the new sys-

tem successfully, the software development life cycle

is applied to the project; a feasibility study, logical data

flow design, and prototyping are the steps that enable

the company to create an integrated eCRM and work

flow model described earlier. The functionality of the

eCRM customer support centre is defined as a cus-

tomer value and process value offered to end users.

Every user has the right to expect that the services pro-

vided by the support services centre are efficient and

helpful. With increasing emphasis on the company to

deliver a quality product to its internal and external

customers, it is important that an effective eCRM ex-

ists. It also provides an additional marketing benefit

since it provides an extra customer care service and

value. The system will provide services to 28

distributed retail outlets, with the objectives to ensure

that the level of service to the customer or users are

consistently of high standard. In fact, the CEO has ad-

dressed the issue on various important occasions and

highlighted the need to deliver the eCRM and work

flow management model using the functional frame-

work proposed in this paper; the problem needed to be

resolved in terms of the requirements of the people, the

processes, and most importantly, the customer value

and processes.

Over a reporting period of six months, the project

team applied the system development life cycle to de-

liver over 50% of the functionality of the requirements

according to the model. The system was designed and

implemented using development programming lan-

guages in Windows Internet Explorer. It provides a

powerful interface for developing the system quickly.

The system is a modular development with a set of

modules based upon different hardware and software

features. End users and customers are able to search

solutions and retrieve information using OLAP tech-

nology. In addition, end users are allowed to post a re-

quest/resolution to the eCRM through a work flow

management system. For example, customer service

representative receives a service request from customer

or end user to the eCRM system; verifies the end user

information, product or service information, and then

responds to a solution using the OLAP tool. The work-

flow management software is used to automate the

various business logic as well as to process the request

and approval for each individual. Figure 3 shows the

workflow of the end users/customers to submit a re-

quest and search for solution. Customer service repre-

sentative (CRS) first identifies the service request

whether it is a new service request. If it is a new re-

quest, CRS verifies the submitter information and en-

ters the details including service or product catalog,

product owner, product version, and product platform.

Also, CSR verifies the product information whether it

is still under service contract and the status of returned

materials authorization (RMA) if appropriate. Once all

services or product information is identified, CSR clas-

sifies the solution type and search for appropriate solu-

tion. If there is no resolution in the knowledge base ,

the service request is classified as pending status in

eCRM system where work flow management system

will automatically deliver a notice to the Engineering


or Marketing Department with a suggested schedule

and resource allocated for further investigation. If a so-

lution is available for the user’s request, CSR responds

to the user through an E-mail and close the request.

CSR then enters the request date/time and reviewed the

time-spent statistics which will be further analyzed us-

ing OLAP technology.

Fig. 3 Case study: Integrated eCRM and work flow system

Figure 4 further illustrates the workflow of the end

users to submit request and search for solution in the

knowledge database. End users can post a case and ex-

perience to the knowledge base for sharing. End users

can login the eCRM system, search solution from

knowledge base, and then use various functions to post

experience cases for OLAP analysis.

Fig. 4 Case study: Workflow process of eCRM

The system architecture includes an Internet net-

work connection of Web server between the eCRM

and work flow management. Hardware specifications

define the amount of system memory, CPU speed, the

amount of hard disk space, as well as the type of ac-

cessing technique employed. All these could lead to

different system turnaround times, response times, and

end users’ impressions of the system. The system is in-

stalled in personal computer (PC) server and UNIX

server and run on local/wide area network. UNIX has

the advantages over PC operating system: UNIX is

found to be more proficient in the use of its memory,

especially when dealing with network services. Be-

cause UNIX requires less memory and processor time

than PC operating system, a UNIX-based system has

more memory and processor power for other computer

functions. Moreover, individuals and subsystems run-

ning on PC operating system could be less stable than

a UNIX system. For example, UNIX can operate 27%

faster than PC operating system when reading static

HTML content, and with application programmer


interfaces (API) generated content.

Different software, programming language, and ra-

tional database management system (RDBMS) are de-

signed to support the model and applications. Flexibil-

ity needs to be considered, as the RDBMS language

may not interface with other common programming

language available on the market. One of the common

approaches is to use Microsoft Visual Studio

(C/C++/Basic) to interface with different RDBMS;

other programming languages can be deployed using

Microsoft Active Server Page for Internet and Web-

based application program. Several common RDBMS

software packages, such as Oracle, Sybase, and DB2,

available on the market have been evaluated during the

project implementation. To select the appropriate data-

base for this project, three aspects are evaluated. First

of all, server-based databases can handle just about any

data management problem. Developers select the

RDBMS because they have programmer-friendly ap-

plication programmer interfaces (or APIs) for the rapid

development of database oriented custom applications.

Performance is another consideration; server-based da-

tabases are able to efficiently utilize just about any rea-

sonable hardware platform. Modern databases can

manage multiple high-speed processors, clustered

servers, high bandwidth connectivity, and fault tolerant

storage technology. Moreover, scalability provides the

necessary hardware resources, and server databases are

able to gracefully handle a rapidly expanding amount

of users and data. In the implementation, Microsoft

Visual Studio and Active Server Pages were chosen as

the development toolkits, and Oracle was chosen as the

RDBMS software. This is because Oracle provides the

capacity, stability, reliability, and performance, and it

is a common relational RDBMS on the market. Also,

Oracle software package is available for multiple oper-

ating systems, providing UNIX with a level playing

field when paired off against the other RDBMS soft-

ware packages.

The functionalities of eCRM are based on customer

value and process and the framework of our proposed

model. The customer support now provides a single

customer interface. Productivity has been increased

which enables customer support service staff to com-

petently deal with any problem; they have access to all

the information necessary to make decisions. Re-

sources are being effectively utilized while the quality

improves significantly. This effect was soon identified

by the Customer Relations Department, who has seen a

significant decrease of customers and users complaints

within two months of the introduction of the system.

Responses have been speeded up with new service be-

ing introduced. Data captured by the system is now

converted into meaningful and useful information us-

ing OLAP technology. One of the major roles of the

managers is now to analyze and identify trends and

patterns according to customer values and segmenta-

tion. This has increasingly enabled the manager to be

proactive in the identification of potential improve-

ments. The eCRM and work flow management system

is organized around results rather than individual tasks;

the decision point is built into the process. The front-

line customer support service staff can make effective

decisions while the managers concentrate on strategic

issues and management of customer value and process

value. Managers now concentrate their efforts not only

on training customer support service staff, but also on

the changing from measuring the performance of the

help desk by the number of calls it handles to how ef-

fective it can contribute to customer decision support,

customer segmentation, and most of all to increase cus-

tomer value.

5 Conclusions

In this paper, we suggest that customer value should be

the core and basis of eCRM and work flow manage-

ment. The customer values include both the customer

required value and the customer return value. Based on

the content of these values, the main functionalities of

customer support and customer segmentation operating

on the Internet environment are designed using a pro-

posed model and its functional framework. Data inter-

change can be done through a common standard, im-

plementation of business processes automation, and

keeping the valuable data for decision-making regard-

ing customer support and market segmentation. In or-

der to make these decisions with accurate information,

on-line analytical processing is used as a tool for

knowledge discovery. Raw data are sent from the data

source into an OLAP-multidimensional database,

which performs multidimensional views on aggregate

data and provides quick access to information for stra-

tegic analysis such as customer segmentation and

customer decision support. It enables managers and


executives to gain insight of data through fast,

consistent, and interactive data access to a wide variety

of possible views of information. This web-enabled

technology can be operated on the Internet and author-

ized users can perform data mining any time, anywhere.

In the case study implementation, it was found that

staff morale had completely changed and improved

with a high degree of commitment. Staff turnover has

fallen below the company’s norm because they are

empowered to be accountable for decision-making to

improve customer value.

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