Integration of Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM) for Quality Service Delivery

Table of Contents

Declaration

Acknowledgements

List of Tables

List of Figures

List of Acronyms

Abstract

Chapter One: Introduction
1.1. Background of the Study
1.2. Background of the Organization
1.3. Statement of the Problem
1.4. Research Questions
1.5. Objectives of the Study
1.5.1. General Objective
1.5.2. Specific Objectives
1.6. Significance of the Study
1.7. Scope of the Study
1.8. Organization of the Research

Chapter Two: Literature Review
2.1. Introduction
2.2. Enterprise Resource Planning (ERP)
2.2.1. Definitions of ERP
2.2.2. Historical Overview of ERP
2.2.3. ERP Modules
2.2.4. Benefits of ERP Implementation
2.3. Customer Relationship Management (CRM)
2.3.1. Concepts of CRM
2.3.2. Evolution of CRM
2.3.3. Types of CRM
2.3.4. Benefits of CRM Implementation
2.4. ERP and CRM Integration
2.4.1. Types of ERP and CRM Integration
2.4.2. Benefits of ERP and CRM Integration
2.4.3. Challenges of ERP and CRM Integration
2.5. Service Concept
2.5.1. Service Quality
2.5.2. Dimensions of Service Quality
2.5.3. Service Quality Models
2.5.4. Service Quality in Airline Industries
2.5.5. Role of ERP and CRM Integration in Quality Service Delivery
2.6. ERP and CRM Software Vendor Profiles
2.7. Conceptual Framework

Chapter Three: Research Methodology
3.1. Introduction
3.2. Research Design
3.3. Study Population
3.4. Sample Size and Sampling Technique
3.5. Sources of Data
3.5.1. Primary Data Source
3.5.2. Secondary Data Source
3.6. Data Collection Instruments
3.6.1. Primary Data Collection Instruments
3.6.1.1. Semi-structured Interview
3.6.1.2. Questionnaire
3.7. Procedures of Data Collection
3.8. Methods of Data Analysis
3.9. Ethical Considerations
3.10. Reliability and Validity

Chapter Four: Results and Discussions
4.1. Introduction
4.2. Data Analysis Based on Employees Response
4.2.1. Presentations of Respondent Profile (Employees)
4.2.2. Employees’ Responses on the Achievements of ERP Impl ementation
4.2.2.1. Employees’ Responses on ERP-Human Capital Management
4.2.2.2. Employees’ Responses on ERP-Supply & Logistics Management
4.2.2.3. Employees’ Response on ERP-Advanced Planning & Scheduling
4.2.2.4. Employees’ Responses on ERP-Finance and Controlling Module
4.2.2.5. Employees’ Responses on CRM System Implimentation
4.2.3. Employees’ Response on Challenges of Integrating ERP and CRM
4.3. Data Analysis Based on Customers Response
4.3.1. Presentations of Respondent Profile (Customers)
4.3.2. Customers’ Response on the Service Quality Dimensions
4.3.2.1. Customers’ Responses on Reliability Dimension
4.3.2.2. Customers’ Responses on Tangiblity Dimension
4.3.2.3. Customers’ Response on Empathy Dimension
4.3.2.4. Customers’ Responses on Assurance Dimension
4.3.2.5. Customers’ Responses on Responsiveness Dimension
4.4. Discussions

Chapter Five: Conclusion and Recommendations
5.1. Introduction
5.2. Conclusion
5.3. Recommendations
5.4. Policy Implication

References

Appendix A: Questionnaire for Employees

Appendix B: Questionnaire for Customers

Appendix C: Interview Questions for Managers

DEDICATION

This piece of work is dedicated to my parents for their selfless support, constant encouragement and inspiration toward in pursuit of my academic ambitions.

ACKNOWLEDGEMENTS

First of all, I would like to thank the Almighty God who gave me strength and encouragement to complete the courses of this study and Holy Mother of God, St. Mary, for her intercession through all the rough and difficult times.

Then, my special thanks and gratitude goes to my advisor Dr. Elias Berhanu for his unreserved cooperation, incredible suggestions and supervision. I would like to extend my deepest thank to my lecturers at the University and I am grateful to all of you.

I would also like to sincerely express my gratitude to the employee of Ethiopian Airlines for their kind and unlimited support during the survey. My gratitude also goes to the customers of the company who took time off their busy schedules to respond to the questionnaire. I must also acknowledge my brothers, especially Gemechu Mulat for his continuous support and encouragement in the course of my study. In addition, I like to thank my fellow-students, especially Alebel Girma for his good and helpful advice.

Finally, I am very grateful indeed for those people whose names are not mentioned here, for their direct or indirect contributions, to the completion of this research. For all of you, your contributions will always be in my heart. The effort made by Addis Ababa University, Colleges of Business and Economics, Department of Public Administration and Development Management in facilitating the course and research work is highly appreciated. Thank you

List of Tables

Table 2.1: SERVQUAL 41

Table 3.1: Respondents of the Study in Ethiopian Airlines

Table 3.2: Reliability and Validity (ERP and CRM)

Table 3.3: Reliability and Validity (Service Quality Dimensions)

Table 4.1: Respondent Profile (Employees)

Table 4.2: Employees’ Responses on ERP-Human Capital Management

Table 4.3: Employees’ Responses on ERP-Supply and Logistics Management

Table 4.4: Employees’ Responses on ERP-Advanced Planning and Scheduling

Table 4.5: Employees’ Responses on ERP-Finance and Controlling Module

Table 4.6: Employees’ Responses on CRM System Implimentation

Table 4.7: Employees’ Responses on Challe nges of Integrating ERP and CRM

Table 4.8: Respondent Profile (Customers) Profile

Table 4.9: Customers’ Responses on Reliability Dimension of Service Quality

Table 4.10: Customers’ Responses on Tangibility Dimension of Service Quality

Table 4.11: Customers’ Responses on Empathy Dimension of Service Quality

Table 4.12: Customers’ Responses on Assurance Dimension of Service Quality

Table 4.13: Customers’ Responses on Responsiveness Dimension of Service

Figure 2.1: Information Integration Through ERP System

Figure 2.2: History of ERP (ERP Expansion Process)

Figure 2.3: Human Capital Management System Model

Figure 2.4: Finance and Controlling Functions

Figure 2.5: APS Module Functions

Figure 2.6: History of CRM

Figure 2.7: Types of CRM

Figure 2.8: ERP and CRM Integration

Figure 2.9: Back Office and Front Office Integration

Figure 2.10: SERVIQUAL Model

Figure 2.11: GAP Analysis Model

Figure 2.12: Schematic Diagram for the Conceptual Framework

Abbildung in dieser Leseprobe nicht enthalten

Abstract

Service quality and customer satisfaction are very important concepts that companies must understand in order to remain competitive in business and hence grow and in the process of delivering quality service, technology plays a larger role. The purpose of this study was t0 explore the achievements, pinpoint the challenges and scrutinize the prospects of integrating Enterprise Resource Planning (ERP) & Customer Relationship Management (CRM) and analyze their impact on quality service delivery in Ethiopian Airlines. A structured questionnaire was designed, pre-tested, modified, and self- distributed to senior executives, employees and customers of the company to capture data. A total sample of 165 were taken as a respondent. Out of these, 115 were employees of the company and 50 were customers who have made a flight with Ethiopian airlines on any route. Quantitative & qualitative techniques were selected to collect the data. Non-probability purposive sampling was used during the selection of the sample. The SPSS computer package was used to analyze the collected data. Feedbacks received from 84 employees and 45 customers were analyzed & the response rate was 73.1 and 90 percent respectively. The analysis of employee responses revealed that the integrated systems has improved various functions of different department in the company by acting as a catalyst to support the tactical planning processes, ensures the right number and kinds of people at the right place and right time, reduced the financial cycle closing time and improve the supply chain performance by adding value to the company. In addition, since the integration, the company is enjoying the ultimate benefit of all-in-one system that can decrease errors, lower cycle times, reduces turnaround time, and support management decisions. The findings also indicated that delivering high quality service increase customer satisfaction, which in turn leads to high level of customer commitment and loyalty. Several challenges were also pointed out among which included lack of finance to update and maintain the systems, lack of expertise in IT to operate the systems, lack of training and development of staff on the systems. The study also assessed the perception of the customers about the quality of the service delivered by the Ethiopian Airlines by using five dimensions of the SERVQUAL model. The result revealed that, in reliability, tangibles and assurance dimensions, the customers are satisfied, but in responsiveness and empathy, they feel dissatisfied. This implies the existence of inefficiency in delivering prompt service, helping customers & responding to their inquiries and understanding individual customer needs. Finally, the findings are so important to enable the company managers to have better understanding of customers’ perception of service quality and employee attitudes toward integrated systems to further improve the systems and measure customers’ satisfaction & service quality seasonally to keep the services corresponded with customers’ opinions.

Key words: Enterprise Resource Planning (ERP), Customer Relationship Management, Integration of ERP and CRM, Service Quality, Ethiopian Airlines

Introduction

1.1. Background of the Study

Service quality is an attitude related to a particular service. It is the customer’s overall impression of the relative inferiority or superiority of the organization and its services (Lawrence, 2006). According to FDRE Service Delivery Policy (SDP), 2001, quality service delivery is a systematic arrangement of activities in service giving institutions with the aim of fulfilling the needs and expectations of service users and other stakeholders with the optimum use of resources. Rosen (2015) stated that service industries in developed countries have been continuously increasing and the world trade in services now approach 4.7 trillion dollar per year. According to Global security organization, the service sector accounts for 45% of gross domestic product of the Ethiopian economy (GSO, 2016).

The pressures for improved efficiency during the past decades on service sector organizations across the world accompanied by strong need to revolutionize service delivery process with aim of creating solutions that better meet citizens’ needs and transform their functions from closed, top-down, bureaucratic, and paper-based transactional models to integrated online systems that encourage a new kind of interaction between citizens and the organizations since delivering quality service has significant relationship with customer satisfaction (Boulding et al., 2005), customer retention (Grönroos, 1994), loyalty (Gulati and Oldroyd, 2005), costs (Wilson 2008), profitability (King,, 2008), service guarantees (Sheth, 2001) and growth of organization (Payne and Frow, 2005). To provide better quality service, institutions have to change their outdated working processes and need to become customer oriented.

In the current globalized environment, the success of an organization largly rests in resolving the confilicts between the various business functions and making them do what is good for the organization as a whole. For this, information is critical and every body whith in the organization should know what is happening in the other parts of the organization. It is not enough that each department manages its activeties effeciently and function as islands of information, each working in isolation. Each and every employee should know what their counterpart are doing, how their actions and decisions will affect the other deparments (Gargeya and Brady, 2005). This kind of information sharing was difficult in the early days (Malhotra and Temponi, 2010). Now organizations are using technologies to improve their service delivery process by adopting and integrating an IT applications that facilitate information sharing in their front-office and back-office operations. Enterprise Resource Planning (ERP) and Customer relationship management (CRM) are an IT application systems that currently used by several organizations across the world to integrate different functions of their organizations (Zhang et al., 2005).

According to Malhotra and Temponi (2010), Enterprise Resource Planning (ERP) is the recent in a progression of functionally oriented information systems which reflects the trend towards end user computing that incorporates wide range of computer based applications. It covers the techniques and concepts employed for the integrated management of business as a whole, from the viewpoint of the effective use of management resource and improving the efficiency of the enterprise (Yu, 2008). Ranganathan and Brown (2006) stated ERP as a common database system and a modular software design that allow every department of a business to store and retrieve information in real-time. A successfully implemented ERP system has the advantages of reduced cost and high system quality (Dezdar, 2012). According to Thomas and Michael (2001) ERP packages originally targeted at the manufacturing industry, and consisted mainly of functions for planning and managing core businesses such as sales management, production management, accounting and finacial affairs, etc. However, in recent years, adaptation not only to the manufacturing industry, but also to diverse types of industry has become possible and the expansion of implementation and use has been progressing on a global level.

On the other hand, customer relationship management (CRM) is the other management concept that currently sweeping the business world and finding audience in the professional service sectors to improve service delivery process of organizations (Sheth, 2000). According to Bose (2012), companies are increasingly focused on managing customer relationships and customer assets in order to unite the potentials of relationship strategies and information technology to create profitable, long -term relationships with customers and key stakeholders. CRM explicitly recognizes the long-run value of potential and current customers, and seeks to increase revenues, profits, and shareholder values through targeted marketing activities directed toward developing, maintaining, and enhancing successful company and customer relationships (Gronroos, 1999). This requires a cross functional integration of processes, people, and operations that is enabled through information technology applications (Payne and Frow, 2005).

CRM is a front-office system that centralizes all information about external marketing, manages the sales pipeline, automates customer service, and tracks information about customers (Yu, 2008). On the other hand, ERP system is back-office operations that streamline and integrate internal business processes, such as accounting, purchasing, collections, human resources, payroll, manufacturing, distribution, and more (Zhang et al., 2004). Properly integrated back-office (ERP) and front office (CRM) system bring together a previously disconnected business processes by automating complex, multistage processes in end-to-end manner and in turn facilitate delivering quality service to customer and meet their requirement (Hendricks et al, 2007).

ERP and CRM packages, if chosen correctly, implemented and integrated judiciously and used efficiently, will raise the productivity and profits of companies dramatically (Ruivoa, et al., 2014a). But many company fails in this because of wrong product, haphazard implementation and inefficient or ineffective usages (Dezdar, 2012). Traditionally, it has been difficult to integrate CRM and ERP systems because of the vastly different architectures and the lack of standards for exchanging data between the systems. In addition, more than 90% of ERP and CRM integration have been delayed and required additional budget amounts due to numerous changes in the original plan (Malhotra and Temponi, 2010). Even when a company realizes that their ERP and CRM implementation is not going to be successful, it is usually impossible to cancel the effort (Hendricks et al., 2007).

Thus, to further improve the systems and measure customers’ satisfaction and service quality seasonally to keep the services corresponded with customers’ opinions, precise and timely information on the application and outcomes of the systems become critically important. This research, therefore, sought to find out the achievements, pinpoint the challenges and scrutinize the prospects of integrating Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM) and analyze their effect on quality service delivery in Ethiopian Airlines within the perception of senior executives, middle-line managers and customers. The findings of the study will be used by the company to improve the quality of service delivery process and fulfill the needs of customers through the successful implementation of integrated ERP and CRM systems. The study also offer a foundation for the readers and academicians that make them understand how computerized system can assist organizations in order to achieve their predetermined objectives.

1.2. Background of the Organization

Ethiopian Airlines is the service sector organization which was founded on December 30, 1945 by Emperor Haile Selassie with assistance from Trans World Airlines (TWA). It commenced operations on April 8, 1946, with a weekly service between Addis Ababa and Cairo with five Douglas DC-3 propeller-driven aircraft. The airlines started long-haul services to Frankfurt in 1958 and inaugurated its first jet service in January 1963 from Addis Ababa to Nairobi. Today, Ethiopian Airlines serves 92 international destinations with 530 weekly international departures from Addis Ababa and a total of 625 weekly international departures worldwide. In 2007, Ethiopia Airlines provided basic pilot and aviation maintenance training to trainees from African countries including Rwanda, Tanzania, Chad, Djibouti and Sudan. At the moment, the Ethiopia airline has been in rapid expansion mode to capture hot Africa-Asia market (www.ethiopianairlines.com).

Since 2010, the airlines has designed a fifteen years vision named as “Vision 2025”. By the year 2025, Ethiopian Airlines will be the most competitive and leading aviation group in Africa by providing safe, market driven and customer focused Passenger and Cargo Transport, Aviation Training, Flight Catering, Maintenance Repair and Overhaul, Ground Services, Domestic and Regional services. Currently, different statistics indicated Ethiopia Airlines as the most successful and the largest airline in Africa. In spite of the difficulties facing the aviation industry, including escalated fuel prices, slowdown of world economy and fierce competition, Ethiopian Airlines has achieved a record profit in its latest full fiscal year of 2014/15 and has already taken over the leading role from South African Airways since then. Ethiopian Airlines is one of the few airlines that have continued to grow during the past years despite the downturn in the international airline industry (http ://www.ethiopianairline s.com).

In the present globilized environment, businesses have been competing each other with their high-tech investments and their technology. Especially, in a service sector like airline services, it is so important to have a good equipment and great technology. Previously, Ethiopian airlines had a range of individual systems before implementing the current ERP and CRM system for controlling and monitoring their functions, which had problems of interfacing with each other as they had different databases and file formats. The old systems did not provide accurate, consistent and accessible data that was required for good and timely decision-making and performance assessment and did not support significant growth of the business and were not sufficiently agile to keep pace with the changing business environment.

As the result, the airlines management realized the necessity of adopting technology such as ERP and CRM systems to overcome those challenges and led the business to success since the systems are useful tool for the company to build a strong information systems infrastructure and enable the administrator to undertake better decision making based on accurate and real-time information and facilitate quality service delivery which in turn satisfy the customers. The company has obtained license for the system implementation from the world well known software developer named SAP AG, an ERP & CRM vendor company through open tender and SAP’s Africa partner, SAP South Africa was selected as implementer partner for the ERP and CRM systems.

With the changing world and constant new technology that is available and environment of increasing in competition locally and globally, organizations must become more adaptable, resilient and customer-focused and managers need to be aware of the technology that will increase effectiveness and improve efficiency in their systems of service delivery. Today, providing quality and unique services as required by customers are very challenging for organizations. Creating effective relationship with customers is critical issue since service requires high interaction with customers, and this relationship has a great influence on customers’ satisfaction since no business can live on without satisfied customers. Non-availability of a proper customer tracking system leads to customer needs being unheard or neglected and lack of dedicated resources with decision making powers to resolve customer issues quickly resulted with unhappy customer.

In the current globalized world, the difference between market leaders and followers, successful companies and sick industries, is the way in which companies make use of information about business environment. Companies generate huge amounts of data, documents and details about customer, employee and so on. In order to manage the produced data and deliver high quality information to the decision makers at the right time and automate the process of data collection, collation and refinement, organizations have to make Information Technology (IT) an alley since only an organization that makes the best possible use of the information can succeed. If the management do not realize and understand the actual impacts of technology on their business performance, they are not prepared and ready for the large changes that might affect the performance of the whole company.

Aviation sector is high-tech investment in general and characterized with change and uncertainty. Customers have difficulty envisioning how technology can meet their needs. They are not aware of new technologies that are available how those technologies might be used to solve their current problems. That’s why it is a complicated problem for airlines firms to get latest high-tech product and innovations. As already known, delivering high-quality service to customers is the key strategy to survive in the competitive services industries such as airline industries. Service quality influences a businesses’ competitive advantage by keeping customer patronage in order to increase market share. That’s why airlines businesses have to understand service users’ needs and expectations. In practice, most airline businesses measure customers’ satisfactions of their service offerings without any knowledge of service users’ needs. If there are some misunderstandings in expectations or needs, then serious problems in service implementations can be happened. It is so important for airlines management to take a right decision about customers’ wants and needs.

Many countries, especially the developed ones have benefited the advantages of ERP and CRM systems by highly adopting these systems since early 1990s (Malhotra & Temponi, 2010). Developing countries are now adopting the systems like the developed ones. But, regardless of the system advantages, developing countries like Ethiopia have not yet adopted and benefited much from such integrative information solutions (Alemu et al., 2014). In isolated system, different units work simultaneously on different parts of one project. If the information and detail about every completed and in process phase is not monitored at one location, it is difficult to find at which stage of completion does a project actually lie. Non-streamlined processes and non-directional flow of information may create unnecessary time delays in execution of action plans.

According to De Lone and McLean (2003), large scale deployment of the internet and related technologies has profoundly impacted service sector organizations by transforming their product mix, distribution channels and competitive strategies. At the same time, this transformation is unlikely to be uniform because the impacts of technology differ significantly among various segment of service. Davenport (2000) stated that organizations often jump into ERP and CRM projects without clear objectives and strategies. He outline the service sectors organizations which constitute one of the intangible aspects of production has not been subjected to in depth study to explore the benefit organization achieve by undertaking the integration. Zhang et al (2005) also argue that it may takes time to observe the achievement after proper integration. According to him, the achievement from ERP and CRM integration need to be measured on long term relationship with customer to generate long term benefit through increased customer satisfaction & retention.

Hendricks et al. (2007) stated several problems such as high complexity of the system, lack of knowledge among managers and personnel, low data accuracy, and a lack of support from the software vendors challenged the successful integration of the schemes. According to Hsu and Chen (2004) low involvement of employees, lack of top management support, cultural misfit problem, and ineffective usage of the system will lead to ERP and CRM system integration failure and then lead the whole company to bankruptcy. Elarbi (2001) stated different business units use distinct systems to record their data and the dissonance in the data tracking and storing methods of the systems forbids the company from portraying actual data. According to him, bad data to the management prompts bad business decisions for the company. Alexis (2006) stated, separate processes generate disparate data which downgrades the efficacy of the company to come up with best practices for higher productivity. According to him, each system will need to be maintained, and will require separate functional and technical administrators. Lack of proper integration between the systems of the company to provide timely and accurate information to its internal and external users increase the turn-around times and incur heavy expenses.

According to Ruivoa et al. (2014) many organizations also already have implemented the integrated ERP and CRM system in order to enhance their productivity and improve their service delivery process but they did not use the system to the full extent and fail to satisfy their employees and customers fairly, equally and transparently. He added, since the organization has already spent a considerable amount of money on the system, they don’t need to afford a new one. Though they need to identify inadequacy of the existing system and solve the challenges.

Despite the link existing between technology and quality of services, Meuter et al.(2009) calls for more research and Parasuraman et al. (1991) emphasized further investigation into the impact of technology on the service quality process. The existing different research have studied the importance and benefits of using ERP and CRM systems separately and they are limited in addressing the integration between the two IT systems to fully exploit the value of the systems. In Ethiopia, since both systems are fairly new, there are the need for empirical data and comprehensive information which show the value from ERP and CRM integration initiatives for service sector organizations and the future prospect the organizations intend to drive from the system implementation. The researcher, therefore, tried to study in depth the achievements, pinpoint the challenges and scrutinize the prospects of ERP and CRM system adoption, implementation and integration in Ethiopian Airlines.

1.4. Basic Research Questions

With the aim of addressing the general and specific objectives of the study, the entire efforts of the paper revolve around seeking answer to the following questions

1. What are the main success factor the Ethiopian Airlines achieved related to quality service delivery as the result of ERP and CRM systems integration?
2. What are the main challenges of integrating ERP and CRM systems that in turn impede quality service delivery?
3. What the future prospects of ERP and CRM systems integration should have to looks like to facilitate service delivery process
4. What could be the possible solutions to maximize the benefits of ERP and CRM systems?

1.5.1. General Objective

The main objective of the study is to explore the achievements, pinpoint the challenges and scrutinize the prospects of integrating Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM) and analyze their impact on quality service delivery in Ethiopian Airlines.

1.5.2. Specific Objectives

1. Examine the main success factor the Ethiopian Airlines achieved regarding quality service delivery as the result of ERP and CRM system integration.
2. Locate problems, gaps and failings in the ERP and CRM system integration that hindered the achievement of its predetermined objectives and endeavors.
3. Explore what the future prospects of ERP and CRM systems integration should have to looks like to facilitate service delivery process.
4. Suggest the possible solutions to maximize the benefits of ERP and CRM systems

1.6. Significance of the Study

In order to expand the knowledge in the area of ERP and CRM system integration, the first and most obvious research path is to conduct deep studies in the area in order to broaden the literature base which will contribute to the knowledge base in one way or another. As a result, this paper is significant for the following reasons

- The study will contribute to the body of knowledge by filling the existing knowledge gap in the area of ERP and CRM systems integration in Ethiopia by producing the paper that shows the successes the Ethiopian Airlines achieved and the way the managers can solve the confronted challenges in the process of implementation and integration of systems, as well as serve as a bench mark paper for further evaluation of the success and failure factor associated with ERP and CRM integration.

- It will help readers and academicians in understanding of how far the ERP and CRM system integrated in Ethiopian Airlines to facilitate high quality service delivery by overcoming the challenges confronted in the processes of adoption.
- It will initiate interested researchers to carry out more extensive studies in area.
- The Ethiopian Airlines will use the findings and recommendations of the study as a feedback to make the service delivery process more efficient and effective.
- Finally, the information produced from this study is expected to be of some value for decision and policy makers with respect to the use of technology in service delivery process.

1.7. Scope of the Study

ERP and CRM user populations are small since most organizations cannot afford it within reasonable cost. Though, it is not possible to gather data from everybody and all organizations. In addition, due to the limited nature of time and resource, the researcher focused only on exploring the achievements, pinpoint the challenges and scrutinize the prospects of ERP and CRM systems integration and assess their impact on quality service delivery by using SERVQUAL model dimensions such as reliability, tangibility, empathy, assurance and responsiveness in Ethiopian Airlines. Senior executives and middle-line managers’ perception of the company are considered as a measurement since they are mostly involved in the process of adoption, implementation and integration of the system. Customers’ perception also considered and used as a source of lesson for further improvement.

This research paper is organized into five chapters in order to provide clarity and coherence on the topic. The first chapter discuses and provide sufficient background on the issue and constitute the statement of the problem, general and specific objectives, research questions, scope as well as the significance of the study. The second chapter holds review of different literatures and presentation of the existing studies and their findings. The chapter also lays out the conceptual framework of the research to designate the variables and their relationships. The third chapter outlines the research methodology of the study. The fourth chapter focus on the analysis of the results and interpretations of the data collected using appropriate charts, graphs and tables. The last chapter present and recapitulate the conclusion and forward appropriate recommendation.

Chapter Two Literature Review

2.1. Introduction

This chapter presents the literatures reviews of ERP and CRM concepts and their contributions in the process of automation and integration of organizational functionalities and improvements of service delivery process. The review was guided by the objectives that lead the study.

2.2. Enterprise Resource Planning (ERP)

2.2.1. Definitions of ERP

Enterprise Resource Planning (ERP) is a software that attempts to integrate all departments and functions across a company in to a single computer system that can serve all those departments’ particular needs (Malhotra and Temponi, 2010). It allows a company to automate and integrate the majority of its business processes, including planning, purchasing, human resource, inventory control, interaction with suppliers and customer and keeping track of orders, to share common data and practices across the entire enterprise, and to produce and access information in a real-time environment. ERP enables decision-makers to have an enterprise-wide view of the information they need in a timely, reliable and consistent fashion (Aslan et al., 2012). ERP systems are designed to enhance organization’s competitiveness by upgrading an organization’s ability to generate timely and accurate information throughout the enterprise.

Organizations consists of many functional departments, such as finance, HR, purchasing, and logistics, etc. (Ehie and Madson, 2005). Since the applications of information technologies are more and more popular than before, each of these departments typically has its own computer system optimized for the particular ways that the department does its work, not only for office automation, but also for helping people to analyze data and make right decision (Meuter et al., 2009). ERP combines all software programs that serve the needs of specialized functions together into single, integrated software program that
runs off a single database so that the various departments can easily share information and communicate with each other (Ehie and Madson, 2005).

Fig. 2.1 Information Integration through ERP Systems

Abbildung in dieser Leseprobe nicht enthalten

Source: Alexis, 2006

2.2.2. Historical Overview of ERP

The history of ERP began in the 1960s when large manufacturing companies produced Material Requirements Planning (MRP), which was created to keep track of all products and materials across one or more plants, and used to keep track of needed materials (Molla and Bhalla, 2006). A decade later, MRP was extended in the software application called Manufacturing Resource Planning (MRP II), which not only processed the material portion of the equation, but also the planning process, amount of resources available, and other planning requirements. MRPII seeks to improve the efficiency of manufacturing enterprises through integration of the application of information and manufacturing technologies (Thomas and Michael, 2001). MRPII approach was extended in the 1980s towards the more technical areas that cover the product development and production process (Gargeya and Brady, 2005).

In the early 1990s, the Gartner Group introduced the term Enterprise Resource Planning (ERP), an extension of MRPII with enhanced and added functionality, encompassing functions that are not within the traditional focus of MRPII, such as, decision support, supply chain management, maintenance support, quality, regulatory control, and health and safety compliance (Alexis, 2006). Today, ERP system has become one of the most well-known business software in the market place and an essential part of everyday IT investments for many companies that believe ERP system will provide solutions for their IT problems and therefore provide effective online transactions with the current e­business era. Moreover, one of the significant and global developments of IT is the broad acceptance of ERP system by many companies worldwide which reached today to consider ERP system as the most rapid growing system in operational area (Zhang etal., 2004; Molla and Bhalla,).

Fig. 2.2 History of ERP (ERP Expansion Process)

Abbildung in dieser Leseprobe nicht enthalten

Source: Thomas and Michael, 2001

All ERP packages contain several modules (King and Burgess, 2008). The number and features of the modules vary with the ERP package and provide different functionality and support different business functions such as manufacturing planning and scheduling, inventory management, human capital management, storage management, financial administration system, marketing, and order processing. These modules are combined through a common data base system to supports the integrations among different business functions (Hsu and Chen, 2004; and Klaus et al., 2000). ERP SAP R/3 package contains core modules where each module provides a particular functionality such as, materials management, asset management, production planning, plant maintenance, project system, controlling, quality management, industry solutions, financials, human resources, sales, and distribution. Each of these modules formed from sub-modules, for instance the financial module includes sub-modules like accounts payable, accounts receivable, and general ledger (SAP, 2005). Some modules of ERP SAP R/3 description are as follow

2.2.З.1. Human Capital Management (HCM) Module

Human Capital Management System module is a set of people, procedures and data utilized to store, analyze, distribute and use information of human resources. ERP-HCM goal is to provide accurate information for the use of persons making human resource related decisions and to reduce the manual work of HR expertise (De Lone and McLean, 2003). It helps to abandon paper forms or reports because all information is available through the system. ERP-HCM can support also long range planning, with information for labor force planning, and supply and demand forecasts; staffing with information on equal employment, separations, and applicant qualifications; and development with information on training program costs and trainee work performance (Markus and Tanis, 2000).

With employee data neatly woven into an orderly web of HCM databases, HR executives become free to pursue more critical and creative-thinking projects. The automation of the data significantly reduces the likelihood of entry errors and discrepancies between records (Teo et al, 2001). The formation of one vast, unified reservoir of employee information allows for more complex and integrated analysis by company executives, facilitating better decision making and greater business efficiency (Alexis, 2006). The company uses the adopted HCM system only for payroll services and employee information management. The Payroll subsystem collects employee time and attendance information from the databases, calculates taxes and other deductions, and automatically generates paychecks according to executive dictate. However, HCM is not only designed to automate HR activities to gain administrative advantages; rather, it can also be used for decision making to provide strategic advantages for the organizations (Molla and Bhalla, 2006).

Fig. 2.3: Human Capital Management System Model

Abbildung in dieser Leseprobe nicht enthalten

The Finance and Controlling components of the ERP solutions work hand-in-hand to improve the bottom line and tightly integrated all business areas and all geographic areas. This tight integration includes all the other different modules, from materials management to human resources to logistics (Alexis, 2006). ERP system automatically links related areas; it eliminates the need to repeat procedures. The data enter only once. Within the ERP system, all areas work in concert, creating a new level of efficiency in handling the financial data. The Finance and Control module includes a variety of planning and controlling tools for enterprises following a uniform system of reporting (Thomas and Michael, 2001). It provides comprehensive reports to support most common cost-accounting issues. Controlling module is usually for internal reporting purposes.

2.2.3.1.1. Financial Accounting sub module

The Financial Accounting sub modules provide companywide control and integration of financial information that is essential to strategic decision making. The module collects all the data relevant to financial accounting into an integrated General Ledger (Sullivan and Bozeman, 2010). It provides comprehensive and consolidated financial reports and integrates the different sources of financial data including Accounts Payable, Accounts Receivable, Asset Management and Treasury. It also provides up-to-date or real time information for enterprise-wide control and planning. The Financial Accounting module is for external reporting purposes and it is compatible with the international accounting standards (Alexis, 2006). The financial accounting system contain sub module such as General Ledger, Accounts Receivable/ Payable, Special Ledgers, Fixed Asset Accounting, Legal Consolidation.

Fig. 2.4. Finance and Controlling module function

Ensure Compliance & Mitigate Risk

- Accounting and Tax Compliance
- Efficient Process Controls

Abbildung in dieser Leseprobe nicht enthalten

Risk Management a Audit Support

Source: www.sap.com

2.2.З.1.2. Investment Management sub module

Investment management provides extensive support for investment processes right from planning through settlement and facilitates investment planning and budgeting at a level higher than that needed for specific orders or projects (Zhang et al., 2005). Investment management provides tools to plan and manage the capital spending projects right from the earliest stage.

2.2.3.1.3. Financial Controlling sub module

The financial controlling system gathers the functions required for effective internal cost accounting. It offers a versatile information system with standard reports and analysis paths for the most common questions (Alexis, 2006).

2.2.3.3. Advanced Planning and Scheduling (APS) Module

Planning is the core of most organizations and has a direct impact on their operational costs, revenue and customer service level (Stadtler and Kilger, 2007). Every day, many decisions are made about how to utilize scarce resources on a strategic, tactical, and operational level (Chen et al., 2012). According to Consortium PSLX (2005), Advanced Planning and Scheduling (APS) is a system and methodology in which decision-making, such as planning and scheduling for industries, is federated and synchronized between different divisions, with in enterprises, to achieve total and autonomous optimization.

Decision making is perceived as a process of determining information related to planning and scheduling of business activities with in an enterprise (APICS, 2008). This process encompasses all the business activities that create and manage information required for planning and scheduling. Organizations must strike the right balance between operational efficiency on the one hand and employee and customer satisfaction on the other (Elarbi, 2001). The five main components of APS systems are (1) demand planning, (2) production planning, (3) production scheduling, (4) distribution planning, and (5) transportation planning (APICS, 2008).

Fig. 2.5 : APS Module functions

Abbildung in dieser Leseprobe nicht enthalten

Source: Adapted from Stadtler and Kilger, 2007

A supply chain is a network of suppliers, factories, warehouses, distribution centers and retailers through which raw materials are acquired, transformed, produced and delivered to the customer (Rai et al., 2006). The supply chain consists all the activities associated with the flow and transformation of goods from the raw material stage, through to the end user, as well as the associated information flows. Supply chain management system can be regarded as a type of distributed information management system, of which agent technology provides the ultimate in its development (Akkermans et al., 2002). Information Technology application has brought enormous opportunities to supply chain management and making it grows at an even faster pace. Role of information is crucial and drives the entire supply chain system. For many companies, it has become clear that a supply chain that flows information and material effectively can be a significant differentiator, the competitive winner (Sheth, 2000).

2.1.4. Benefit of ERP Implementation

2.1.4.1. Business Integration

ERP packages integrate the automatic data exchange among application that is possible among the related business components (Zhang et al., 2005). Conventional company information systems were aimed at optimization of independent business function in business units that are almost weak in terms of the communication and integration of information that transcended the different business functions. Through ERP packages, the data of related business function is automatically updated at the time a transaction occurs. For this, it is simple to grasp business details in real time, and carry out various types of decisions in a timely manner, based on that information (Thomas and Michael 2001).

2.1.4.2. Increased Flexibility

Flexibility is a key issue in the formulation of strategic plan in companies. Flexibility means the way of quickly changing something that is being done, or completely changing to adjust to new product designs (Kwahk and Ahn 2010). Since competition is growing, companies must learn to respond more rapidly to customers’ wishes as well as changes in the market and need to design new products or redesign old products quickly and efficiently (Dezdar, 2012). Only then will companies have the chance to capitalize on opportunities while they are available. To cope with company globalization and system unification, flexibility is essential, and has major advantages, not simply for development and maintenance, but also in terms of management. ERP enhance flexibility.

2.1.4.3. Better Analysis and Planning Capabilities.

By enabling the comprehensive and unified management of related business and its data, organizations become possible to fully utilize many types of decision support systems and simulation functions (Hendricks et al, 2007). Real time filing and analysis of data from a variety of dimensions is able to give the decision makers the information they want; thus enabling them to make better and informed decisions (Alexis, 2006).

2.1.4.4. Better Customer Satisfaction

Customer Satisfaction means meeting or exceeding customers’ requirements for a product or a service (Zeritu, 2010). ERP systems have proved that they can produce goods at the flexibility of make-to -order approach without losing the cost and time benefits of made- to -order operation. This means that customer will get individual attention and the features that want, without spending more money or waiting for long periods (Wilson 2008).

2.2. Customer Relationship Management (CRM)

2.2.1. Concepts of CRM

Customer Relationship Management is a broad term that covers concepts used by companies to manage their relationships with customers, which may include attracting the customer, analyzing the customer, retaining and satisfying the customer (Bose, 2012). It is an integrated management system focused on customers and prospective customers.

The CRM approach contains the processes that build a business management model centered on a 360° approach to the customer (Payne and Frow, 2005). The CRM platforms build on customer-centric processes, disseminated throughout the organization. CRM extensively uses information related to the client by integrating the areas of marketing, sales & service & verifying the creation of customer value (Parvatiyar and Sheth, 2001).

In order to build a smarter CRM strategy, the technology responds only to the company’s strategy by helping to capture data about the client and external sources and consolidate that data in a central data-warehouse. CRM system provides the company with integrated and effective means of meeting, recognizing and caring for the client in real time. CRM applications transform the data collected into information that allows a better understanding of the customer profile (Rigby and Ledingham, 2004). The management processes in which CRM is based are undoubtedly at the forefront in terms of strategy and marketing, and also at the economic and financial level. Companies that are thoroughly familiar with their customers can create custom responses, anticipating their wants and needs and answering their major wishes (Lovelock et al., 2001).

In a recent Harvard Business Review article, Gulati and Oldroyd (2015) observe that the implementation of CRM systems serve the purpose of getting closer to customers, and the company that engaged in a learning journey about the customer and about the business improved the way of doing business. The authors identify four stages in the evolution of a successful CRM implementation: 1) gathering information; 2) gaining insight from customers’ past behavior; 3) learning to predict future customer behavior and 4) real time response to customer needs. This evolutionary and transformational process takes time, resources, and patience, but the implementation of each of the stages should provide visible end results. Furthermore, the deep understanding of the customer provided new levers for future growth (Gulati and Oldroyd, 2005; Gupta and Lehmann, 2005).

CRM is based on the principles of relationship marketing (RM) which is regarded as one of the key areas of modern marketing and has generated great research interest (Sheth, 2000). Grönroos, (1997); Parvatiyar and Sheth, (2001) view RM as a paradigmatic shift in marketing. The increased interest in one to one marketing raised the potential for shifting from a mass to individualized or one-to-one marketing (Peppers & Rogers, 1993). With its roots in RM, CRM is a relatively new management discipline. Parvitiyar and Sheth (2001) point out the two terms are often used interchangeably. Contributors to this literature emphasize the key role of multiple stakeholders (e.g. Christopher et al., 1991; Gummesson, 1999). Customer relationship based approaches have been increasingly advocated over the last fifteen years (Webster, 2015).

Fig. 2.6 History of CRM

Abbildung in dieser Leseprobe nicht enthalten

Source: Gurmnesson, 1999

2.2.3. Types of Customer Relationship Management (CRM)

According to Bose (2002), there are three types of Customer Relationship Management

2.2.3.1. Collaborative CRM

Collaborative CRM is designed to share information on various types of interactions that customers have with the organization and its different departments, either through direct interactions, by email, by letter or by fax. It is a communication with customers and covers direct interaction with customers including feedback and issue reporting. Collaborative CRM greatly improves services provision process.

2.2.3.2. Analytical CRM

Analytical CRM Functions include performance analysis and business intelligence. The analytical CRM addresses the analysis of customer data for a host of different purposes. In general it is used to design and execute targeted marketing campaigns that optimize marketing effectiveness. Analytical CRM takes into account product and service decision making, pricing and new product development (Mendoza et al, 2007).

2.2.3.3. Operational CRM

The operational CRM application interacts directly with the customer by integrating the front office and back office. This type of CRM includes the functional areas of sales force automation, contact management, automation of marketing activities and customer service. It generally refers to products and services that allow an organization to take care of their customers. It provides support for various business processes, which can include sales, marketing and service.

Fig. 2.7 Types of CRM

Abbildung in dieser Leseprobe nicht enthalten

Operational CRM

Source: Sheth, J. 2001

2.2.4. Benefits of CRM Implementation

Customer relationship management (CRM) explicitly recognizes the long-run value of potential and current customers, and seeks to increase revenues, profits, and shareholder value through targeted marketing activities directed toward developing, maintaining, and enhancing successful company and customer relationships (Gronroos, 1994). In order to endure long-term success, the role of CRM in a firm is to contribute to building strong and valuable customer portfolio. CRM is an integral part of a company’s strategy, and its input should be actively considered in decisions regarding the development of organizational capabilities.

Boulding et al., (2005) also argue that CRM improves business performance in a wide variety of service settings. A striking example is described in a case study by Ryals (2005), showing that a business unit was able to achieve a 270 percent increase in business unit profits above target by implementing some straightforward CRM procedures. Boulding et al. (2005) stated that, holding fixed the level of CRM investment, the effectiveness of CRM activities depends on (a) how CRM is integrated with the existing processes of the firm and (b) the firm’s preexisting capabilities. In other words, organizations that have already developed learning capabilities and effective information processes are more likely to improve their business performance by adopting CRM systems. They are able interpret information correctly and act on it in a manner to increase value for both the customer and the firm. A brief analysis of the literature on CRM systems points, historically, to implementation problems. For example, Gartner Group (2003) found some 70% of CRM projects resulted in either losses or no bottom­line improvement. As CRM vendors have largely driven the initial emphasis on CRM, they must be seen as at least part of the problem with respect to the failure of many CRM systems. However, more recent work analysis (Rigby and Ledingham, 2014) has shown companies are now reporting improved satisfaction with their CRM investments.

2.2.4.1. Customer Acquisition

Customer acquisition is a first step in building a customer base. Targeting, acquiring, and keeping the right customers entails a consideration of fit with current firm offering, future profitability, and contribution to the overall business risk (Benkenstein and Stuhldreier, 2004). Many firms do not employ appropriate criteria to identify profitable customers and their programs are broadly communicated to potential customers who may or may not be profitable. Customer-product fit becomes important because campaigns aimed toward new customers that change the positioning of a product can alienate existing customers. Mittal and Kamakura (2001) discuss the nature of the relationship of the customer and the brand, finding that customers with different characteristics have different satisfaction thresholds, and, therefore, different probabilities of repurchase.

2.2.4.2. Customer satisfaction

Customer satisfaction has important implications for the economic performance of firms because it has the ability to increase customer loyalty and usage behavior and reduce customer complaints and the likelihood of customer defection (King and Burgess, 2008). The implementation of a CRM approach has an effect on customer satisfaction and customer knowledge for a variety of different reasons. By accumulating information across customer interactions and processing the information to discover hidden patterns, CRM applications help firms customize their offerings to suit the individual tastes of their customers (Bose, 2002). This customization enhances the perceived quality of services from a customer's viewpoint, and because perceived quality is a determinant of customer satisfaction, it follows that CRM applications indirectly affect customer satisfaction.

2.2.4.3. Customer Retention

Customer retention is often easier and cheaper than customer acquisition, especially in stable markets with low growth rates. An organizational emphasis on customer retention also makes sense when discount rates are low (Gupta and Lehmann, 2005). Boulding, (2005) confirms that consumers with higher satisfaction levels and better price perceptions have longer relationships with firms. Organizations that have long -term relationships with customers are able to achieve significant growth and higher profitability through differential reductions in discretionary expenses (Kalwani and Narayandas, 1995).

CRM applications also enable firms to provide timely, accurate processing of customer orders and requests and the ongoing management of customer accounts (Parvatiyar and Sheth, 2001). Both an improved ability to customize and a reduced variability of the consumption experience enhance perceived quality, which in turn positively affects customer satisfaction. Furthermore, CRM applications also help firms manage customer relationships more effectively across the stages of relationship initiation, maintenance, and termination (Gupta and Lehmann, 2005).

2.3. ERP and CRM Integration

Integrating ERP and CRM system ultimately provide insight, creating a single, and 360- degree view of organizational profitability (Hendricks et al, 2007). Back office and front office will no longer be isolated, but working hand-in-glove to anticipate customer demand rather than react to it. Using integrated CRM-ERP solutions, organizations gain access to comprehensive and consistent data about customers from throughout the organization using their accustomed application dramatically (Gargeya & Brady, 2005). This integrated information enables users to view combined financial and nonfinancial information about customers from within the CRM application, regardless of where the data is generated or stored. The integrated solutions also bring together previously disconnected business processes by automating complex, multistage processes in an end- to-end manner (Huang and Palvia, 2001). They employ workflow management and can automatically trigger the downstream business process, passing data seamlessly from one application to the next without manual intervention. Improved integration means better access to organizational data for service thereby eliminating repeated calls to customer service (Yu, 2008).

Fig 2.8 ERP and CRM Integration

ERP SYSTEMS CRM SYSTEM

Abbildung in dieser Leseprobe nicht enthalten

Source: Adopted from www.crmswitch.com

The front office includes departments, such as the contact center, marketing and sales, which have direct contact with customers. They operate in real-time as they pursue immediate resolution, so the work process usually requires just one person. Furthermore, their work is distributed throughout the day, so no backlog develops other than call or customer queues (www.aspect.com).

By contrast, back office employees usually perform very manual and routine work which doesn’t involve having direct contact with customers. Their primary product is a work item or task that may require many different people or processes; therefore, a wide variety of skillsets are required. Back office tasks may take hours, days, or even weeks to complete. Since work often arrives at specific times, such as at the end of the month, significant backlogs can occur if staffing is not monitored and adjusted on a daily basis.

Fig. 2.9 Back Office and Front Office Integration

Abbildung in dieser Leseprobe nicht enthalten

Source: www.aspect.com

According to Ruivoa et al., 2014, and Ranganathan and Brown, 2006, there are different types of CRM and ERP integration, the main are:

2.3.1.1. System Integration

Systems integration is the composition of a capability by assembling elements in a way that allows them to work together to achieve an intended purpose. System integration is defined as the process of bringing together the component subsystems into one system and ensuring that the subsystems function together as system (Ranganathan and Brown, 2006). Systems integration creates a mission capability by composing subcomponents of the capability. It is the logical next step between design and development, and testing, verification, validation, and deployment. The system integrator brings together discrete systems utilizing a variety of techniques such as computer networking, enterprise application, business process management or manual programming.

2.3.1.2. Process Integration

Process integration is the extent to which the business process of the two systems are tightly linked and standardized into what could be described as a single information system. Although the system integration facilitates the business process integration, by itself does not guarantee firm’s high levels of business process. Process integration streamline and integrate internal business processes to improve efficiency of the firms (Ruivoa et al 2014).

2.3.3. Benefit of ERP and CRM Integration

CRM and ERP integration enhance the organizations operational effectiveness if properly implemented. CRM is a front-office system that centralizes all information about external marketing, manages the sales pipeline, automates customer service, tracks information about customers, as well as creates dashboards & reports on this data (Park et. al., 2004). ERP systems automate and manage back-office business activities, such as accounting, purchasing, human resources, payroll, manufacturing, distribution, and more (Elarbi, 2001). By developing automated workflows that span both CRM and ERP applications, organizations can expand on the individual capabilities of their ERP and CRM systems to enable straight through processing (Dezdar, 2012). A user can then initiate a transaction, automatically triggering all related business processes as appropriate and passing the transaction seamlessly from one application to the next without the need for extensive manual intervention. Allowing staff to use proven, repeatable processes improves productivity by eliminating time-intensive manual activities (Park et. al., 2004). Straight- through processing improves productivity by reducing or removing the need to rekey information from one system to the next, as orders generated within the CRM system are passed automatically through to the ERP system for processing and fulfillment.

2.3.4. Challenges of ERP and CRM Integration

ERP and CRM packages, if chosen correctly, implemented and integrated judiciously and used efficiently, will raise the productivity and profits of companies dramatically. But many company fails in this because of wrong product, haphazard implementation and inefficient or ineffective usages (Hendricks et al, 2007). Traditionally, it has been difficult to integrate CRM and ERP systems because of the vastly different architectures and the lack of standards for exchanging data between the systems. Older, point-to-point integration methods can be costly, complex, and risky (Payne and Frow, 2005). Even when a company does integrate these systems, future CRM or ERP upgrades can easily render the integration inoperable.

2.3.4.1. Lack of Training

Lack of training in existing hardware/software and related technologies and inadequate education regarding new developments in Information System are critical barriers to success. Training needs occur at two levels in the organizations: firstly is the training and development of Information System staff, and secondly training and education of user department personnel in appropriate technologies (Teo et al., 2001).

When different departments use different IT systems that don’t share a single, centralized data warehouse to store information, information must be manually reentered into each system, resulting in wasted time and potential rekeying errors (Bennett et al., 2010). Alternatively, organizations must set up a separate data mart to take data from the different systems in use and normalize that data so that it appears in a common format.

2.3.4.3. No single point of information

Employees who want access to complete information about the customer’s interactions with the company must turn to two entirely different systems—the CRM system and the ERP system to answer customers questions. Employees must spend time learning two systems and then take extra time to toggle between them. The organization must also purchase licenses for two solutions for these users, rather than a single license for a system that enables users to access data from the other system (García-Sanchez and Pérez-Bernal, 2007). Purchasing additional licenses increases total cost of ownership.

2.3.4.4. Lack of Funding

Funding is a problem in two areas in the organizations. The first is lack of funding to acquire, update, and maintain the systems; and the second is the specific funding opportunities that create uneven or inappropriate investment in particular technologies especially in donor funded organizations (Gardner et al., 2007).

2.3.4.5. Poor ICT Infrastructure

It is expensive to build an infrastructure and to maintain the equipment update. Likewise, there is low connectivity in the third world countries where the communication bandwidth is slow and access to the internet, the job portal and downloading application forms is a problem (Kovach and Cathcart, 1999). The overall Network connectivity continues to pose a challenge especially in the rural areas.

2.3.4.6. Inability to track customer interactions

Since information is stored in two systems, no one single point of reference or single version of the truth exists for information about customers’ interactions with the organization. This increases the likelihood of errors that can be time consuming to correct; for instance, when entering a customer order, the sales representative using a standalone CRM system won’t have access to customer credit information and will be unaware of any credit holds (Thomas and Michael, 2001).

2.3.4.8. Inability to target customers effectively

Target marketing is generally recognized as a way to reach the right customers with the right offers, often for purposes of up-selling and cross-selling, in a highly efficient manner. In order to perform target marketing, organizations need information about their customers, the products they’ve purchased in the past, the amounts they’ve spent, and so on (Payne and Frow, 2005). When information is spread across different applications, organizations are either unable to perform target marketing at all or must use time­consuming manual processes to obtain the necessary information.

2.3.4.7. Information Insecurity

The challenge is to keep information protected all the time from being accessed by unauthorized persons, system hackers, web spam and document viruses. There are inadequate technical and operational skills within the Public service and levels of computer literacy of users are very low (Reddic, 2009).

The concept of service refers to the outcome that is received by the customer and is made up of a portfolio of core and supporting elements which can be both tangible and intangible (Lovelock and Wirtz, 2004). It is a description of the service in terms of its features and elements as well as in terms of the benefits and value it intends to provide to customers (Sheth, 2000). There are some major differences between services and goods. The nature of services is intangible whereas goods are tangible. Since services are intangible, measurement of service quality can be more complicated. Service quality measures how much the service delivered meets the customers’ expectations. Perceived service quality is a result of the comparison of perceptions about service delivery process and actual outcome of service (Zeritu, 2010). Since a service process leads to an outcome resulting in the customer being either satisfied or dissatisfied with the service experience, it is so importance that the service organizations should have to pay attention to designing the system by which service concepts are produced and delivered to customers (Brown et al., 1994).

Today, service faces many challenges in its efforts to become a truly representative, competent and democratic instrument and to play its proper role in the reconciliation, reconstruction and development process of the country. To fulfill this role effectively, the service sectors are being transformed to implement government policies according to the policy framework contained in the transformation of the service delivery. In order to ensure that service delivery is constantly improved, each departments should be required to outline their specific short, medium and long term goals for service provision (Park, et al., 2004). Improving delivery of services means redressing the imbalances of the past and, while maintaining continuity of service to all levels of society, focusing on meeting the needs of the majorities (Spreng and Singh, 1993). Knowing what the customer wants and providing it quicker, better and cheaper than competitors, is essential to business success (Wilson 2008).

Service quality is an overall judgment similar to attitude towards the service and generally accepted as an antecedent of overall customer satisfaction (Zeithaml and Bitner, 1996).

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