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J

J

OURNAL OF

I

NFORMATION

T

ECHNOLOGY

T

HEORY AND

A

PPLICATION

Bartel Van de Walle acted as the senior editor for this paper.

AN INSTITUTIONAL PERSPECTIVE ON CUSTOMER

RELATIONSHIP MANAGEMENT

D

AVID

R.

F

IRTH

,

University of Montana

School of Business Administration, Missoula, MT 59812, 406-243-5979, Email: david.firth@umontana.edu

C

AMERON

L

AWRENCE

,

University of Montana

School of Business Administration, University of Montana, Missoula, MT 59812, 406-243-6739,

Email: cameron.lawrence@umontana.edu

A

BSTRACT

Customer relationship management (CRM) is an IS innovation that is

becoming an important concern for many organizations; for instance a recent

study suggests that over 50% of organizations may be in the process of

implementing some form of CRM technology. This paper uses the organizing

vision framework, introduced by Swanson and Ramiller (1997), as a tool to

examine CRM from an institutional perspective. Such a perspective is valuable to

researchers as it highlights the multifarious factors outside the organization that

can impact adoption of CRM within the organization. For practitioners, we find

that by creating, participating, and being influenced by the CRM discourse,

managers do not operate in a vacuum when they consider whether to adopt and

implement CRM.

I

NTRODUCTION

Customer Relationship Management (CRM) is an IT-driven concept used to design the business and its processes around the customers’ wants and needs (Burghard and Galimi 2000). The CRM market is said to have been around $8 billion for 2004 but is expected to grow to $10 billion by the end of 2006 (Low 2002). In addition, recent survey-based research of CRM diffusion (Firth and Swanson 2003) has found that more than half of the respondents are either using or implementing some form of CRM technology (see Figure 1 below).

In addition to this evidence of extensive diffusion of CRM and the rapid reported growth in the CRM market, CRM has other facets that make it interesting to study. CRM is not simply another turnkey project that can be parachuted into an organization. With the unique ways in which different organizations handle their customers and because business processes supporting this are often complex and diverse (Gefen and Ridings 2002), it is clear that “CRM is not a tool for buffing a company’s performance at the edges” (Rigby and Ledingham 2004, p. 119), but must be handled in a very strategic fashion.

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C

ONTRIBUTION

This paper makes a contribution to IS research by taking an institutional perspective on this IS. It offers an alternative point of view to much of the academic- and practitioner-oriented literature, which suggests that the decision to adopt a new technology such as CRM is based exclusively on the rational analysis of factors and events occurring at the organizational level. In addition, it provides insight into how personal and institutional knowledge of CRM is accumulated, which may reveal biases that have occurred in one’s own knowledge creation that were not evident, but nonetheless deserve some self-reflection.

Despite this, researchers seem to typically focus on specific, technical aspects of CRM (e.g., Kim 2006), or on implementation details that arise long after the decision to adopt CRM has been made (e.g., Gefen and Ridings 2002). Both of these emphases, we believe, can be attributed to viewing CRM primarily as a technology initiative (Kale 2004). One difficulty with such a perspective is that it doesn’t often fit with how executives themselves grasp CRM. True, some executives see CRM as a narrowly defined and very tactical undertaking, but for others it is a broadly conceived and holistic solution (Payne and Frow 2005). To encompass and address this continuum of views, as well as the complexity inherent in CRM, we take a different research perspective, based on the “organizing vision” framework first presented by Swanson and Ramiller (1997).

The paper proceeds as follows: First we introduce the notion of an organizing vision as developed by Swanson and Ramiller (1997). We next provide a brief descriptive overview of CRM. We then look at the diffusion of the CRM innovation using the organizing vision framework. We conclude with remarks about how an institutional perspective on CRM, such as that provided by the organizing vision framework, can be useful to both academics and practitioners alike.

O

RGANIZING

V

ISIONS

An organizing vision is defined by Swanson and Ramiller (1997, p. 460) as “a

focal community idea for the application of information technology in organizations.” Organizing visions, they further expound, are “developed and promulgated in the wider interorganizational community” (Ramiller and Swanson 2003, p. 13). The organizing vision concept recognizes that managers who are faced with options about an innovation make those choices not in isolation but in the context of, and with reference to, processes taking place at the institutional level. Essentially, the organizing vision framework provides researchers with a way to view the diffusion of technological innovations such as CRM from a broader and more encompassing perspective.

0% 5% 10% 15% 20% 25% 30% P e rc e n ta ge of Or ga niz a ti ons R e por ti ng ( Tota l n = 5 5 )

Using Implementing Deciding Watching and Waiting

Ignoring

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An important theoretical influence in the development of the organizing vision framework is neo-institutional theory, which is a perspective that is gaining momentum within IS research. Some of the most influential voices within the IS research community have explicitly singled out neo-institutional theory as a promising theoretical approach (e.g., see Robey and Boudreau 1999, Orlikowski and Barley 2001, and Avgerou 2002). However, in spite of the increased interest in institutional theory within our field, it is still “relatively novel to IS research” (Swanson and Ramiller 2004). According to Scott (2001), “institutions are composed of cultured-cognitive, normative, and regulative elements that, together, with associated activities and resources, provide stability and meaning to social life.” Consistent with Scott’s definition, this paper aims to provide insight into the diffusion of CRM that takes into account the broader institutional environment in which actors and organizations are inextricably intertwined.

The idea of the organizing vision is that a diverse interorganizational community creates and employs a vision of an IS innovation that is central to its early as well as later diffusion. The organizing vision represents a social construction by the members of the community that allows these members to make sense of the innovation as an organizational opportunity.

In the process of adopting an IS innovation, an organization is looking to extract business benefit from the application of the technology. Attewell (1992) states that firms delay in-house adoption of complex technologies until they obtain sufficient know-how to implement and operate them successfully. Yet how will they obtain the know-how, and what is sufficient? It is clear that managers need to find the requisite information to perform the task ahead of them – the implementation of the innovation. So how then do they get this information? Swanson and Ramiller (1997) suggest that managers in the prospective adopter organizations search out and appropriate the interpretations of others around them, through mechanisms such as Internet searches, the trade press, practitioner oriented conferences, knowledgeable friends, and vendor

presentations. The significance of this perspective is to situate – from its earliest stages – the IS innovation process in the larger institutional environment. In addition, organizing visions serve as an invaluable “sensemaking” (Weick 1993) device for organizations in complex, dynamic environments.

The organizing vision in information systems innovation, then, is an attempt to describe, interpret, analyze and understand the social world (Orlikowski and Baroudi 1991) that emerges around the innovation, in an attempt to see what possible use the technology might have for the organization. This point of view stands in stark contrast to the rational perspective that sees the adoption of new technology as the byproduct of careful deliberations by rational actors who then implement the appropriate technology. Instead, the organizing vision perspective situates organizational “sensemaking” processes in the larger environment in which the organization is intertwined.

The current research project is an attempt to provide an alternative conceptualization of the adoption of a critically important technology, CRM, by suggesting a more sophisticated approach. Through the organizing vision framework, we can view the adoption process for CRM as simultaneously tied to both its micro-level organizational context and the larger environment in which it operates. The organizing vision framework will free us from being bogged down in the technology that supports CRM and, instead, allow us to look at the social processes that shape the tactical and strategic decisions that academics and practitioners both face.

C

USTOMER

R

ELATIONSHIP

M

ANAGEMENT

CRM combines methodologies, software, and (usually) Internet capabilities with a customer-focused strategy designed to optimize profitability, revenue, and customer satisfaction, all the while focusing on the customer’s wants and needs (Burghard and Galimi 2000). By being attentive to customers’ needs, they’re likely to become better, more profitable customers. Although CRM is easy

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to define, it is not an easy thing to achieve as it requires a top-to-bottom analysis of the way the enterprise sees its customers and the way those customers see the enterprise (Blodgett 2000). Complexities such as this make some organizations reticent to adopt CRM.

A suite of software applications lies behind the vision of CRM, aiming to integrate sales, marketing, and customer service (Galimi 2000, Wardley and Shiang 2000) with the back office (see Figure 2 below).

Figure 2. CRM Aims to Integrate Sales Automation, Marketing Automation and Customer Care and Support with the Back

Office

A review of the offerings of leading CRM vendors such as Siebel and Oracle shows some of the applications needed to support the vision:

Sales automation includes providing the functionality to perform tasks such as lead tracking, account/contact management, telemarketing, and contact management;

Marketing automation allows the automation of campaign management, planning and execution, handling of customer lists, and direct marketing;

Customer care and support applications provide customer information management designed to enhance the management of relationships with existing customers. The applications may include problem tracking and incoming call management.

T

HE

D

EVELOPMENT OF THE

O

RGANIZING

V

ISION FOR

CRM

So how did the organizing vision for CRM develop? The following numbered sections refer to the numbered paths in Figure 3 (below), which is adapted from Swanson and Ramiller (1997).

Figure 3. The Institutional Production of Organizing Visions (from Swanson and

Ramiller 1997)

1. The vision is first produced and sustained through discourse. The vision exists because a collection of social actors agrees it exists, in a process Lee (1994) might depict as social construction. Lee describes social construction using as an example Euclidean geometry. Although it does not exist in the physical world of nature, Euclidean geometry is something that can be discussed. And although people who carry knowledge of Euclidean geometry come and go, the object called Euclidean geometry remains. Likewise we see that the organizing vision of CRM is an object that does not exist in the physical world yet exists in the eyes of those discussing it.

An ABI/Inform search for articles related to CRM1 found that the discourse begins around 1994 (Jutkins 1994), even though Siebel Systems, Inc. “a company founded to address the growing need of organizations of all sizes to acquire, retain, and

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better serve their customers” (according to Siebel Systems, Inc. website www.siebel.com prior to its integration into Oracle) was founded in 1993. Jutkins (1994) uses the buzzword CRM, although at this time the term equates to customer relationship marketing, evidence that the early discourse surrounding the vision had a distinct marketing focus.

Discourse in a community may ebb and flow. A particular upswing in the discourse is often a result of the vision coming to be seen as distinct and plausible. A buzzword for the vision then gives a title to the story that the organizing vision represents (Swanson and Ramiller 1997). Not until a decade after the fact does Slater (1997) report on Capital One having an epiphany that their business could be about more than just extending credit: “[We realized] that the credit card business was not just a finance activity but an information-based activity about customers.” It seems clear that the roots of CRM go back further than does the public manifestation of the organizing vision.

What we see then is that an emergent, heterogeneous community coalesces around the common goal of shaping the discourse. This occurs through a process of structuration (Giddens 1984) in which members of the community draw upon existing discourse to understand the technology features available to them and in so doing create a set of social practices that reinforce, adjust, or change the discourse.

2. Swanson and Ramiller (1997, pg. 462) note that particular impetus is given to the vision’s production through commerce. It is through commerce that companies start to find that they have connections both to the vision and each other.

New companies spring up to support the vision. Siebel Systems, Inc. is one such company, and in a recent survey (Firth and Swanson 2003) Siebel was found to have captured 40% of the market for CRM amongst those responding. Some seek to exploit the vision and its “fuzziness” (Swanson 2000), using the lack of clarity in the vision to their advantage and perhaps swaying the vision in one particular direction. Diversity exists in the commercial marketplace, with companies seeking to exploit the different views people

have of CRM, which include direct mail, loyalty cards, databases with data mining, and even personalization on the Internet (Payne and Frow 2005). These companies are champions and supporters of the vision, and many spend considerable effort supporting their version of the vision (Wang and Swanson 2003).

Further evidence of the breadth of the commerce vision for CRM comes in a recent report from Chellappa and Saraf (2002), which shows that CRM vendors were a part of a larger enterprise resource planning (ERP) schema and that extensive social networks existed between the different vendors in both the CRM and ERP markets. As these markets overlap, and then the vision for the markets overlaps, these social networks will enable the organizing vision for CRM to extend beyond its original horizon, introducing changes as it organically spreads.

3. The subculture of IS practitioners. Without a “lingua franca,” there is no focus for the discourse about CRM. As is often the case with human communication, people might think that they’re talking about the same thing, but in fact they’re talking about different things. The early discourse reflects this struggle to define a common language as members of the community jostle with a buzzword to describe the vision. In 1994 and 1995 the vision is one of relationship marketing (Jutkins 1994; Child, Dennis, Gokey, and McGuire 1995), and it is only later that it becomes a broader relationship management issue.

Swanson and Ramiller (1997) note that the discourse draws meanings and language from a store of cultural and linguistic resources provided in the subculture of IS practitioners. Thus we see that the first time Datamation (Varney 1996) talks about CRM is in terms of database marketing to allow prediction of customer loyalty. By using the term database, the community idea of what is involved in a database has been engaged, and members of that community now have a common frame of reference.

4. It is business need that drives the purchase and deployment of technology to support the core business process of the organization. To the extent that the organizing vision represents

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a response to a business problematic (Swanson and Ramiller 1997), the organizing vision will gather pace, momentum, and buzz.

Once a business need has been identified, the community finds focus for its discourse, and the vision becomes more strongly legitimized (Swanson and Ramiller 1997). Grounding the innovation in business terms provides access to the vision for a wider variety of actors and organizations and allows for capital to be applied to the purchase of technology and skills to support what has been described in the vision. The broader the grounding that can be created, the more likelihood that the vision will continue to grow.

Early evidence suggests that the rhetoric surrounding the business driver of CRM was quite fervent: “For CRM time is of the essence right now, because companies that establish CRM infrastructures are getting a jump on developing loyal customer bases. People are scooping up customers now” (Pender 2000). This is consistent with research into fashions and trends in IT, which finds that in the early days of an innovation, the rhetoric is upbeat (Wang and Swanson 2003). As 2005 comes around, the rhetoric has become more balanced. For example, Gartner (2005) reports “the majority of CRM application technologies that were approved for investment in 2004 were chosen primarily because they would reduce costs.”

5. Technology. In an example of adaptive structuration (Orlikowski 1992), we find that the organizing vision provides structures that actors appropriate, and the technology itself provides structure that confines the visions of the actors. As the actors use the technology, the technology gets adapted to the vision and the vision gets adapted to the technology. This is a dynamic process, as the vision is changing organically with reference to, as well as irrespective of, the technology. In addition, the technology is in a state of flux and can alter the organizing vision as it itself morphs over time.

For CRM we see that the technology available in software packages is often too constraining; a recent survey found 23% of the organizations responding had developed CRM in house (Firth and Swanson 2003). Pender

(2000) reports that CRM packages do not offer adequate tools for ERP integration and without that level of integration, critical data like financial information cannot flow back and forth between ERP and CRM systems. The result is that companies could have difficulty creating customer profiles that include information like shipment performance and customer spending habits. The technology has constrained the vision, and with articles having titles such as “CRM from scratch” (Pender 2000) in the business press, the organizing vision for CRM becomes altered.

6. The organizing vision is formed and reformed in the ongoing interpretation of the innovation’s adoption and diffusion (Swanson and Ramiller 1997). Although a variety of players make up the discourse community, the organizing vision specifically addresses the application of technology within prospective adopter organizations.

To be successful, an organizing vision must be distinctive, intelligible, plausible, and add business value (Ramiller and Swanson 2003). To the extent the vision supports this, then it is easier for the implementer and users of the technology to rely on the vision.

IT practitioner magazines such as CIO, with articles like “Crunch Time” (Deck 2000), are an example of the ongoing interpretation of CRM’s adoption and diffusion. Deck’s article provides insight into the early planning stages of one company’s CRM project and shows how that company prioritized the practical considerations for long-term CRM results. In another article (Mitchell 2000), the details of how a company turned to a CRM system that tied sales-force automation to departments like product engineering, customer service, and pricing approval, spells out the fact that CRM is distinctive, intelligible, plausible, and adds business value. It also brings home that here is a company that has already adopted.

D

IFFUSION OF THE

CRM

INNOVATION

Having taken a structural-process view of the organizing vision for CRM, in line with Swanson and Ramiller’s (1997) organizing vision paper, we offer a complementary view from the perspective of function. In revealing organizational opportunities for exploiting technology such as CRM, organizing visions

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facilitate three important aspects of the IS innovation process: interpretation, legitimization, and mobilization (Swanson and Ramiller 1997, p. 460).

1. Interpretation: the organizing vision represents the community’s effort to develop a common “social account” (Swanson and Ramiller 1997, pg 460). Such a social account may be difficult to measure since it is often created and re-created in the myriad of interactions that take place between managers at different organizations. However, we are able to capture an element of the process of interpretation: that which gets published.

A review of articles, both academic and practitioner oriented, relating to CRM on ABI/Inform2 gives us insight into the size of the discourse for CRM and the level of efforts at interpretation that have taken place. As Figure 4 shows, articles relating to CRM grew rapidly for a number of years, indicating a significant effort being put forth to interpret the CRM innovation. Even after the peak in 2001, the tail-off through 2004 is not rapid, suggesting a sustained effort at interpretation.

It is important to recognize that looking at the discourse surrounding CRM, as we do here, is different from looking at the actual diffusion of CRM, although Abrahamson and Fairchild (1999) do find that the lifecycle of discourse coevolves with the lifecycle of diffusion across organizations. It is important to note that the glimpse of the social account provided here addresses its intensity, not its substance or content, although as we discussed earlier under business need¸ the content of the “social account” is ever changing. (For an

effort to chart such changing content, see Wang and Ramiller’s (2004) study of ERP.) 2. Legitimization: the organizing vision is a requisite step toward the innovation’s potential, eventual legitimization as an element of good organizational practice. The early days of “customer relationship marketing” (Jutkins 1994) have given way to a more broadly targeted CRM vision as part of the legitimization process, grounding the innovation in broader business concerns. At the same time, early reports show revenue growth in the CRM sector as being expected to continue at a healthy clip (Wardley and Shiang 2000). As the organizing vision evolves, so does the process of legitimization. Gartner (2005) now classifies the CRM market space into slices such as marketing automation, and sales automation and has developed a moniker of “Cool” for those vendors which it believes are innovative, impactful, and intriguing. This development by Gartner of a classification schema for vendors, using a popular colloquialism to name the schema’s constituents, shows that, at least for Gartner, CRM has become mainstream.

3. Mobilization: the organizing vision also serves the dynamic function of helping activate, motivate, and structure the entrepreneurial and market forces that emerge to support the material realization of the innovation. Of the organizations responding to a recent survey (Firth and Swanson 2003), 80% of those who either had implemented or were implementing CRM used one of eight available software packages, evidence that there has been market mobilization around the organizing vision for CRM.

0 500 1000 1500 2000 2500 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 N u m b er o f A rt icl es

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We find that the diffusion of CRM as an innovation occurs as a result of the diverse interorganizational community that created and now employs the organizing vision for CRM. Furthermore, we suggest the organizing vision serves as an important “sensemaking” tool that facilitates the interpretation, legitimization, and mobilization of CRM as an innovation.

C

ONCLUSION

Like a hot-air balloon, the organizing vision is given lift by what is said among those interacting with and interpreting it (Swanson and Ramiller 1997, pg 468). The ability to add lift is a result of each aspect of the organizing vision and how one aspect interacts with another at a particular point in time.

At what point are we on CRM’s balloon ride? Looking at Figure 4, we seem to be clearly beyond the apex of the CRM discourse curve. We cannot be sure, but results from 2005 suggest that the curve is leveling off. This suggests that the organizing vision for CRM is being given a constant, sustained, and sustainable lift by the discourse surrounding it. Understanding and anticipating the change in the discourse is important for managers and academics alike: for managers a downturn in the discourse might signal the end of an innovation’s life, and perhaps portend a new innovation; for academics, a downturn may make a rigorous piece of work potentially less relevant to its reviewers.

Swanson and Ramiller (1997) propose the organizing vision as a vehicle to show that institutional processes are engaged from the beginning of an innovation’s diffusion and that local choice is exercised in the context of, and with fundamental reference to, those same processes. We find support for the concept of the organizing vision in its application to the IS innovation of CRM. By creating, participating, and being influenced by the CRM discourse, managers do not operate in a vacuum. Instead, it is important for sophisticated managers to recognize that the complex decision-making processes they undertake are often influenced in subtle ways by the larger institutional environment.

This is important news for managers. A critical decision such as the adoption of a new

information technology is not made in isolation within the organization. Reference is made to the business problematic, to the community of vendors, consultants, and other user organizations who might adopt, have already adopted, or may never adopt. Insights can be gleaned from IS practitioners both within the organization and from those in the broader community. As the organizing vision for CRM develops, the technology supporting CRM will morph, developing along with the vision. As CRM technology develops, certain aspects of CRM will be supported while others will be constrained. Managers should be aware of the constraints that technology places and will likely place on the IT to be adopted. Finally, once one manager has made the decision to adopt, this then feeds into the organizing vision for other potential adopters and inherently affects the diffusion of the innovation.

Academics should see the organizing vision as an important research tool to help understand IT diffusion. Using the organizing vision provides a way of looking at information systems innovations from an institutional perspective which considers the interaction of a potentially disparate network of actors with technology that is ever changing. In today’s global short-time-to-market economy, this is clearly an important perspective.

The relatively nascent state of the organizing vision framework leaves us with fruitful avenues for future research. We need to learn how individual organizations, as members of the institutional environment that socially construct community ideas, might better monitor the development of organizing visions. In addition, dominant technologies and organizational practices emerge at times in the macro environment as the legitimate mechanisms for carrying out organizational activities, but these ideas and technologies then come into conflict with deeply ingrained and entrenched technologies and practices contained at the organizational level. How do managers reconcile these conflicting forces between the larger institutional environment and the complex organizational contexts in which they must operate?

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Another interesting area of exploration concerns the relative importance over time of the six elements of Swanson and Ramiller’s framework (1997) regarding the CRM organizing vision. For example, when does the IS practitioner subculture hold a higher level of influence than the business problematic? This type of analysis would make an important contribution because it would require the

inclusion of important contextual elements such as organizational history as well as the evolution of information systems and technology. Extending this line of inquiry scholars could then examine how the evolution of the organizing vision discourse differs for CRM vs. say ERP or web services.

1

A simple ABI/Inform search of the key words “customer relationship management” or “CRM” in title and/or abstract, filtered for irrelevant results manually, was performed.

2

Uncorrected for changes in ABI/Inform coverage over the period 1994 – 2004. Other scholarly work (Wang 2001) has shown the minimal effect of correcting for the increased coverage offered by ABI/Inform.

R

EFERENCES

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A

UTHORS

David Firth’s research interests focus on understanding innovation in organizations. This interest has led to several streams of research. One stream is on the use of genre analysis to comprehend organizational communication, and understand the systems supporting such communication. A second stream, and the focus of his dissertation which was completed in 2003, is on understanding organizational memory systems, in particular how individuals supply, search for and use information within them. The final stream examines the impact IT Research and Analysis firms have on the comprehension and adoption of IT innovations. Dr. Firth has a Ph.D. in Information Systems from the Anderson Graduate School of Management at UCLA, and an MA in Natural Sciences and a BA (honours) in Physics from the University of Oxford. He also is a Chartered Accountant.

Before his Ph.D., he was a senior manager in the IT control and security practice at KPMG LLP.

Cameron Lawrence holds a Ph.D. from The London School of Economics in the field of information systems. His research interests are in the areas of technological mediated organizational

transformation, the application of neo-institutional theory into information systems research and the diffusion of private sector IT management models into the public sector. Cameron’s teaching is focused on management information systems at the graduate and undergraduate level as well as telecom management and quantitative methods. He has been the recipient of multiple teaching awards from the LSE and the University of Montana.

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References

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