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Introduction

There are many changes that have occurred in the business world as a result of technological advancements that have taken place in the recent past. Coupled with globalization, technological progress has resulted to stiff competition among all market players. Focus has been on new alternatives of business conducts that would be more effective, efficient, and not compromising any fundamentals upon which the current businesses are based.

Organizations have developed an understanding that the customer is the starting point and the ending point in every strategy as such. Priorities are given to customers all over the world. The ultimate goal is always to unveil the changes in consumer behaviors and structuring means of fulfilling their demands[1].

Information available to organization determines the quality of the decision to be made. Therefore, information is vital in the global economy today. The companies that are able to secure competitive advantages are those that are able to collaborate and share information more quickly in a cost effective and efficient manner. Acquiring data on consumer behavior is critical and determines how well an organization will be able to compete in the market. This has resulted into incorporation of information systems (IS) or information technologies (IT) in the organization operations.

IS/IT systems have helped to replace the manual data capturing methods.  Firms are opting to outsource services from other firms rather than make use of the manual process due to problems encountered. For example, using manual labor for capturing data is costly. This is because critical business workflow decisions have to be made at every remote location. Using IT/IS strategies in data capturing is a cost-effective strategy for an organization. 

In the times if current ultra-competitive global markets and specialized organizational integration systems collecting customer data has become a standard undertaking. This data is relevant in creating understanding about customers spending habits and hence help align the products to the needs and wants of the consumers. Understanding how customers act and think is a starting point in developing competitive advantage over the other market players[2].

One of the widely used and powerful ways that organizations use to collect and gain information about their customers is the data mining technique. This technique is used to collect and compile information about consumers and develop insights on their spending habits. This has been achieved by organizations through development of customer based systems that help in identifying customers, differentiating them depending on their needs, interacting in a productive way, and then customizing the products. Data mining is used to achieve various competitive advantages such as approximating the size of the actual market to the organization, predicting the rate of consumer responses, and also in classification of consumers into segments. Data mining has gained popularity in online sales and advertising firms where competition is very stiff.

  Using information technology in data collection has the effect of improving the productivity in the organization. For instance, the possibility of using information technology in capturing data remotely, whether in electronic or paper form, without the use of manual intervention saves on the cost of labor. It becomes simpler to collect and integrate information within the organization workflow. An automated data capturing process may categorize data as it enters into the organization workflow. This results into a more accurate and faster method of data distribution and categorization within the organization[3]. In comparison to manual processes time is saved and there are fewer errors made. By making use of automated data capturing process, the document-borne errors are discovered early enough in the process. In addition, the employees that would have been employed to deal with the manual data collection can be used to focus on other core responsibilities within the organization, hence giving a firm a competitive edge.

A centralized reporting database for the organization is called “data warehousing”. It is an intelligent device made through extraction of information from different operation systems in an organization. It removes the redundancies that may exist among the data. It also formats the missing fields in the data so as to develop a reliable central data reporting database. Data can be easily retrieved from this central point for such purposes as market research, statistical modeling, and analytical process[4]. All these form means by which an organization may build competitive advantage. For example, internal and external contacts may be through phone, mail, physical documents, and meetings among others. By capturing these different forms of data into a central system, the company is able to get all updates necessary for strategic decisions.

An example of software used in data storage is Oracle Customer Data Hub. It enables an organization to handle customer information by use of a single interface. It merges information from different systems in the organization, manage, and modify data correctly. The customer information in this hub has real-time updates and hence is reliable for the organization. The diagram below points out the possible opportunities that improve the competitiveness of an organization by incorporation of IS/IT in it customer handling.

The data collected from customers is then analyzed to help develop insights about trends and patterns that can be associated with customers. The analysis is based on the ease of data retrieval from the data warehouse. This process of trying to extract information from the customer data captured for business use is called “business analytic”. This analysis helps an organization to realize facts, draw up conclusions, and hence make decisions. For decision making such data are used in the decision support systems or executive information systems. These systems make use of user interfaces that are simple to use e.g. displaying graphs. Managers are able to compare, analyze, and identify trends in critical variables so as to observe performance and determine any opportunities or threats.

  From the business analytical procedures an organization is able to get a better view of its operations. It is also able to make an informed decision with regard to the next move given the existing circumstances. Organization gets the ability to respond to consumers immediately and hence honor the consumer’s service-level agreement. Avenues to respond quickly and timely to the customer requests are possible in an IT supported operation. This results to a more agile organization with more contented customers, improved customer loyalty, and hence higher margins.

The data from the customers are used to create competitive advantage through implementation of programs and marketing techniques that are tailored for a particular target group. This way an organization is able to appeal to consumers. This creates improved response rates, which give the organization a better information source for product and process improvements.

Data Access

By the use of IT, images and scanned documents can be transmitted electronically to any place in the word in real time[5]. Companies are able to maximize the benefits realized from enterprise management systems through capturing and integrating consumer information immediately. The data capture solutions available to organizations. This leads to reduced cost, data disseminations, increased productivity and integration. In addition, there is a faster access to documents, document versioning through the content management systems, and central storage point.

  The common used software in data retrieval from the database is a query. It helps the user to sort, locate, extract or update records in the database. The query is designed by specifying the necessary conditions for a record to be selected. A selection query is used to display and locate the required records. On the other hand, an update query is used to make updates in the data storage systems. Such updates include deleting, appending new records, updating values or making new tables with a summary of required information. Using this software helps reduce the turnaround time for service delivery and hence improves customer service.      

Financial Returns for the Organizations

By data getting to the organization in real time from all over the market where it operates, management is able to have a precise view of the organization’s financial status almost instantly. There is a real-time observation of the effect of market changes on the organization’s bottom line and any discrepancies are noted. This reflects the ability of the organization to honor the service level agreements (SLA) with the customers. For example, as business expands, the obligations to the customers also increase. A real-time view of such effect will enable the management to know how many additional employees it requires to assign to particular task. This way penalties associated with missing the customer’s SLA are avoided.

Use of IS/IT leads to reduced cost through different ways. The greatest cost implication results from reduced manual labour requirement. Cost saving arises from reduced hiring cost, required office space, and training. Employee productivity increases due to reduced workload and manual activity. Employees no longer have to waste time sorting through pertinent information and other statistics.

Increased security

There is a legal obligation on the part of the organizations on matters relating to security and confidentiality of consumer information. Use of IS/IT makes security and confidentiality levels higher[6]. Automated technologies help remove the human interaction with confidential information and hence increase security. The customer data when captured is instantly categorized, encrypted, and directed to the right party. Within the information system rules and procedures may be implemented so as to limit access to organization’s data to authorized computer systems and specific personnel only. This raises the trust that the customer has to the organization and can be calm even when the organization has some sensitive data. Sensitive information can only be accessed by the authorized staff for viewing and processing to help the organization in decision-making.

However, there are some challenges experienced in IS/IT strategies. Sometimes, the IS may be based on a point technology which do not integrate accordingly with the enterprise’s systems[7]. IS in use may not be that flexible to adopt changes that arise in the business. Sometimes it lacks in scalability that does not equate to the rate of growth in business demand. It is expensive in the sense that heavy investments have to be made in software and hardware among other costs.

Conclusion

When customer data is collected, stored, and analyzed it creates immense potential for business competitive strategies. Understanding the customer’s purchase, service and account history puts the organization at a better position to satisfy the customer and create an assurance that the customer will be coming back for more purchases. It also helps in strategy optimization in the sense that more focus and effort is distributed to the customers based on their profitability history to the organization. This prevents unnecessary expenditures. Therefore, the use of customer data in data mining, information democratization, and business analytics creates a powerful base that can be used to build a huge competitive advantage over competitors.

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