Information System Solutions For Appliance Online – MIS And CRM Comparison

Background and history

Appliance online is one of the leading online retailers in Australia specializing in selling of various products related to electrical appliances and homeware. It was founded by John in 2005. This was the time when the homeware in the Australia was yet to be explored. Although there was demand the services were not that great and it was not organized at all. Hence there was not only a potential for the market, but there was market gap which was well studied by John and he went on to found the Appliance online which has today become an leading online store in this category. Appliance online is backed by family-run Winning Group and Big Brown Box and Winning Appliances also serve as two important shareholders

Products or services it is offering

It offers a wide range of electric and home appliances. It includes kitchen appliances such as fridge, micro oven, automatic dish washer, coffee machine, toast makers, mixer and juicer and several other appliances that are essentials for daily kitchen works. Electrical appliances such as TV, home theatre, digital music player and other electronic essentials.

Overall organisational business strategy

The overall strategy of the organization is to provide world class products to the customer with attractive price and create a strong market presence through top notch customer service for better competitive advantage in the online marketing.  

As a leading online store in Australia in its category it has a strong customer base. Hence it needs to serve a lot of customer on a day to day basis. In exact figure it serves more than 300,000 customer per year in Australia alone. Hence it easily makes sense that the job of serving this huge customer base is not a complex process, but rather need intelligent solution as well. It need to manage individual customer data, sales information and project that with accurate sales and profit report as well. Only manual effort from dedicated people is not efficient, it requires automation to manage this complex job. Hence two information system solution will be reviewed in this context.

The two information system solution that will be reviewed are Management Information System or MIS and Customer Relationship Management or CRM. Benefit of each of the information system will be analysed along with the issues associated with each of the system. This comparative analysis will be done to figure out which information system solution is best in terms of benefits and cost effectiveness.  

Information systems for supporting business processes and competitive strategies

Information system such as MIS and CRM provides organization better support in business process and gives competitive advantage in the following way:

1. MIS provides an efficient customer response system that make connection between  customer behaviour and  distribution,  production and supply chains which reduces inventory cost
2. CRM provides access to real time analysis of consumer purchase history, customer preference, customer review and provides a better opportunity to serve the customer better than other competitors

Importance of information systems to the company success and its impact on the company without it

The information system has several benefits for the company success like

• lower inventory cost
• better customer management and customer retention
• better revenue through increased sales

However without information system the primary thing that is going to impact the business is that a lot process has to be managed manually which means:

• ineffective analysis of consumer data, sales report, consumer purchase behaviour and customer management as volume of data is huge
• ineffective strategy for business as data management is not efficient and hence less consumer retention
• poor customer segmentation as consumer data is not properly analysed
• Decrease in sales and revenue as customer retention is not proper customers
• Increased workforce and hence increase in expenditure, yet not as productive as an information system

Contribute to sales revenue

Products or services it is offering

As information system such as MIS and CRM provides better consumer management with proper fact and data regarding consumer behaviour towards product, price and choice, it becomes easier for the company Appliances Online to increase in the sales because of effective and correct consumer segment supported by fact and data.

Currently the company has the human resource management system information system for managing its employee like tracking attendance, analysing performance, storing salary information, storing recruitment data for better workforce management. However company does not have any dedicated information system like CRM or MIS for managing consumer data and integrating that with sale and services.

• Pros and Cons for each of the two alternative information systems

MIS	Pros	Cons
Better organization management	Complex to implement
Competitive advantage in the market with better statistical analysis of consumer data	Manager  should have IT skills to operate the software
Effective decision making in quick time	It is online connected an hence chance of hacking
Better communication and coordination between various departments of the company.	High cost
	Quality of the product is improved as consumers responses are properly analysed

CRM	Pros	Cons
Automatic data entry	Complex data entry
Dashboard for streamline sex activities	Proper setup required
Revenue generation	Costly
Scalable	Time consuming and need proper accuracy, otherwise not effective
Provide automation for repetitive tasks

Discount Rate Used	5.00%
Annual Benefits	$  1,00,325.00
Annual Operational Costs	$     29,502.00
One-Time Development Cost	$     41,480.00
				Year of Project
		0	1	2	3	4	5	totals
Economic Benefit		$0.00	$1,00,325.00	$1,00,325.00	$   1,00,325.00	$ 1,00,325.00	$   1,00,325.00
Discount Rate		1.0000	0.9524	0.9070	0.8638	0.8227	0.7835
PV of Benefits		$0.00	$95,547.62	$90,997.73	$86,664.51	$82,537.63	$78,607.26
NPV of all BENEFITS		$0.00	$   95,547.62	$1,86,545.35	$   2,73,209.86	$ 3,55,747.48	$   4,34,354.75	$    4,34,354.75
One-Time COSTS		$(41,480.00)
Recurring Costs		$0.00	$  (29,502.00)	$  (29,502.00)	$     (29,502.00)	$  (29,502.00)	$     (29,502.00)
Discount Rate		1.0000	0.9524	0.9070	0.8638	0.8227	0.7835
PV of Recurring Costs		$0.00	$  (28,097.14)	$  (26,759.18)	$     (25,484.94)	$  (24,271.37)	$     (23,115.59)
NPV of all COSTS		$(41,480.00)	$  (69,577.14)	$  (96,336.33)	$  (1,21,821.26)	$(1,46,092.63)	$  (1,69,208.22)	$   (1,69,208.22)
Overall NPV								$    2,65,146.53
Overall ROI
								1.5670
Break-even Analysis
Yearly NPV Cash FLOW		$(41,480.00)	$   67,450.48	$   64,238.55	$      61,179.57	$   58,266.26	$      55,491.67
Overall NPV Cash FLOW		$(41,480.00)	$   25,970.48	$   90,209.02	$   1,51,388.60	$ 2,09,654.85	$   2,65,146.53

Discount Rate Used	5.00%
Annual Benefits	$     90,322.00
Annual Operational Costs	$     26,436.00
One-Time Development Cost	$     38,349.00
		Year of Project
		0	1	2		3	4	5	totals
Economic Benefit		$0.00	$   90,322.00	$   90,322.00		$      90,322.00	$   90,322.00	$      90,322.00
Discount Rate		1.0000	0.9524	0.9070		0.8638	0.8227	0.7835
PV of Benefits		$0.00	$86,020.95	$81,924.72		$78,023.54	$74,308.13	$70,769.65
NPV of all BENEFITS		$0.00	$   86,020.95	$1,67,945.67		$   2,45,969.21	$ 3,20,277.34	$   3,91,046.99	$    3,91,046.99
One-Time COSTS		$(38,349.00)
Recurring Costs		$0.00	$  (26,436.00)	$  (26,436.00)		$     (26,436.00)	$  (26,436.00)	$     (26,436.00)
Discount Rate		1.0000	0.9524	0.9070		0.8638	0.8227	0.7835
PV of Recurring Costs		$0.00	$  (25,177.14)	$  (23,978.23)		$     (22,836.41)	$  (21,748.96)	$     (20,713.30)
NPV of all COSTS		$(38,349.00)	$  (63,526.14)	$  (87,504.37)		$  (1,10,340.78)	$(1,32,089.75)	$  (1,52,803.05)	$   (1,52,803.05)
Overall NPV									$    2,38,243.95
Overall ROI
									1.5592
Break-even Analysis
Yearly NPV Cash FLOW		$(38,349.00)	$   60,843.81	$   57,946.49		$      55,187.13	$   52,559.17	$      50,056.35
Overall NPV Cash FLOW		$(38,349.00)	$   22,494.81	$   80,441.29		$   1,35,628.42	$ 1,88,187.59	$   2,38,243.95

Although of the system has pros and cons, MIS is more costly and complex. However it is more efficient than CRM. CRM is only applicable for managing consumers and provides consumer support. But MIS along with the features of CRM, offers additional features such as sales and revenue management, logistic management and various organizational aspect of business. Recommended step to implement MIS:

• Opting for outsourcing rather than in house development for reduction in cost, scalability and flexibility
• Proper training to the management authorities for executing the system properly
• Continuous evaluation of security features of the system
• Contact to vendor if issue is reported like data hacking, system malfunction and anay faults related to the system execution so that the issue is resolved properly.

• Distinction between in house development and outsourced components

In house development of MIS would require sophisticated hardware and software as the software is complex and need powerful computing resource. It will need powerful processor applied in workstations as simple hardware and software solution won’t work for such complex system implementation.

However for outsourced component the company need to be invest resource for selecting the appropriate hardware and software. It will be provided by the vendor and Appliance Online have to provide the cost to the vendor

• Company use of in house development vs outsourcing

in house development	outsourcing
Flexibility and scalability is not that great in terms of selecting professional according to the requirement and specialization	Better flexibility and scalability in software development in terms of hiring professional as per the project requirement
Cost  for in house development is always higher than the outsourcing as company has to arrange everything on their own	Reduced cost
Complete control over the quality	Less control over quality control
Perfect team collaboration as professionals are selected within the organization itself.	Issues with team collaboration as outsider vendor might not comply with the organizational culture

What is data analysis?

Data analysis refers to the process of extracting meaningful information from the provided data set. Although data analysis can be done for any kind of data it is more impactful for data that are not organised and needs extensive analysis.  Data analysis is done with the help of tools and technology and for large and complex data set this process is often automated as it is not possible to analyse large and complex data properly with only human intelligence. Hence processing of data with tools and technology for extracting meaningful information is known as data analysis

Benefits of analysing data for the company

With the advancement of technology and increase in affordability, people are now more connected. The advancement of technology has shifted the traditional business model as well.With customer being more connected than ever before, there has been increase in amount of online data that is generated on daily basis. Companies need to capture lot of data from online activity of the consumer like what are the product they are searching for, what are the price they are looking for, how many times they are searching a product and what are the preferred brand. All these data provides a lot of information about the choice of customer and once it is decode it becomes easier for a company to target an individual customer or a group of customer through online advertisement and convince them purchase the product of the company that matches the choice and preference of the customer. Hence extensive analysis of data regarding consumer online presence is necessary for increasing the customer base and create effective online marketing.

Overall organisational business strategy

Use of data analysis to increase company revenues from existing customers

While data analysis is beneficial for increasing the consumer base, it is effective for serving the existing consumer as well. Just because he or she is an existing customer will stick to the same company while considering to buy any new product. In fact data analysis for the existing customer should be done more extensively and accurately. Because retention of existing customer ensures increase in sales and hence better revenue.

In order to serve the customer more accurately, company might offer discount, create special and dedicated marketing. However it is important to assess the performance of such strategy like how well the marketing content was, how many customer were actually interested in the discount and the offers provided, how many customer actually purchased product, was there any increase in the sale due to offers and discount provided. All of these data need to be analysed properly as it gives overview about the effectiveness of customer engagement strategy that the company has for the existing customer. The retention of existing customer is essential for any business and hence proper customer engagement strategy through extensive data analysis is extremely important for the company Appliance online.

Use of data analysis for future plans of products/services and how information systems can play its part here

Before launching a new product in the market, integration of consumer choice at the early stage of product launch is considered as an effective strategy as gives information about consumer behaviour and attitude towards the new product. If similar product is already available in the market, data should be collected about that like what is the market evaluation of the product, how many customer has actually purchased the product, what are the special features about the product and what are the features that consumer complain about the product , what is the overall consumer review. However when of these data is accumulated it merely gives any significant information as all of these data are not only huge in volume and frequency, they are not properly structured as well. Hence to extract information from the huge amount of data proper data analysis is needed and for this data analytics tools are required for proper data analysis.

References:

Abolfazli, S., Sanaei, Z., Ahmed, E., Gani, A., & Buyya, R. (2014). Cloud-based augmentation for mobile devices: motivation, taxonomies, and open challenges. IEEE Communications Surveys & Tutorials, 16(1), 337-368.

Jia, Q., Guo, Y., & Barnes, S. J. (2017). Enterprise 2.0 post-adoption: Extending the information system continuance model based on the technology-Organization-environment framework. Computers in Human Behavior, 67, 95-105.

Kennedy, A. (2014). Electronic customer relationship management (eCRM): Opportunities and challenges in a digital world.

Laudon, K. C., & Laudon, J. P. (2015). Management information systems (Vol. 8). Prentice Hall.

Laudon, K. C., & Laudon, J. P. (2016). Management information system. Pearson Education India.

Marchewka, J. T. (2014). Information technology project management. John Wiley & Sons.

Motahari-Nezhad, H. R., Stephenson, B., & Singhal, S. (2015). Outsourcing business to cloud computing services: Opportunities and challenges. IEEE Internet Computing, 10(4), 1-17.

O’Brien, J. A., & Marakas, G. M. (2017). Introduction to information systems (Vol. 13). New York City, USA: McGraw-Hill/Irwin.

Park, C. H., & Kim, Y. G. (2015). A framework of dynamic CRM: linking marketing with information strategy. Business Process Management Journal, 9(5), 652-671.

Stefanou, C. J., Sarmaniotis, C., & Stafyla, A. (2018). CRM and customer-centric knowledge management: an empirical research. Business Process Management Journal, 9(5), 617-634.