J. Service Science & Management, 2009, 2: 432-438
doi:10.4236/jssm.2009.24052 Published Online December 2009 (www.SciRP.org/journal/jssm)
Copyright © 2009 SciRes JSSM
The Development of Services in Customer
Relationship Management (CRM) Environment
from ‘Technology’ Perspective
Gaurav K. Agrawal1, Daniel Berg2
1Decision Sciences and Engineering Systems, Rensselaer Polytechnic Institute, Troy, USA; 2Decision Sciences and Engineering Systems, Rensselaer
Polytechnic Institute, Troy, USA.
Email: gkagrawal@engineer.com, bergd@rpi.edu
Received May 15, 2009; revised July 2, 2009; accepted August 21, 2009.
The service sector is receiving much deserved attention resulting from its inevitable role in a country’s economic de-
velopment. Despite all the efforts gaps such as the relationship between technological advances and service develop-
ment are yet to be revealed from the perspective of new applications that organizations want to develop and implement.
This paper explores opportunities u sing a comprehensive model (and CRM, as an example) tha t can be used to extend
the research relating service development to the technology development aspects of the market.
Keywords: Service Systems, Service Hierarchy, Customer Relationship Management, Service Development, Technology
1. Introduction
Presently, extremely competitive and globalized markets
demand economic globalization as a ‘must do’ activity
for the competitors to maintain their niche in th e (service)
market. Technology development is seen as a solution,
allowing organizations to enhance their service portfolios
using latest technological advancements. Also, new
technology development triggers the service develop-
ment process to be more customer intensive with cus-
tomized service offerings. With the shorter maturity
times of (different services and hence) the service or-
ganizations [1], it became evident for businesses to pur-
sue the technology development and its implementation
aspects at a faster pace. It is established that ‘technology’
plays an inevitable role in the service development proc-
ess [2–4].
With the increasingly changing perception (of cus-
tomers) and fierce competition (among business organi-
zations) at the international level, organizations lean to-
wards using customer relationship management (CRM)
like approaches. CRM is known to be a strategic ap-
proach where organizations implement new processes
enabling them to create long term profitable relationship
with their customers. The use of CRM approach in dif-
ferent industrial sectors (manufacturing, services, con-
struction, extraction, and mining) requires associated
organizations to be technology compatible to implement
them. This paper discusses the need and impact of im-
plementing different technologies (with varying levels of
complexities) in the course of developing (new) services
from the customer relationship management perspective.
CRM is proven to be helpful in organizing and analyzing
activities (e.g., marketing, sales, customer services, etc.)
in an organization to keep the overall organizational ef-
forts useful to both the customers’ and the organizations’
growth and development.
A systems level approach is used, in this paper, to
identify the level of techn ical complexity that n eeds to be
employed in developing and operating different services.
A Service System is defined as a collection of different
(service-sub) systems, and their placement with well de-
fined roles and responsibilities. The customer relation-
ship management concept (at large), its applicability and
relationship to service development processes and levels
of technology being used to develop them is discussed as
2. Service Systems and CRM
In simple terms a system can be a group of several inter-
acting elements consisting input parameters, a process to
manipulate them and output(s). A service system on the
other hand is said to have - customers, a physical or vir-
The Development of Services in Customer Relationship Management (CRM) Environment from ‘Technology’ Perspective433
tual facility to house the required hardware and/or infra-
structure, and service providers. Services can be distin-
guished from other activities based on their specific
characteristics, a.k.a. CHIPS which represent Coproduc-
tion, Heterogeneity, Intangibility, Perishability and Si-
multaneity [5]. Similarly, the concept of service package
consisting Delivery, Infrastructure and Product a.k.a.
DIP can be used in defining the service systems [5].
In case of a simple service system, e.g. a restaurant (as
shown in Figure 1), it is observed that to offer end ser-
vices to their immediate customers, it would need to use
several other services. This would require the main ser-
vice system (restaurant in this example) to interact with
other service (sub) systems, e.g., transportation services,
banking services, insurance services, credit card services,
recreational services, etc. The visibility of systems (in-
cluding its sub-systems) varies based on their access to
customers and their placement in the system.
A closer look on such a system clarifies that all the
sub-systems (e.g. credit card services, transportation ser-
vices, insurance services, etc.) providing their services to
a master service provider (restaurant in above example),
can actually be the master service providers to other ser-
vice (sub) systems. While analyzing an end service pro-
vider, it is clearly observable that all the su b-systems can
be given a specific role and placement in its service sys-
tem hierarchy. While on a global level all the service
systems are expected to have some (moderate to exten-
sive) level of interaction with other systems in the hier-
archy subject to their role and placement in it (as shown
in Figure 2).
Every member in a service system hierarchy (i.e. a
service sub-system) consists of their own target custom-
ers, business strategy, development & expansion plans,
software and hardware requirements, infrastructural
needs, and marketing policies. Such a diverse set of dif-
ferentiating factors among service sub-systems makes it
crucial to study the primary and secondary effects of
them on their customers [6] and observe their relation-
ship with each other. The interactive relationship
amongst the systems in whole can be said to have a sig-
nificant impact on setting the market trends. The change
in (sub) systems’ operating and developing strategies
creates a dynamic impact on all other (sub) systems, due
to their close and regular interaction needs.
The role of customers in a business is as important as
the business itself. All businesses (including manufac-
turing, services, agriculture, mining and construction)
operate to fulfill their customers’ direct or indirect re-
quirements in a best way suitable for their mutual devel-
opment. Services, although, have the unique characteris-
tics of having the mandatory presence of customers as
the co-producers [7]. In the midst of fast paced, globally
competitive environment and continually growing need
(e.g. A Restaurant)
Required Inputs Subsystem
Lo cal Visibil ity
Global Visibility
Figure 1. Example of a complete service system, using subsystem approach
Copyright © 2009 SciRes JSSM
The Development of Services in Customer Relationship Management (CRM) Environment from ‘Technology’ Perspective
Ln(1) Ln(y)
Figure 2. Master service system (L1) with its first and second level subsystems
of economic globalization, it has become evident for the
businesses to not only look for new market segments to
expand but also work harder to retain their existing cus-
tomer base. Different organizations/businesses choose a
variety of strategies to earn the loyalty of their customers.
This includes examples such as sales follow ups, free
upgrades, quick complaint responses, free home deliver-
ies, holiday packages, personalized call center responses,
etc. Based on the size, need and type of businesses, or-
ganizations opt either for a single or a combination of
several strategies to expand their customer base while
serving their existing customers within their best ab ilities.
This whole process is named as the “Customer Relation-
ship Management” or CRM. Payne and Frow [8] defined
CRM as –
“CRM is a strategic approach that is concerned with
creating improved shareholder value through the deve-
lopment of appropriate relationships with key customers
and customer segments. CRM unites the potential of rel-
ationship marketing strategies and IT to create profitable,
long-term relationships with customers and other key
stakeholders. CRM provides enhanced opportunities to
use data and information to both understand customers
and cocreate valu e with them. This required a cross-fun-
ctional integration of processes, people, operations, and
marketing capabilities that is enabled through inform-
ation, technology, and app lications [8].”
Several organizations are dedicating their resources to
deliver an optimized (software) system to serve the CRM
needs of different organizations. Microsoft®, ORACLE®,
SAP, Salesforce.com® are some of the major players in
the CRM arena. Aside pure service providing organiza-
tions, other industrial sectors receive a large portion of
their revenues from the service activities they offer.
Some good examples in the manufacturing sector are –
GM, IBM, etc., where a large portion of their annual
revenue comes from their service counterparts. In a
similar fashion other sectors (i.e. mining, agriculture, and
construction) though may not qualify as pure service
organizations but do have a large sum of their revenues
coming from the services they offer. Embedded relation-
ships, like these, between non-service organizations and
their embodied service providing networks make the re-
quirements of CRM like interfaces more crucial and hard
to ignore to keep them operational.
3. Technology, Business Process Outsourcing
and CRM in Services
The concept of CRM is not as new as its accepted need
and demand for different application packages in the
market (in last decade or so). The concept of building
customer relationships is as old as any business in the
industrial world. With the increasing competition among
different business (organizations) types, technology used,
originating subcontinents, etc. their survival becomes
highly dependent on their capabilities to sustain their
competitive positioning and customer base. Introduction
of new technologies (e.g. internet and IT based tools) not
only reduced the distance among customers and business
owners but also brought the opportunities of sub con-
tracting the business functions overseas with much re-
duced costs and enhanced effectiveness. The concept of
Business Process Outsourcing (BPO) had emerged in the
past decade to provide an edge to different (mainly US
based) business owners in terms of gaining the strategic
advantage over their non US counterparts. The concept
of BPO was added to the multidimensional scenario of
the industrial world as the low cost solu tion of mainly its
Copyright © 2009 SciRes JSSM
The Development of Services in Customer Relationship Management (CRM) Environment from ‘Technology’ Perspective435
information technology (IT) and finance operational
needs. BPO did not only introduce the low cost IT and
Finance business solutions to the corporate world but
also paved the way for the global strategic management
of technological innovation. With the intercontinental
business ties, customer relationship management strate-
gies took shape in the form of new software packages
and alliances formed between different corporate giants
to retain their target customer base to survive the compe-
tition. Some examples can be given as the recent mergers
of AT&T and Cingular, Sears and K-Mart, and talks of
acquiring Yahoo! by Microsoft are the steps forward to
maintain their niche in the market and expand their cus-
tomer base.
Services being the largest contributor to the United
States’ (and many other countries’) Gross Domestic
Product (GDP), plays a decisive role in directing the de-
velopment of various tools and technologies in the mar-
ket [9]. It is an inevitable fact that ‘technology’ plays a
significant role in the course of service development
process and needs to be seen as the driving dimension in
the service development process [2–4]. The contribution
of services had continued to rise (in the vicinity of ~80%)
in US GDP in last decade or so, as shown in Figure 3.
It is evident from the contribution of services that ser-
vices cover a wide spectrum of activities responsible for
the economic development. Because of their embedded
nature, services can sometimes be hard to distinguish
from other activities (i.e., mining, agriculture, construc-
tion and manufacturing). A more detailed literature on
service characteristics can be found in Agrawal,
Fitzsimmons and Fitzsimmons [2,7], Several attempts
have been made to classify the services, some of the most
accepted service classifications in the literature are
Schmenner, Bitner, Agnihotri et al. [10 – 12] .
As stated earlier in Section 2 (with Figure 1, and 2) a
(service) system exhibits a dynamic hierarchy constitut-
ing several sub systems. The dynamic behavior of sub-
systems directs (large) organizations in strategizing and
implementing their CRM activities and vice versa. Based
on the specifics of the business, e.g., their strategic mo-
tivation and vision; different businesses respond to fluc-
tuations in the market differently. The changes in the
market are largely dependent on either the changing per-
ception and needs of customers or a result of the erratic
behavior of sub-systems in the system hierarchy. The
changing behavior of sub-systems can be explained using
varying needs of customers as well, which is a result of
introduction of new technologies, products and services
in the market. New products and services offered by dif-
ferent organizations drives customers’ ever-changing
expectations [13] and hence a demand in the market mo-
tivating organizations to develop and deliver new ser-
vices, and hence completing the circle.
Factors such as, market orientation, global strategic
growth, technology innovation, management structure,
and service blueprints are the driving factors, used in
explaining the variations in the service systems devel-
opment [2,4]. The increasingly embedded sub-systems
and complexity therein, calls for the implementation of
CRM solutions for organizations to assure their (long
term) existence in the market. CRM solutions are equally
applicable to all segments of the industry, including the
service sector and goods sector.
%age Contribution of Service in US GDP
78.33 78.86
%age Contribution of Services
Figure 3. Percentage contribution of service in the US Gross Domestic Product (GDP) source: Bureau of economic analysis
Copyright © 2009 SciRes JSSM
The Development of Services in Customer Relationship Management (CRM) Environment from ‘Technology’ Perspective
Service Factory
Resorts & Recreation
Service Sh op
Auto R epair
Other Repair Servi ces
Mass Service
Retail aspe cts of comme rcial
Professional Service
Deg ree of Interactio n an d Custo m iz a ti o n
Degree of Labor Intensity
Low High
High Low
Figure 4. Service-process matrix [10]
4. The Service Development Process,
Technology and CRM
Service organizations adopt different approaches to de-
velop their services b ased on the lev el of technolog y they
choose to use in the course of developing and delivering
their services. As discussed in the earlier sections, it is
becoming customary for the organizations to implement
CRM strategies to stay competitive in the market. Busi-
nesses face tough competition from their long existing or
low cost internation al contend ers in the market. Although
using latest technology and tools, some are able to ex-
pand their business networks with uniquely customized
services, e.g. OnStar© services by General Motors Cor-
poration (GMC). These services added another dimen-
sion to already existing global positioning systems (GPS)
in the automobile market by providing live customer
support to their customers. Even though GM faces great
competition in the automobile market, OnStar© services
gave them an edge in the market to sell not just their
products but their customized services as well. To offer
such technically intensive services, organizations need to
choose the appropriate personnel, infrastructure, hard-
ware and software to be able to implement that specific
level of technology to not only developing but also de-
livering such services.
Among different service businesses (even for the
similar kind of services) the level of technical complexity
chosen by different organizations to develop and deliver
their services causes them to pursue the service devel-
opment process differently [2]. In a similar fashion, im-
plementing CRM applications in a technology intensive
environment would demand a higher level of develop-
mental efforts than a comparatively lower level of tech-
nology intensive environment. Reinartz et al. [14] liked
CRM process economic performance with the Informa-
tion Technology as a critical moderator. Based on the
Schmenner’s Service-Process matrix (as shown in Figure
4) to classify the services [10], a new model is suggested
as the Service-Process-Technology (SPT) matrix (shown
in Figure 5) that shall be used in relating the service de-
velopment process to the level of technology used. The
service development process and the level of technology
that organizations select to use in developing (and deliv-
ering) their services can be visualized and explained us-
ing the SPT matrix.
Schmenner used labor intensity (labor to capital ratio),
degree of interaction and customization to develop the
Service-Process matrix. Using these factors any service
organizations can be nominated to one of the four quad-
rants in the matrix based on the specific characteristics it
reflects. As an extension to Service-Process matrix the
SPT matrix is proposed with the techno logy to be used as
the 3rd dimension in it. Research studies have established
that the level of technolog y, organizations use to develop
their services, affects their service development process
immensely [2–4 ].
The SPT matrix can be used in explaining the rela-
tionship between different service systems based on the
level of technology they have used to develop their sys-
tems. Although only 3 layers are shown in the SPT ma-
trix, it is possible to have a larger number of layers based
on the technical complexity and details involved in the
analysis. Reinartz et al. [14] stated the need to allocate
resources to different tiers of customers based on the
economic value (or position in the Service Hierarchy)
they have. In an embedded environment, the relationship
among different systems can become highly cross linked
and ambiguous. Such relationship among (sub) systems
makes it essential for the sub (service) systems to keep
up with the technology advancements in either master or
related sub systems to retain their customer base, which
Copyright © 2009 SciRes JSSM
The Development of Services in Customer Relationship Management (CRM) Environment from ‘Technology’ Perspective437
X Degree of Interaction and Customization
Y Degree of Labor Intensity
Z Level of Technical Complexity Used
(Lower, Medium, & Upper Layers)
Figure 5. Service-Process-Technology (SPT) matrix
aggressively pursues the technology upgrades available
in the market [15].
The implementation of applications such as CRM re-
quires target systems to have some minimum basic tech-
nological infrastructure available to them to be able to
use CRM applications successfully. As discussed earlier
in Section 2, each member in the system hierarchy is ca-
pable of affecting other member systems due to their
embedded structure and cross relationships. To sustain
such minimum requirements, organizations may need to
upgrade their existing facilities and hence causing a
chaos in the system hierarchy requiring other (attached)
subsystems to keep up with them. The relationship be-
tween placement of organizations and their subsystems in
different ‘technology’ layers (or level in hierarchy) and
the changes/upgrades they need to pursue in order to im-
plement new applications (e.g., CRM) can be explained
using SPT matrix like tools. Although, the definition and
number of layers in the model may differ for different
business types, the matrix features and applicability re-
mains unchanged. As discussed in Section 3, the concept
of BPO is playing an important role in the current eco-
nomic scenario of the United States by giving corporate
firms an opportunity to outsource their technical needs to
low cost overseas organizations. Because a big part of
technology requirements are being outsourced, it is evi-
dent that local US companies are being affected greatly
and are facing harsh competition in the market to retain
their customer base. CRM practices are proven to be
helpful in such situations [16]. The organizations out-
sourcing their operations overseas are implementing and
taking advantage of CRM practices as well. With the
infrastructural internationalization, organizations with
their establishments in the United States are unable to
gain any advantage over the organizations that are using
overseas resources, in expanding their customer base.
Two organizations situated in different continents, but
in the same business, may qualify in different quadrants
of Service Process matrix based on the characteristics
they reflect in their business models. Research has estab-
lished that hardware and software (or infrastructural) re-
quirements for different organizations (or quadrants in
the Service Process matrix) differ significantly from each
other in the course of their service development process.
Using the z-axis in the SPT matrix (i.e., ‘Technology’
layer) it is possible to distinguish among different or-
ganizations who operate similar businesses but in differ-
ent quadrants based on the similarities in the technologi-
cal advancements they pursued over time to implement
the CRM like applications. Once the most suitable layer
for a system (using the service provider, customer base,
technology being implemented, and the quadrants it re-
sides in) is identified, the specific requirements for those
organizations can be predicted in terms of the infrastruc-
tural updates they would need in the process of imple-
menting an application system such as CRM.
Bitner et al. [17] established (using their Technology
Infusion matrix) that technology plays a crucial role in
customers’ satisfaction in the service encounter process.
Bitner used the Technology Infusion matrix as the
framework explaining the improvements in the service
encounter experience using the available technology ef-
fectively. Using the SPT matrix, the change in customers’
expectations can be explained subject to an organiza-
Copyright © 2009 SciRes JSSM
The Development of Services in Customer Relationship Management (CRM) Environment from ‘Technology’ Perspective
tion’s shift from one ‘technology’ layer to another in
terms of the drivers, i.e., customization/flexibility, effec-
tive service recovery and spontaneous delight as stated by
Bitner et al. [17] in their technology infusion matrix.
Also, with the customers’ inevitable role in the service
delivery process, the organizations’ efforts to shift within
different technology layers (or quadrants in SPT matrix)
can be explained based on the shift in customers’ expec-
tations and requirements over time.
5. Conclusions
Despite all the attention in services arena, the role of
technology in the service development process has not
received much attention from researchers, even though
the technology development is established to have strong
link with the services arena [9]. The need and advent of
new applications such as CRM led us to explore the op-
portunities to study the service o rganizations using a sys-
tem based approach and establish the important relation-
ship among different (sub) systems therein.
This paper presented the SPT matrix as one of the so-
lutions that can be used to explain the relationship be-
tween different service systems using technology as a
common connecting factor among them. Technology
being the driving force for (service) organizations to
compete in the global markets amid all the intercontinen-
tal low cost solutions, it is necessary to have such models
available to be able to differentiate among them based on
the level of technological advances they wish to pursue
over time to stay competitive in the business.
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