The Invaders

The Invaders

Customer relationship management is truly the flavour of the day. Some companies talk about customer interaction systems, or enterprise relationship management, but however you refer to it, there's no doubt that software which helps companies interact more knowledgeably and effectively with their customers constitutes a very hot market.

These customer data systems can be enormously useful. A bank can tell when one of its well-heeled clients is on the phone and route them directly to a top account executive. A service company can communicate to its field technicians all they need to know about the customer on whom they're about to call and the equipment they have. Call centre worker bees can be turned into salespeople.

And as these systems come to be integrated closely with Web and Internet based technologies, they will become even more powerful. Data on where a person goes on the Net and what they do there can be tied to accumulated information in back-end databases to build up an incredibly detailed profile of that individual. A company can develop profiles of customers who log into its Web site. It can track the number of people who come in, how much time they've spent at which area of the site and what activities they are looking for, as well as their location. The idea is to give one-to-one service to the customer.

And that's great.

But if this power is abused, then many customers will perceive these technologies as a threat rather than as something mutually beneficial. So alluring is the prospect of knowing all about their customers that some companies seem blind to the potential backlash. For others the warning bells have started to jangle already, and the distorted tune they are playing is "I want my privacy!" It is an area of great tensions, and Australian CIOs and their companies should be sensitive to them.

Earlier this year, the fact that Intel's Pentium III chip contained serial numbers allowing online merchants to track customer information had privacy advocates fuming. But a poll by US CIO magazine of more than 200 business and technology executives showed strong support for Intel -- 64 per cent thought it was more important to track customers' information than to protect their privacy. Let's hope they paid attention to another study, released in April by the Information Technology Association of America and Ernst & Young, which named privacy concerns as the leading barrier to e-commerce growth.

In fact, basic to e-commerce efforts is some form of privacy policy that tells your customers how you're gathering information, what you will do with that information, and how they can prevent misuse of their information.

Some vendors are listening. IBM said in April it would pull ads from any Web site that did not post such a privacy policy. Microsoft doesn't have a great record on privacy -- witness the Windows 98 registration wizard that scooped up system information and sent it to Redmond -- but it recently previewed software that lets PCs analyse Web site privacy policies automatically as people browse.

Like IBM, Microsoft is keen to head off privacy legislation. But laws look inevitable in the US given recent cases. Cases such as US Bank, which provides sensitive customer data to a telemarketing company in return for commissions.

Or the state of California, which plans to sell its citizens' salary data to loan companies as a way of raising funds. At this writing, some 50 bills related to how private data may be sold or traded are pending in the US Congress.

Privacy is an international issue, too. The European Union's Directive on Data Protection bans the transfer of data about citizens of any of the 15 EU member nations to any country deemed not to have adequate privacy protections. New Zealand Privacy Commissioner Bruce Slane has recommended amendments to the NZ Privacy Act to bring it in line with the EU Directive, believing this will give the Kiwis a competitive advantage over countries like Australia and Canada which have yet to enact privacy legislation.

So before you get carried away with powerful customer information systems, and tying them to the Web, maybe you should give some thought to how you can satisfy customers' legitimate concerns on privacy.

Steve Ireland is publisher of ComputerWorld newspaper

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