Evaluating the application of CRM systems in Chinese companies by CSF

Degree project

Evaluating the application of

CRM systems in Chinese

companies by CSF

Author: Jin Wang

Supervisor: Christina Mortberg Examiner: Christina Mortberg External Supervisor: FirstName

LastName, Company

Date: 2015-10-27

Course Code: 4IK00E/5IK10E, 30 credits Subject: Information System

Level: Master

Faculty of Technology

SE-391 82 Kalmar | SE-351 95 Växjö Phone +46 (0)772-28 80 00

teknik@lnu.se

Abstract

This thesis is about the current condition of Chinese Small and Medium sized Enterprise (SME) and the focus is on the Customer Relationship Management (CRM). This research also uses the concept of Critical Success Factors (CSF). The CSF are not established by any agreements or regulations; they are flexible and vary between different enterprises. This study reflects on some problems and conditions of Chinese SMEs. Since the economic market in China has not developed for so long, regulations setting and business management for most Chinese enterprises still leave room for improvement. Especially for Chinese SMEs, they take the biggest responsibility for tax and employment and meanwhile they also suffer from shortcomings like financial strength and technology capability. Helping these SMEs is a valuable and necessary topic for Chinese society and also for the study of some concept like SMEs and CRM. The CRM as a big and broad concept has been used in different circumstances; in this study, it only concerns the CRM systems implemented in target companies and information system factors like critical success factors to serve companies demands.

The research design is a case study of two Chinese enterprises. The main data collection methods are interviews and observation. Since this research does not make an extensive survey of Chinese SMEs, the companies are purposefully selected. They are typical Chinese SMEs and can represent some part of the phenomenon. The results of interviews are compared with each other and the literature material. This study led to lists of CSFs considered by two case companies, which are:

 Top management support and commitment

 Leadership and management of time and financial stuff  Internal and external communication

 Employee skills

 Customer understanding of value  Customer satisfaction

 Infrastructure, System and strategy conformity

 Organizational data sharing and process changing capability  Systems integration inspiration from inside

 Cooperation between business side and technology side

Preface

TABLE OF CONTENTS

1

Introduction_________________________8

1.1 Problem Discussion________________________9 1.2 Research Question________________________14 1.3 Research Purpose_________________________15 1.4 Research Question ________________________16 1.5 Delimitation______________________________16 1.6 Disposition_______________________________16

2

Literature Review__________________18

2.1 Customer relationship management__________18 2.2 Small and Medium Enterprise_______________21 2.3 Critical Success Factors_____________________27 2.4 Relationship between CRM and CSF __________31

3

Method____________________________37

3.1 Scientific Approach________________________37 3.2 Inductive and Deductive Approach___________38 3.3 Qualitative and Quantitative approach ________39 3.4 Strategy of Inquiry________________________41 3.5 Case Description__________________________43 3.6 Data Collection___________________________44 3.6.1 Participants______________________________44 3.6.2 Data Collection___________________________46 3.7 Data Analysis_____________________________50 3.8 Researcher‘s role__________________________50 3.9 Validity and Reliability_____________________51 3.10 Ethical Issue______________________________53

4

Empirical Findings__________________54

4.1 Guanyi Software Presentation_______________54 4.2 CRM system in Guanyi______________________55 4.3 Information from Guanyi interviews __________57 4.4

FIGURE LISTING

Figure 2-1 The CRM Continuum (Payne and Frow , 2005)_____19 Figure 2-2 CSFs for CRM (Arab, et al., 2010)______________34

TABLE LISTING

1. Introduction

In last decades, the influence of globalization has given the same opportunity and access to economy and technology to most countries. Although countries and areas still have huge gap between economy level and technology capability, however, they already get access to share new technology (Bilbao-Osorio, et al., 2013). Apart from some traditional factors, enterprises and managers are facing a new challenge: production process optimization and marketing capability. Enterprises expect that they can turn these challenges into opportunities to improve their productivity and market share (Arab, et al., 2010). In today‘s business world, customers have more choices in their

consumption action. Businesses need to take customer satisfaction as a core of business success. In other words, enterprises need to make themselves customer-oriented, and all of their products and services must be devoted to meet customer satisfaction because the customer relationship is the most valuable capital to

enterprises (Anderson & Huang, 2006). Therefore, the

management of customer relationship (CRM) is a topic worth to put attention to and its concept is emerged as a solution to set up and sustain customer relationships. Furthermore, good customer relationships will help to set up a modern and efficient business process to add value to products and services (Arab, et al., 2010). However, if companies implement CRM systems in inappropriate ways, even excellent applications or systems could be disasters. These CRM systems might be obstacles if companies do not appreciate their full applications but only use few functions, or companies do not provide enough administration support, or companies do not use their CRM systems maintain information and use those information to commit to long term, step by step marketing or business activities. Therefore, the matter of CRM systems is always not simply a yes-or-no question (Marks, 2013). At the same time, countless of companies are growing up in China in the last couple of decades, in which small and medium

some related concepts within these two enterprises. Although these two companies are from different industry sectors and with different background, they have some common points which make them to be chosen in this study. First of all, they both fit the criterion of a SME in China market (Liu, 2008). Secondly, they made investment for their CRM. Thirdly, the way of their CRM development has typical Chinese SMEs‘ characterics (Liu, 2008). If you want to run a business, start a project or manage a grocery store, it is important to know what you should care about, what you should ensure to be in your business. These concerns or consideration points which you think are critical and would like to address before and during your business will help you to reach your goals or destroy all the effort. In other words, you need to know what is needed to get evaluated and to complete your project which is a shortcut to see if you and your project are in the right way. There is a useful tool, which is used to strengthen performance of organizations called Critical Success Factors (CSF). CSF is a measurement indicator that can be applied in a whole organization or single department or project. It can be a reference to make up a strategy and a measurement to check if the real action is associated with the strategy made up in the

beginning of business (Lotich, 2012). In this research, CSF is used as a tool to measure and evaluate the implementation of CRM project in Chinese companies.

1.1

Background and Related Studies

According to the Current Development Condition of China SMEs in 2011 (Baiduwenku, 2011), in the first half of 2011, there were 43 million SMEs registered in China representing more than 95 percent of the total number of enterprises. Today, the

employments in SMEs account for 80 percent of whole quantity of employment and 85 percent of all new job opportunities are within SMEs. Moreover, SMEs contributed to 60 percent of Gross Domestic Product (GDP), paid half of the total tax to the

more than 1000 employees belong to SMEs. Retail SMEs are supposed to have no more than 300 employees as well as catering SMEs and software and information technical service companies. Construction companies, with under 3000 employees are also regarded as SMEs.

Despite of their significance, SMEs are also a vulnerable group due to their financial and technological constraints. In 1978, China‘s GDP was only 2.9 trillion euro and the government started the so called ―reform and opening-up policy‖ (Wang, 2008). The basic principle of the policy was to abolish ―the rigid, highly centralized planned economic system‖ (Wang, 2008) and to turn the one fold public ownership into a new and dynamic economic system that has the public ownership as the mainstay and developed with the diverse forms ownership. The new policy permitted the privatization of enterprises. The policy has given China and enterprises in the country a modern and open

environment to develop within. It has raised the GDP more than 66 times in thirty years, starting from 1978 (Wang, 2008).

However, from the perspective of enterprises, thirty years is still a short time. Most of the enterprises lack experience and

accumulation and they would need to improve their productivity, competitiveness, business and management skills. Nowadays, enterprises are living in an IT based global business environment; the sustainability of these enterprises depends on their ability of information technology application and exploitation (Fong, 2011). The discussion about the expectation and final consequence of CRM projects has been going on for many years. There were some doe.com companies that paid attention to customer

relationship management and it was common that such companies would get disappointing results in just 12 month. These

expectation of CRM system project after many years of debate. Azila and Noor (2011) claim that the CRM is the main strategy to hold customers and it should save five times budget from the customer loyalty, which is generated by CRM.

In order to get the best result from CRM system, success key elements need to be defined. King & Burgess (2007) pointed out that CRM systems are new technologies, if customers use Critical Success Factors (CSFs) to help the implementation of CRM system, CRM systems will be applied more appropriately. Different industries, enterprises and perspectives have different CSFs and simply a list of CSFs is not enough.

Generally we consider 8 to 12 CSFs to be the most influential, and these factors will change the strategy and final results. Too many critical factors may increase uncertainty of planning and

implementation. On the other hand, too few CSFs may be not effective enough to bring the organization to a higher level. When people make a list of CSFs, it usually includes the following five aspects: quality, costs, contentment, market share and incomes (Lotich, 2012). Below some survey results are listed, these data are from different agencies like Garner Group, ARM Research and collected by Michael Krigsman (2009) in his article ―CRM failure rates: 2001-2009‖. The result showed different

understanding and various standards of CRM ―failure‖ in

enterprises. Moreover, this may indicate that people do not have a common sense of the definition of ―successful CRM‖ and they do not know how to judge and constitute a successful CRM

implementation. Therefore, the concept of Critical Success Factors will be introduced in this research.

Almost every two years there has been an institution or organization doing an investigation of the service condition of CRM. Table 1-1 shows the failure rates, given by different organizations.

Table 1-1 CRM Failure Investigation (Krigsman, 2009) Year Investigation Organization CRM Failure percentage 2001 Gartner Group 50% 2002 Butler Group 70%

Forum 2005 ARM Research 18% 2006 ARM Research 31% 2007 ARM Research 29% 2007 Economist Intelligence Unit 56% 2009 Forrester Research 47% According to Krigsman (2009) these ―failure rates‖ do not

indicate a total crash, they rather define the situation as ―not meet the customer expectation‖. From the statistics in table 1-1, two questions emerged. Firstly, what is the definition of CRM failure and how do organizations calculate the data. These surveys used different methodologies, assumptions, sizes of targeting company, sizes of CRM project and aims of research. Furthermore, when people quote other‘s results, they may use other expressions, which could change the original meaning. Secondly, what are the factors causing the failure of CRM. It is noticeable that there is no unified measurement or common criteria to evaluate CRM

projects in SME (Krigsman, 2009). From the global perspective, the main trend of economy and technology has been developing; therefore we infer that the success application barely relies on the technology or economic situation although there might also be some other factors that influence the effect of CRM projects. In order to evaluate the application and outcome of CRM projects in an emerging market such as China is therefore a valuable subject to investigate.

Because of advantages of IT, IT applications (including Information System, Information and Communication Technology) are to prefer as a solution to develop SME‘s

business. Previous studies showed that IT application could assist SMEs from two aspects; it can provide the required infrastructure that can supply proper information at the right time to the right person or place. IT application could also combine enterprise with its partners in the supply chain and its different internal functions. With the help of IT application, single entities within or without of the enterprise will be connected as a system and cooperation between entities can be improved. However, compared with large enterprises, SMEs usually have fewer competencies from

The IT application adoption for SMEs has some specific characteristics compared with large enterprises. For example, technical factors like process compatibility, user friendliness, hardware/software quality and especially costs. Prior research shows that the cost of IT application has always been a difficulty to most of the SMEs. In United States, 90% SMEs think they are short of resources to afford IT application. The cost is not only due to investment in implementation but it also includes employee training and further development (Ghobakhloo, et al., 2012). In previous studies, enterprises have been realizing the

relationship between ―achieving customer satisfaction‖ and ―the achievement of enterprise excellence‖. In practice, understanding and achieving customer requirements are depending on the possession of related information, information analysis capability and data processing technique. CRM projects can help enterprises to deliver right service more properly to customer in order to improve customer satisfaction and loyalty (Milovic, 2012). According to Pandya (2012), India and Indonesia are the

representative examples of SMEs in developing countries. They play an important role in economy and employment, and the development condition of SMEs decides whether it is a developing country or developed country. The constraints of SMEs are not only due to obvious financial shortage, but they also include technological aspects. While SMEs in developed

countries are upgrading their machinery, developing countries‘ SMEs have to manage their business in traditional way. These differences lead to lower productivity, old technology and inefficiently used tools.

Pezhman, et al. (2012)made a study of CRM condition in Mellat Bank of Iran. They stated that effective factors in CRM execution are strategic, high-level management support, internal culture, organization structure, employees, process and technology. They also suggested some important points such as:

2. Customers‘ positive and negative comments should be taken into account to optimize organization processes. 3. Specific responsible team should be authorized to make

decisions.

4. Managers need to have training of new CRM applications.

5. Managers and employees should have interactive meetings to exchange views, so that employees would understand better of managers‘ strategy.

Compared with Mellat bank, some successful foreign banks like Royal Banker, HSB Bank have better performance in CRM application execution. It is based on their better understanding of CRM and more customer oriented marketing and service.

Furthermore, good CRM execution organizations would use CRM software to collect and analyze customer data in their local

affiliates. At the end, it is recommenced to utilize technical data collection and data mining application for customer orientation and management.

1.2

Problem Discussion

Chinese SMEs, even if this group may be the biggest CRM applier. To many people, SMEs are not as important as big sized enterprises. Looking at the market nowadays, the product life cycles are shortening while the customer expectations concerning the products‘ quality, price and reliability are rising. To build up a close relationship with customer becomes a vital weapon to the survival of most enterprises that also includes a great number of Chinese SMEs (Raab, et al., 2008). Therefore, it is necessary to study the condition of customer relationship management system of China SMEs, and in this study Critical Success Factors will be used as an examining tool.

1.3

Research Purpose

From the problem discussion we can see that the CRM concept and its condition are not an easy work for well-developed

enterprises. In addition, the definition of an enterprise success or failure is also a vague concept. The purpose of this thesis is to study CRM system from the perspective of critical success

factors. According to previous studies (Avlonitis & Panagopoulos, 2005; Payne & Frow, 2005), implementation and meaning of CRM are unclear and broad. In this research, Information System-based perspective is used in order to study two specific cases of CRM projects in China. This Information System-based

perspective means, although the concept of CRM is broad and including all the related hardware, software and organizational strategy, but in this study, we will mainly focus on the system which is applied in two case companies. Because the system they use and all the discussion and knowledge related to the system can help us to understand those companies‘ CRM condition.

Moreover, because of the significance of CRM system in companies‘ daily business, the working condition of CRM systems can reflect companies‘ business consideration. For example, how do they deal with their customer and the reason behind; how do they plan to develop their technical capacity and what is the common issue for Chinese SMEs from CRM

systems will be compared with each other and try to provide suggestions for their improvement.

1.4

Research Question

As discussed above, companies apply different CRM systems based on their actual condition and it is necessary to evaluate the implementation. Thus, the aim is to study critical success factors in two companies that use CRM systems. By studying CSFs the following research questions are addressed:

What kind of critical success factors are considered in the studied CRM systems?

How do the different CSFs reflect Guanyi Company and

Hangzhou Urban & Rural Construction Design Institute‘s CRM system working condition and their business consideration? Why do they have different CSFs for their CRM systems?

1.5

Delimitation

This research is a qualitative study of Guanyi Company and Hangzhou Urban & Rural Construction Design Institute. The research is focused on their CSFs‘ definition. In this study, qualitative data will be collected and analyzed. Relating to CSFs concept, CSFs will be used to evaluate the performance of CRM system. However, this is an internal affair. In this research, the aim is not to identify or set up a target for the company.

Furthermore, the consequence of CSFs for customer relationship management cannot be observed this time.

1.6

Disposition

Chapter 2 Literature Review

This chapter presents the Methodology and research approach. Detailed data collection and analysis method are introduced. Chapter 4 Empirical Study

This chapter presents the process of interview, observation and documentation.

Chapter 5 Analysis

This chapter presents the analysis of collected data and associated with theories.

Chapter 6 Discussion

This chapter presents a brief discussion of the role and impact of CRM to Chinese SMEs.

Chapter 7 Conclusion

2

Literature Review and related

studies

This chapter summarizes the main theories from current literature. Important concepts and their relevance are defined, for example, CRM, SME and CSF. Furthermore, related studies to each concept are presented in each section.

2.1 Customer relationship management

There is no unified definition for customer relationship

management. The term of customer relationship management was introduced in the middle of 1990s by the information technology‘s vendors and those who with IT. This concept was used for

customer solutions with the support of technology, for example sales force automation (SFA) (Payne & Frow, 2005). Zablah, Beuenger and Johnston (2003 cited in Payne & Frow, 2005, p.167) stated that CRM is a posterity related with philosophy to relationship marketing which had been ignored by most studies. Furthermore, it was stated that the potential need of CRM application and its effect will be extremely high.

Although there has been years of the development of CRM, there is not much work done on ensuring and defining the exact role and meaning of CRM in business processes and especially in e-business. This is not only a practical aspect, but the fact also applies on opinions among scholars. It is widely accepted that technology plays an important role in the successful application of CRM. However, there is a lack of researches trying to find out what factors that influence the CRM technology (Avlonitis and Panagopoulos, 2005). A significant problem to many enterprises when adopting CRM is their understanding about construction of CRM. From interviews of organization managers, their

other technologies as panacea for all the inefficiencies or problems in their business. However, technology is supposed to aid in improving and operating business but it leaves the customer retention work to human beings, i.e., to employees. Apart from this, the unsatisfactory outcome of CRM could also be caused by lack of customer centric view, wrong estimation of customer value, lack of support from board, lacking ability to reengineer business process and problem in data mining and completeness (Kale, 2004).

Payne and Frow (2005) suggest that we can analyze CRM from three perspectives, narrow and tactical technology tool, integrated series of customer-oriented solutions and enterprise-wide strategy. These perspectives can be seen as different stages but are

sequential, as shown in Figure 2-1. Each of these three

perspectives are concluded from a number of case companies. Some companies take CRM just as its SFA project with a big investment. Sometimes CRM are referred to as a customer-based information technology solution. The last perspective adopts CRM project with the connection of its whole strategy and CRM projects really create value for stakeholders.

Figure 2-1 The CRM Continuum (Payne and Frow, 2005)

Chen & Chen (2004) made a survey including180 companies. The content of the survey was a test to clarify if CRM in electronic form has helped companies to achieve their business success. The range of score was from 1 to 10 and the companies got the

average points of 9.2. The survey showed that CRM system had played different roles depending on the size of the enterprises. Most large companies agree that applying some CRM software tool helps them to take good care of customers. For medium sized companies, they use CRM system as an efficient method for communication with customers. For small companies, they do not have that many customers compared with large and medium sized companies. Therefore, what they need is a platform to get in touch

with more customers and CRM systems satisfy this expectation. To associate with this research, small and medium sized

enterprises use CRM system according to their actual needs, which is to build up a channel for communication and platform to obtain more customers.

Apart from the expectation of CRM systems, the implementation also varies. Based on basic system infrastructure, which modules and functions will be added, depends on companies‘ own decision (Chen & Chen, 2004). According to the survey made by Chen & Chen (2004), some of the systems are not fully implemented, as some companies only need the information function. In these cases, the customer interaction function is not needed. Some companies expect systems improve their business operation. CRM systems in these companies serve purchase processes and capital flow processes. The function of analysis is also popular in the use of CRM system. With the help of data analysis, an

organization can propose a hypothesis and test it, so they do not need take the risk in real market but are able to estimate the process and consequence that if they are applying some kind of CRM system in their organization. So they can make the best choice of CRM system application and design the collaboration of company and customer is one of the CRM system function. This goal can be reached by the help of forum or agents service. It provides a communication platform for companies to get market feedback.

The survey made by Chen & Chen (2004) also shows that the adoption of CRM software needs to be part of the business

system to their sales department, the salesmen put too much effort on paperwork and labor work in order to sustain the relationship with customers. Although their staff dedicated great effort of work, they still got customers‘ complain about the inquiries delay. This problem was solved by introducing the Siebel eHealthcare system. The effect of the system was conspicuous, the employee productivity and marketing efficiency were improved. On the other hand, their customers were happy to see that it became easier to get contact with sales agents. As a consequence, the GHI planned to expand the application of other functionality of the CRM systems (Chen & Chen, 2004).

Table 2-1 Benefits from CRM (Chen & Chen, 2004)

Tangible benefits Intangible Benefits

Improve income and profits Satisfy customers Decrease turnaround time Improve reputation

Improve internal efficiency Better service to customers Increase productivity Efficient procedure

Decrease capital for marketing Good customer contact Keep customer relationship Efficient subdivision

Increase in return on assets Detailed customer description Better market comprehension

2.2 Small and Medium Enterprise Developing Condition

In global economy, small and medium-sized enterprises play a vital role in solving employment pressure and promoting economic growth. In Europe there are 23 million SMEs which represent two third of work opportunities in 2010. In last five years, SMEs have created over 80 percent new jobs. Apart from Europe, SMEs has made 10 to 30 million U.S. dollars turnover in 2011 (European Commission, 2011).

thoughtful definition for SMEs is very important (European Commission, 2003).

According to European Commission (2003) declaration, the categories for enterprises have three criteria. This distinction establishes a framework for enterprises finding their position in industry and economy, and it also helps government to supervise and give support. With the understanding of their own position, enterprises can promote technical innovation and apply right treatment towards their suppliers and partners. The three criteria are staff headcount, yearly turnover and balance sheet per year. Companies that compare their data with criteria can therefore ensure if they are micro, small or medium enterprises. One thing that needs to be clear is the staff headcount is decisive among the three values. Furthermore, the other two criteria are not the most important indicator if the staff headcount is presented. The exact criteria are as shown in table 2-2.

Table 2-2: The new thresholds (European Commission, 2003) Enterprise category Headcount Work Unit/ Year Turnover/ Year Balance sheet total/Year Medium-sized <250 ≤50 million EUR ≤43 million EUR Small <50 ≤10 million EUR ≤10 million EUR Micro <10 ≤2 million EUR ≤2 million EUR

In China, the population and market size leads to different criteria in SME definition. The SME promotion law published in 2003 gives the classification for SMEs in China (Liu, 2008).

Comparing the criterion between China and Europe, the definition of SMEs is complex and detailed and some companies belong to this table can be seen as large companies (50 million EUR annual turnover can be regarded as big enterprise in some industries in China). In China, businesses also need to follow the regulation of Asia-Pacific Economic Cooperation (AEPC). They give a

The importance of SMEs in China‘s economy is beyond doubt and becomes more and more influential. In 2007, there were 4459 large sized enterprises registered, which is only 0.19% of the total number of enterprises in China. In other words, the other 42291 medium and 2327969 small companies comprise the rest of 98%. The SMEs earned 60.42% of the total revenue. For the

employment aspect, large enterprises employed 20877.8 thousand individuals. The medium and small sized enterprises accepted the 81.8 percent of total employment (Liu, 2008).

In 2006 SMEs made their contribution of 60.2 percent of the total export of China. However, small enterprises barely took 5-10 percent of this, which is significantly less than the medium-sized enterprises. Too much dependence on domestic market could depend on various reasons and this can be a threshold for small enterprises to grow up to be a medium enterprises or even bigger (Liu, 2008).

According to the document cited in ERIA RESEARCH

PROJECT 2007, Doctor Liu (2008) stated three main problems in SMEs‘ operation: few connections with external market, slow technological innovation and inappropriate financing. The problem of inappropriate financing will not be discussed in this study, the attention is on the other two, because they are related with customer relationship.

In the document ―the China Private Economic Year Book‖ for 2004- 2006, SMEs contributed more than 62.3 percent of Chinas total export in 2006. For small sized enterprises, they have taken 43 percent of total export. However, when we take into account export to the world market, small sized enterprises only made 18 percent of total export. There may be various reasons for this fact. Traditionally, people in China would like to put responsibilities to the matter of economic obstacle. Entrepreneurs believe it is reasonable that their enterprises cannot overcome the difficulty of market overseas. In order to test the possibility of expanding business to market abroad, we can take SMEs in Sweden as a reference.

companies that started their business in China. Within these companies, around 55 percent were smaller than 100 employees and 20 percent of the companies had 100 to 500 employees. By the definition of European Commission, most of these enterprises belong to SME. From above information, the difficulty for expanding external market seems not to exist for Swedish SMEs to the same extent than for Chinese SMEs.

As mentioned above, the definition of SME in Europe is based on the three criteria given by European Commission (2003). In this definition, the staff headcount, annual turnover and annual balance sheet are the basis to judge if the enterprise belongs to SME (European Commission, 2003). In China, staff number is an important reference. In addition, there are other two different references, such as total assets and business revenue. What is the difference between the criteria in Europe and in China and why do they use different references? It is obvious that the criteria

establishment depends on actual conditions. However, we can still find one characteristic, which is the one in China that is more direct and easy to count. When enterprises and government departments put too much attention on these tangible assets like the total asset, they would ignore something more important like company reputation and market share. In this research, the customer relationship will be ignored, too. Therefore we need to ask a question, if the reason that China SMEs do not perform well is due to the economic disadvantage, or do they not put enough effort in something intangible but vitally important.

In China, there are four ways for SMEs to innovate their

technological level: internal R&D, imitation, licensing of know-how and university-led R&D. Internal R&D means that

enterprises research and develop technologies by themselves. However, this approach is based on high technology capability and financial support, so it is not an ideal way for the most SMEs. Imitation is a direct way to copy other techniques or skills.

However, these technology or skills are developed based on experience and they must often be adjusted. Without such an accumulation, they cannot simply be used in different conditions. In addition, this approach may also concern legislation issues such as patent. Considering legislation problem, the know-how

licenses. The last one, i.e. the university-led R&D, is a popular method in developed countries like Sweden. Enterprises and schools build up cooperation. Enterprises provide practices for students that are doing their research. Universities use this chance to connect knowledge with practice. From enterprises‘

perspective, this approach is economic and professional. Later in this study, this method will be discussed (Liu, 2008). In table 2-3 we can see the ratio of internal R&D that made the most

contribution to technology innovation, which accounts for 53 percent. It means that SMEs in China usually rely on themselves to improve technology capability. In contrast, the development in co-operation with university made least contribution as 4 percent. The profitability of technology is the most important attribute for judging if a technology project is successful. Table 2-4 illustrates that the imitation is a direct and quick method to benefit SMEs. Likewise, enterprises get few benefits from the cooperation from universities (Liu, 2008). This result proves again the statement from Peppard & Ward (2004), that the technology can be copied very quickly so therefore it is not an advantage to be sustained, especially as currently intellectual property is not well protected in China.

Table 2-3 Ratio of technology innovation (Liu, 2008.)

Internal R&D Imitation Licensing of know-how

University-led R&D

54% 20% 19.9% 5.3%

Table 2-4 Contribution to profit (Liu, 2008)

Internal R&D Imitation Licensing of know-how

University-led R&D

17% 35% 18% 12%

Industrial clustering means companies are gathered in one region because of similar business content, close relationship in supply chain or other reasons. Small and medium sized enterprises that choose to make an industrial clustering are based on their own condition. This strategy can help companies to get access of market in one specific region. In ways of joint venture, alliance and co-partnership, enterprises can produce different kinds of products and services but they do not need to be expert on each aspect. On the other hand, this industrial clustering can reduce costs from commercial processes and supply chain. Enterprises can also take advantages from cooperative partner. In some regions, local governments have proposed a concept ―one town, one industry‖. This strategy helps to set up the advantage of scale, especially in the traditional textile industry. The unified and single business also helps enterprises to reduce costs in supply chain. However, this protect has a potential risk that SMEs do not experience competition in an economic market by themselves. There are no demands for improving their management capability. The character of industry clustering can be regarded as

localization. It always has centralized production in a single area (Liu, 2008).

Specialization is another important character of SMEs in China. This is a stage when one or a group of enterprises develop to a certain level. Their business products can be regarded as

professional and specialized. SMEs would define themselves or categorize to a certain business. This process would generate a leading enterprise in one region or an industry clustering and its business will focus on one area and usually the most profitable area. Enterprises around the leading enterprise will become its affiliated enterprises and do the rest of production. This phenomenon always emerges in textile industry and design institutes (Liu, 2008).

energy now, but it is possible to have a try in the future (Sun, 2012).

In China, SMEs customer relationship management has three main problems. Firstly, customer relationship management disjoints with enterprise strategy. The market economy in China has only developed for 20 years. From the criteria of SME, we can see that government and enterprises have not given enough attention to some important assets. In the criteria of SME, total assets are accounted. However, some important assets are unable to be counted, like customer relationship. The essence of customer management is to build up the long-term strategic partnership with customers in order to have the win-win long-term value (Sun, 2012).

Secondly, the homogenization and simplification are the main characters of customer relationship management. The way to build up and maintain customer relationship is to stay at a low level public relationship. This relationship is personal

relationship; enterprises and clients do not discuss and try to build up a development strategy. They do not try to share information or improve communication (Sun, 2012).

Thirdly, SMEs lack of informatics knowledge in customer

management and the ability of systematic management. Customer relationship management needs to be supported by enterprise-wide information system, especially the establishment of CRM information system. Although there are many enterprises that have built up CRM systems, their basic information is poor, data collection is not accurate enough and objective. Therefore the CRM system cannot really reach its full capacity (Sun, 2012).

2.3 Critical Success Factors

As long as people review an existing project or start a new

managers support for decision making (Zwikael & Globerson, 2006).

The first time to relate CSF concept to information systems methodology was using this concept for firms‘ chief executive officer(CEO). CEOs applied CSFs for their information

requirements when running companies‘ daily business. However, when CEOs apply CSFs to serve their planning purpose, different levels and departments‘ managers have to be interviewed, then all the answers are collected and analyzed (Boynton & Zmud, 1984). Although the definition of CSF is not hard to understand,

however, to list specific factors is always a complex question, since they are various in different businesses and industries. Furthermore, the factors do not only need to apply for the current situation, but they also need to be valid in the future. Therefore, to some extent, the decision of CSFs is to determine the future condition of the business. Once CSFs are identified, organizations or projects know where they should put efforts and build up their competitive advantage with their competitors. Because of its significance, we need recognize the strengths and weaknesses of CSFs before we apply it as a tool for evaluation. Boynton and Zmud (1984) pointed below strengths and weaknesses. Strengths:

1. Good CSFs helps planning process for a project. 2. It provides good insights and understanding for those

information services which influence company business. 3. It drags management‘s attention.

4. It is high level and well structured project analysis and helps improve the analysis process.

Weaknesses:

1. Some high level managers may have difficulty to provide CSFs for basic daily and organizational CSFs.

2. CSF sometimes is not a sufficient tool for managers. 3. It is difficult for managers to work with conceptual CSFs

if they have not joined the planning stage.

According to Amiri, et al. (2010), Critical Success Factors are identified in a particular situation and for a particular target. There are five most important sources of CSFs and their characteristics. Each one of them is introduced below.

The industry

Competitive strategy and industry position Environmental factors

Temporal factors Managerial position

In the process of listing CSFs, it is important that CSFs should be measurable and there is a quantified standard. So companies not only know the right direction but also know how to measure their progress and how far to get expected goal.

The industry

Every industry has its own characteristics, for example,

technology oriented, human resource intensive, natural resource intensive etc. Therefore different industries have different CSFs. For running a restaurant, CSFs and targets would be as shown in Table 2-5, Restaurant CSF (Amiri, et al., 2010):

Critical Success Factors Targets

Location No more than 30 minutes to most target customers (by car)

Environment (inside and outside) Clean, quiet, no flies Food taste 95% customer satisfied Waiter service No customer complain,

keep smiling

For a coal mine the CSFs are shown in Table 2-6, Coal mine CSF. Critical Success Factors Targets

Traffic 5 days to market

Customer Big demands and proper price

Competitive strategy and industry position

Although projects or business in same industry have some common CSFs, however, not all of them have the same CSFs. There are other factors that can influence the specific CSFs. For example, a company with a leading position in a market has considerable and stable economic capabilities; it does not need take financial stuff as the most influential success factor whereas it is a vital factor for SMEs. Apart from market position, business strategy, and organization culture can also influence the definition of CSFs (Amiri, et al., 2010).

Apple is a famous IT company. Mostly, price and product diversity is sensitive and important factors to the success of a ―Business to Customer‖, especially in Chinese market. However, Apple‘s products do not take these two factors as priority. This is decided by the company culture and competitive strategy. In the history of Apple Company, they have proposed some slogans which can reflect fully the company culture and strategy, as shown in table 2-7:

Table 2-7 Apple‘s slogans (Youyoulan, 2012)

Slogan Year

Think Different 1997-2002

Thinnovation 2008 for Mac Book Air

Trilemma For iBook

Resolutionary For Cinema Display Redesign, Reengineered,

re-everythinged

2008 for Macbook

Environmental factors

The environment is not only about natural environment but it also concerns economic, political and cultural environment.

according to these factors. On the other hand, organizations can influence and even damage outside environment (Amiri, et al., 2010).

Temporal factors

Temporal factors only emerge and last for a specific event. The existence of temporal factors would not be long compared with other factors. A typical temporal factor for business is personnel change. Once a CEO leaves, the company needs to find temporal person to ensure the normal work until they find a new CEO. Sometimes, temporal factors may become regular factors. When the same kind of events happen several times, they will be regarded as normal critical success factors, like ―set up an executive department for new market‖ (Amiri, et al., 2010).

Managerial position

In organizations or projects, some positions are very important and powerful, people in which can decide the result of the business, like managers. These positions are called managerial position. In IT companies, product manager‘s capability is a CSF for the company, at the same time; they have some sub-CSFs: balancing cost, product quality and technical development. In this way, product managers‘ decision can influence sales department, finance of the project and development department. For the highest manager of the company, every decision the manager makes, it would be decisive for the future of the company (Amiri, et al., 2010).

2.4 Relationship between CRM and CSF

In this study, the focus is on one kind of information system, CRM systems. In this section, we will list CSFs in the application and implementation of CRM system in organizations. Alongside, some CSFs summarized from general ERP systems will be presented.

CSFs. A list of CSFs is far from enough to ensure an appropriate implementation and application of CRM. However, Sauer (1993 cited in King & Burgess, 2007, p.423) in his model of information system identified the significant factors in organization context. The model is introduced and required to construct expectations and evaluation system to ensure the quality of the project. Sauer‘s model can be used to make a list of CSFs (See table 2-8) when it concerns CRM project as following.

Table 2-8 Critical Success Factors for CRM (Sauer, 1993 cited in King & Burgess, 2007, p.423)

Top management support

Communication of CRM strategy Knowledge management capabilities Capability to data sharing

Capability to processes change Technological preparation Degree of customer orientation

Degree of process transformation capability

Degree of Systems integration

Sauer‘s model is mostly derived from three constructs, context, supporters and project organization. These three concepts give basic foundation of the success or failure of information systems, and further, the fate of the projects. From these three main

perspectives, specific factors are developed, for example, support from management level, the CRM strategy communication, degree of data sharing, degree of process changing, the ability of technology capability and so on.

and successful change of organization structure and work style as showed in table 2-9.

Table 2-9 Major CSFs for eCRM (Chen & Chen, 2004)

Main aspects Specific points

Good leadership Enterprise-wide consignment

Leadership at management level Support at management level

Inspiration from inside Motivation

Employee training

Management of knowledge Toward customers

Toward different parts of market Toward opponents

Data analysis

Make products personalized

Cooperation between business Side and technology side

Collaboration of business strategy and IT strategy

Make the product customer-oriented Ensure the technical structure reliable Ensure the technical structure scalable

Make the business process fits the IT structure

System conformity Different functions are integrate

Data from different source are integrate Systems can work together

CRM channel are compatible

Change of culture and infrastructure Cooperation of different departments Understanding of Customer service Customer-oriented culture and strategy Mergence and acquisition

As was mentioned in the last section, the function expectation is different in different enterprises. For example, the Bank Hawaii in the survey emphasized the significance of culture changes. This change is between the bank and customers. The bank

and put in an open environment. The integration of several systems lead to a more comprehensive and elaborate analysis for customer needs and every small part of market (Chen & Chen, 2004).

From the illustrations of existing research, we can see that people use their own perspectives and viewpoints like Saurer‘s context, supporters and project organization. Arab, et al. (2010) concluded these factors into three aspects, process, human (mainly about employs and customers) and technology (Figure 2-2).

Figure 2-2 CSFs for CRM (Arab, et al., 2010)

 The employees and customers factors are regarded as a key element in the whole CRM strategy, which includes organization‘s employees and customers. In addition, all the employees and customers factors cannot be considered separately, but the relationship between them is vital to the whole CRM strategy. Those factors can be viewed from clients‘ side and organization‘s side. Each side can be further subdivided into detailed factors:

o Customer understanding of value o Customer satisfaction

o Employee skill

o Organizational culture o Management commitment

 The execution process involves various aspects like marketing and after sale service. The target of this process is to connect customers with the organization. Factors belong to execution process including:

CSFs for CRM

Human(employees and customers)

Factors

Execution Process

o Marketing o Sales o Services

o Management of time and financial stuff o Personalization

o Customer involvement

o Definition and execution of RM strategy

 Technology is not a necessary factor for CRM. However, it can help to facilitate the CRM strategy and improve efficiency through application of software and hardware. In regard to CRM problems, technology is adopted to the capability of computing to make companies able to collect, optimize, assign and manage customer information in order achieve business target. As a assisting tool, common technology used in CRM strategy including:

o Data warehouse and data mining o Help desk

o Internet and intranet

o All kinds of software and hardware

As was discussed above, scholars and practitioners in Europe and United States have made lots of research and got experience of the CSFs in implementation and application of CRM systems.

However, time is changing and the social and natural environment and specific case condition will influence the critical success factors. Therefore, in this research, these factors discussed will be used as a reference and we will make a comparison with the case of Guanyi Company.

Concepts as CRM, SME and CSF discussed above are used in this study as a theoretical foundation. Because concepts are

understood in different ways, several different sources are used. For example, the criterion of SME in China is different from Europe and Asia-Pacific Economic; this distinction may cause confusion if it had not been explained in advance. In this study, the Chinese definition of SMEs is used as the research

cases. To sum up, this study will use CSFs from three

3

Research Methodology

In this chapter the research target and setting will be described. The methodology and its related theories will also be presented. Furthermore, the research approach, the strategy of inquiry, data collection, and data analysis will be outlined.

3.1 Philosophical Worldview

In the beginning of a research project, it is important to identify researcher‘s worldview. Worldview is the conception of the world‘s orientation and it also reflects researcher‘s understanding of the empirical study. Worldviews are different according to researchers‘ study area, personal experience, knowledge of advisers etc. The researchers‘ worldview will decide the adoption of exact research approach, strategy of inquiry and data collection (Creswell, 2009). In this research, interpretivism is adopted as the research worldview.

Interpretivism believes that social interaction is from three tenets: human consciousness of themselves and the relationship with others; human action in different situations and the

unpredictability of human behavior. This theory emphasizes the significance of personal feeling in society in every minute (Livesey, 2006). Like positivism, interpretivism supports the existence of ―facts‖ of human behavior. However, the facts are changing based on specific context. The same facts do not suit all the people and all the situations. This point of view of

interpretivism makes its data collection and analysis more

qualitative, and it is common to use methods like semi-structured interviews (Livesey, 2006). Above characteristics are suitable for the research design in the current study. The problem of

technology is always surrounded by human factors. In this study, two research targets from countless Chinese SMEs are chosen and the human attitude and behavior in the companies are very

different due to different situations. What is more, the

interviewees‘ feeling of CRM and CSFs are the main objective to be explored in this research.

beings are believed to have the capability to interpret and reform the environment. Furthermore, human behavior cannot be

measured from quantification (Olivia, 2011). In this research, the main way of collecting data is interviews. Apart from some structured questions, there are also questions designed for open-ended personal answers so that the result could give a more realistic and rich picture of the situation. Open-ended questions may also allow for unexpected aspects to emerge during the interviews. This approach is also typical for qualitative studies.

3.2 Inductive Approach

There are two ways of reasoning in doing a research, deductive and inductive approaches (Burney, 2008). Inductive approach is mostly used in qualitative researches. The way of reasoning in inductive approach is opposite to deductive approach (Mertler, 2012).

Inductive reasoning starts with the specific, empirical observations, which can then be used to generate bigger generalizations and hypotheses. Therefore, compared with deduction, the inductive reasoning is called bottom up approach. From the beginning of induction, we collect specific information and data, and make measurements in order to find patterns and regulations. These information and data are organized with different guidelines and procedures, so that researcher can

formulate hypotheses. Hypotheses do not need to be true, they are considered as a topic to be explored. In the end, researchers develop theories that can represent more general phenomena (Trochim, 2006). Just like in this research, the information is collected through interviews and observations. We assume the significance of CRM and different CSFs between different SMEs. In the end of the research, we develop the conclusions based upon the current condition within the target cases.

The choice of induction or deduction to carry out a research will significantly influence the nature of research. If we choose inductive reasoning, it is common that the investigation is exploratory and the questions of research are open-ended (Trochim, 2006). This research is carried out inductively.

Chinese market but only play a role as reference. In other words, there is no specific hypothesis that would guide the research. Furthermore, the main way of data collection is open-ended interviews; this is a qualitative approach and in the end the research is expected to generate some conclusions that may explain more general phenomena or be a starting point for further studies.

To sum up, as I have collected data and information from literature review, therefore I have good understanding of the importance and complexity of customer relationship management to the success of business; the current living condition of China SMEs and the problems they are facing and the way of CSFs application. In this study, I use CSFs as a way of measurement to test the common points and difference of two Chinese companies‘ CRM applications and perceptions. Because from different

previous literatures, I find there are big amount of CSFs for different industries and perspectives, I applied the opinion from Lotich (2012), which is to adopt around 8 to 12 CSFs for specific case. After doing combination and simplification of collected CSFs, I categorize them into employees and customers factors, execution process factors and technology factors to have better visibility for later studying into more specific level. After getting common CSFs and the distinction from studied companies, I can generate my conclusion and reflection for these two companies, and because they are representative for Chinese SMEs, I can raise discussion and reflection for most of Chinese SMEs.

3.3 Qualitative approach

Almost every social science research can be categorized into qualitative, quantitative or mixed methods research design. There are various reasons to make different choices. The goal of

one of the prepared answers but they are able to present their opinions and feelings more freely.

Qualitative research is supposed to study objects in their natural settings. The aim is to find the underlying meaning and interpret it from the phenomenon. Research designs and empirical materials used for supporting qualitative research are various, including case study, people experience, self thinking, study, interview, observation, text and video and history - all of these can be source material as long as they have meaning for the research problem and people‘s real life (Jha, 2008). In the beginning of the research, more quantitative approach was planned because statistical

analysis may be more objective and avoid personal bias.

However, as I found that the data provided by interviewees was very specific, and it could therefore be hard to understand the meaning behind the data if readers do not have related

background knowledge. Therefore, an interpretative approach within the research context was chosen, and thereby a qualitative research design. Like Healey (2012) stated the data is one of the most important criterions to distinguish between qualitative and quantitative method, therefore when it was decided to use open-ended interviews and observations to collect data, the qualitative approach was a natural choice.

Jha (2008) stated that the choice of qualitative, quantitative or mixed methods research is based on what kind of research question and the type of data collected in the research. In this research, data collected are mainly transcriptions of the interviews and they will not be quantified. Regarding the research questions, the questions start with ―which‖ and ―what‖, which are typical qualitative wordings.

Myers (1997) states that the qualitative research method is always used in social sciences to study social phenomena in the society. The data are collected by observations, interviews, questionnaires, different kinds of documents and so on. In this research,

information system research: systems development, the human factor, IS policies and the application of IS in business

environment (Andersen & Vendelo, 2004 cited in Cua, 2009, p.4). It is very suitable to use qualitative data to explore these four themes. Moreover, the output of information system can be regarded as text that needs to be explained and make sense by the application of systems. Qualitative research is to give a deeper understanding of experience of human beings (Cua, 2009). This research is to collect data from open-ended interviews. Since interviewees‘ answers are unpredicted, they are mainly oral description and narrative that are recorded and transcribed into text, and this is the most important criterion to decide the approach of this research. Therefore, in this research setting, qualitative research as the main method is the most suitable choice.

3.4 Strategy of Inquiry: Case Study

When the qualitative approach is confirmed, there is a list of choices of inquiry strategies specifically in qualitative study, for example, participant observation, direct observation, unstructured interviewing and case study (Trochim, 2006). Each of them is used according to actual research environment and research topic. In a case study a specific case, i.e. activity, event, process,

organization or individual is studied in detail. Compared with other qualitative methods, case study is quite flexible. It can include a combination of several data collection methods like interview and observation (Trochim, 2006). Yin (2009) stated that a case study is an empirical research that looks into contemporary phenomena and it is related to its actual context.

empirical study focusing on two specific target SMEs based on their real life context. The customer relationship management in these SMEs is a contemporary phenomenon. The CRM and its CSFs are depending on many factors. Therefore we cannot separate these two companies from their real life settings. Secondly, because the researcher resides in Sweden and applies various methods to collect data, case study is the most suitable strategy as it allows combined data sources. As Yin (2009) claimed, the facts of the result should be supported by more than one source of evidence and several different data sources are needed in case studies. The specific methods could include like online interviews, questionnaires, documentation and direct observations. Our interviewees have limited CRM knowledge, therefore the researcher use direct observation in order to obtain better understanding and experience. This experience is not only about the system itself, but also the interaction with the company context. We need to relate the study to social background. In this research, the main way for data collection is interviews, because the research questions fit the four reasons of choosing interview claimed by Gary (2004 cited in Kajornboon, 2005, p.3). Firstly, we need personalized data in this research. Secondly, it is possible to make further investigation, because we cannot confirm whether our answers from the company are true and if it needs to be challenged further. Thirdly, we can trust the quality of

feedback, which is based on my personal relationship with Guanyi Company. Finally, interviewees have problem when they use written language. Apart from interview, documentation can help us to have more comprehensive understanding of the application. Detailed function descriptions can be found for the applications and theoretical concepts can be connected to the interviewee‘s practical experience.

data should serve two requirements. Firstly, data should present the exact CSFs. Secondly; CSFs listed should have differences due to different context. Since we aim to make comparison of different CSFs in our two target companies, a set of criteria should be determined.

According to Yin (2003, cited in Baxter and Jack, 2008, P2), the research purpose will decide the specific type of case study. There is list of types like single, holistic and multiple-case studies. Because this research applied two target companies in the same environment – China market, and use CSFs to evaluate them, therefore this is a single case study. At the same time, this study is to look for an answer which is too complicated to be explained by survey or experimental methods, it is also regarded as a

explanatory case study.

3.5 Case Description

This study was carried out as a case study at two Chinese SMEs: the Guanyi Company, which is located in Shanghai and Hangzhou Urban & Rural Construction Design Institute, which is located in Hangzhou.

As an IT software supplier, Guanyi Company has been working on developing and producing software for online businesses. The company‘s main product is Enterprise Resource Planning (ERP) software for E-shops. As was mentioned, the employee number is the most important criteria to judge the size of enterprises in China. The 400 employees of Guanyi are under 2000 of the upper limit and its annual revenue is less than €35million (around €10million). Therefore it fits the criterion of SME in China. The detailed criterion was given in the literature review.

Guanyi was established in 2008. Although it has only a short history of five years, however it has expended from 5 employees to more than 400 employees and 80% of them are technicians. The company has set up branches in most big cities of China, such as Hangzhou, Guangzhou, Beijing and Taiwan. Until 2011, their middle and big scale customers have reached 2000 around the country.

growing and the company‘s traditional working way makes the whole company under strain. Although the company bought a CRM software ―WiseCRM‖, voices from the company indicate that it has not been working as expected.

The other unit of analysis is Hangzhou Urban & Rural

Construction Design Institute Co., Ltd. This is a design enterprise running their business of municipal and public service and

construction of industrial design. The Design Institute has about 20 year‘s history. Their main business covers construction of municipal roads and bridges, water-supplies and drainage projects, gas and heating pipes, environmental sanitary

engineering and other construction design, planning, research and consulting. There are 200 employees and 50 of them are students doing practice in the company. In 2011, the annual revenue was around one million euro (Anon, 2012).

The Design Institute used to be a 100 percent state owned enterprise and after restructuring, it became a state-controlled share-issuing enterprise several years ago. Therefore the business and customer relationship is more complex than in other

companies and this is an important reason to choose this institute as a research target. In this case, the Design Institute does not have a specific CRM system but a project management system ―Fastman‖ which is a professional system designed for these design enterprises, the system also includes a customer relationship management function.

3.6 Data Collection

3.6.1 Participants

This research invited three participants to join the interview. What is more, the researcher also took direct observation with one of the target companies and had limited communication with

with full access to make judgments. In addition, relevant document reading is also a data source in this research. Initially we invited one participant from each company

respectively. One is a managerial person from Guanyi Company and another one is from Hangzhou design institute. With the latter I have personal connections (he is a good friend of mine). The person from Design Institute is not from the management, but he helped me to collect data and opinions from his colleagues and answer my questions directly, therefore it was possible to get an overview of the Institute‘s customer relationship condition. However, after the first round of interviews, it was found that the interviewee from Guanyi Company‘s answers may need

supplement. Therefore more interviewees were added and they took part in the second round of interviews. To sum up, there were a total of three interviewees from Guanyi Company and the Design Institute. They are Richard and Peter from Guanyi

Company and Ray from the Institute. Due to interview method adjustment, Richard and Peter were interviewed in two rounds. In addition, an additional interview was conducted with a customer of the Design Institute.

Role of interviewee in Guanyi Company

We firstly interviewed Richard in Guanyi Company and had the first round of questionnaires. However, the result was unexpected but also interesting at the same time. People‘s behavior is based on their position. Because Richard is a high level manager, he has the access to all the information about Guanyi. When it seemed hard for him to answer all of the questions, I could indirectly see the CSFs of this company‘s customer relationship management. In order to help my communication with Guanyi Company, I asked Peter to answer questionnaires instead. He has close relationship with the company and also has access to information. During the communication with Guanyi, Peter became a bridge between both sides. In this case, some feedback from Guanyi may be more than one employees‘ opinion.

Role of interviewee in the design institute

practitioner has more chances to use the system and his own experience can reflect the condition from a typical perspective. Role of interviewee (a customer of Design Institute):

Carlos is a designer who is working for a property company. His company is registered in Hong Kong and it co-operates with the Design Institute for their project in Hangzhou.

3.6.2 Data Collection Methods

Creswell (2009) stated that qualitative research collects data as description of texts and tries to understand phenomena in real life settings and the reason behind. Case study often uses various data collection techniques. The reason to use a combination of data collection methods is for improving the complexity of

investigation. Therefore I did not only use direct interviews to collect data from companies, but also visited the design institute to make observations of their real setting. After each step of the observation, I got better overview of the work process of CRM project. Moreover, I had access to all the related documents regarding the applied software from both companies. These combined sources of information can be supplementary to each other and it will be possible to conduct more comprehensive research.

The procedure of data collection is that I firstly start formalizing interview questions and doing observations, and then read documentation about both companies and the software they are using. As I am doing interview and observation at the same time, therefore they are affecting each other and observation is

especially assisting me to adjust my interview questions. For example, at the beginning I intend to ask questions which are comparatively more academic and technical, but the