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You want CRM with that?

Having made the decision to get serious about Customer Relationship Management (CRM), what does a business need to do to make the CRM dream a reality? Do you opt for a ERP solution with a built in CRM module – or go for a standalone CRM package? Davd McNickel investigates the options…

The decision around opting for built–in CRM as part of an entire ERP suite (from Oracle or SAP for example) or going instead for a standalone CRM ‘best of breed’ package, is one that many organisations face when they get serious about their Customer Relationship Management solutions.The fact is there are risks and advantages in both options – and also several ‘must dos’ for CRM success, no matter which option you choose. So how do you decide which approach is right for your organisation?

CRM in a nutshell

The first thing to do is get clear on exactly what CRM is. CRM solutions are designed to maximise sales and marketing effectiveness and increase customer satisfaction in an age where consumers can interact with businesses in many new ways. As well as the traditional forms of interaction such as face–to–face contact with field sales staff or shop assistants, customers may now ‘touch’ an organisation through call centres, online stores, or email. In order to maximise the opportunities these customer interactions present, enterprises need to coordinate the information (data) gathered at these customer touch–points.

By being aware of all the previous interactions that a company has had with any given customer, regardless of channel, and by delivering that information to the appropriate staff in real–time, the next time that customer interacts with the organisation, the company should be able to fully deliver on that customer’s core expectations on one hand, and potentially drive revenue by selling complementary services and products on the other. CRM solutions provide the software functionality to be able to integrate these touch–points and to analyse, process and report this information to front–line sales and marketing departments at each customer contact. Thus organisations gain a personalised, or ‘unified’, view of their customers – with easy to access information such as their preferred contact channels, purchasing habits, acceptable time of contact, special services desired and so on.

When shopping for a CRM solution, consider these three important fundamentals:

  1. That the solution fits your overall business strategy
  2. That the solution is easy to use. As without buy-in at user level, CRM solutions are doomed to fail
  3. The solution is easy to implement and can quickly deliver key customer insights – which can be acted on – thus providing a measurable ROI

Suite or ‘Best of Breed’?

Making the decision between best-of-breed CRM or CRM as part of a integrated ERP suite is challenging, but there are guidelines that can assist. For a start, it pays to appreciate that there is typically no ‘one-size-fits-all’ solution, and the best CRM solution is one that fits your existing business best – taking into account things like your existing technology platform & the way your staff & customers currently interact.

So looking at the two options , a best-of-breed CRM solution is typically one that has been developed for a specific industry sector – incorporating some deep CRM functionality like sales force automation, marketing support, campaign management, behavioral triggers and analytics such as customer profitability and potential for credit risk.

While its true that there are many fundamentals of business operation that are common across a range of industries – like sales, wages, debtors etc – and a CRM solution integrated into an ERP suite would likely be perfectly adequate for tracking CRM fundamentals, there is also the fact that different industries do require different reporting specialisation. A vineyard that exports globally, for example, and a mall–based clothing retail store are certainly very different organisations and would be unlikely to use the same ‘best-of -breed’ CRM solution.

But, any clothing store in a mall could probably use the same best-of-breed CRM system as any other clothing store in a mall, given the solution had been developed for players in that type of retail environment. Similary, any vineyard could probably use the same best–of–breed CRM system as any other vineyard.

And that is the key to understanding best-of-breed solutions – namely, that they are usually configured and customisable to support specific industries. Contrast this with a CRM solution incorporated into an ERP suite. A suite of this type is designed to be a good fit with the majority of transactions any business undertakes – which in many cases are common across an organisation regardless of the industry they’re in.

Of course the functionality is not industry specific but it can cope with the standard CRM fundamentals very well and will be seamlessly connected to all the other parts of the business. And it’s this point that many integrated suite vendors stress as critical – that in order to gain the most from any customer interaction (which is the whole point of CRM), the data gathered must be effectively integrated across the whole organisation – something that should be par for the course for an integrated suite.

Of course, vendors of each solution type are strong proponents of the worth of their approach and damning of their competitors. Ask an integrated suite vendor, for example, what’s wrong with a best-of-breed solution and they will always talk about the hassles of integration, upgrade paths and maintenance meaning a higher total cost of ownership. For their part, best-of-breed CRM providers will say these claims are for the most part baseless and their solutions will integrate easily with just about any application around today. They’ll then say that an integrated suite doesn’t provide enough in-depth functionality to really add significant value, so why bother with it at all?

So who’s right? The fact is there is some truth to both positions, but neither is as critical as the other makes out. While proprietary solutions that couldn’t integrate were a concern in the early days of CRM, today’s common industry standards like XML & web services mean this is much less of a concern. Similarly, the lack of in-depth functionality in integrated suites is also diminished as vendors in that space have made significant strides in adding customisation options to their solutions.

While Greentree’s Graham Hill agrees initial integration of a best-of-breed solution is not a huge concern, he says ongoing integration issues remain. “You’ve then got two disparate systems and everytime there’s an upgrade, that interface somehow gets broken and you have to go and find out what the changes are, which isn’t always straight forward, just to keep maintaining that exchange of information.”

Hill says because of the inconvenience this causes, many organisations choose not to upgrade at all. “So they don’t have the latest and greatest in their software because of that hassles of maintaining that interface.” Interestingly, at Crossware (a ‘best-of-breed’ software developer), marketing manager Ken Fairgray says suite CRM solutions may actually offer too much functionality. “Often the CRM solution in a suite is actually too much for a company. It’s overkill really – a lot more functionality than they actually need.” Fairgray says that sales staff are frequently not very sophisticated computer users, and many CRM modules in ERP suites give them too much information and data.

“That’s where the emphasis is [data], so they’re not peoplecentric or sales-centric,” he says. Fairgray observes that many organisations in the mid-market are wisely installing a suite ERP system for their financials, but not buying the suite CRM solution, and getting a best-of-breed CRM developed instead “which is tailor made for the requirements of their organisation.”

Legacy systems, your people, your customers

In fact, the option you choose may actually be dictated by other factors entirely. For example, except in the case of a brand new organisation starting from scratch, all existing businesses will have some form of legacy system in place.

So if, for example, most of your current ERP solution is Oracle, then you’ll probably want to investigate whether Oracle’s CRM module is capable of delivering on the key CRM fundamentals for your business (fits your business strategy, easy to use & and will quickly deliver actionable data). Remember also, that a system that works with your current data and applications, will help lower your implementation and support costs.

Another factor to consider is the ‘people’ factor. First and foremost, CRM projects are supposed to enable and empower your customer ‘relationships’ but do you really know what kind of relationship your customers actually want with you? For example, when I turn my mobile phone on, the network I am with has programmed into the phone’s operating system two messages – first ‘Welcome’ and then ‘How Are You?’. Now ‘Welcome’ I’m okay with, but ‘How Are You?’ – that’s overkill in my book and worse, it actually generates negative feelings in me towards this company, as a mobile phone asking me ‘how I am’ seems disingenuous and a bit silly. So focus on understanding the core service expectations of your customers and meet those again and again with no exceptions. In the case of my mobile phone, my core expectations are good coverage, pricing and internationl roaming funcationality. Having my phone to say ‘Hi’ to me is nowhere on my list of desires.

The purpose of CRM is to make your organisation more attractive to your customers, and you may well be able to achieve this without a huge spend on advanced functionality by first understanding what your customers’ expectations are. Be wary of ‘over buying’ and increasing the costs of your implementation beyond the point where the investment will ever pay for itself in increased business or efficiency gains. When you can consistently meet the basic service expectations of your customers, only then should you look at CRM modules that assist you in trying to ‘upsell’ or ‘add value’.

Interestingly, if there is a problem with your existing CRM process, two groups of people will be well aware of it. Firstly, your customers, as their core expectations have not been met, and secondly, your customer facing staff members – as they will have born the brunt of the negativity your customers are feeling. So ask them about core expectations and concentrate on addressing any shortfalls there first. So while most CRM systems have a lot of functionality, experience has shown that a successful CRM implementation project is typically one that is managed in a staged approach – starting with ‘core’ CRM functionality that addresses the most frustrating issues facing the support, sales and marketing departments.

This approach ensures the vital buy–in right from outset of the end users of the system as they will gain immediately from the project. Thus, identifying what your ‘core’ issues are, may make the ‘what type of CRM solution?’ decision for you. Also critical to remember here is that CRM projects are about people. While IT departments are involved, they should not be considered ‘IT’ projects.

Preparing for action

Finally, when sizing up the ‘suite or best-of-breed’ CRM solution, it’s critical to analyse your existing and (realistically) anticipated business requirements or core service standards, then put a CRM strategy in place that meets those requirements. Evaluate your existing technology capabilities, map out the desired functionality, then identify the technology needed to close the gaps between what already exists and what is desired. Once the potential requirements have been identified, they can be prioritised based on their impact and how they maintain the balance between product flexibility, functionality and implementation/integration costs.

The final step is to develop a business case that clarifies the estimated return from investing in new CRM technologies to drive specific objectives. If at this stage you’re still unsure about ‘suite versus best-of-breed’ CRM solutions, you should consider doing a business case for both scenarios, as the ROI result may well make the decision for you.

This article was originally featured on iStart. To see the original version, click here.

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