The CRM software market is expected to more than double from US$20 billion in 2001 to $46 billion by 2003 according to the META Group, US-based research and consulting firm.
The same firm says 55 percent of all CRM projects don’t produce results, and even damage long-standing customer relationships. Is it any wonder that some people regard CRM as “money pit”?
So what is going wrong? The software is hard to install, CRM solutions force lot of change quickly and many executives simply don’t understand what they are implementing, let alone how much it costs or how long it will take.
A lack of understanding leads to trouble. Some managers assume that CRM is software tool that will manage customer relationships. It isn’t. “CRM is the bundling of customer strategy and processes, supported by the relevant software, for the purpose of improving customer loyalty and, eventually, corporate profitability,” says Darrell Rigby, director of Bain & Company in Boston.
The right software, call centre services, technology and management advice are critical parts of the equation but unless there is an overall strategic plan driven from the top, CRM becomes quick and expensive way to hell. To avoid this route, experts suggest keeping the customer uppermost in minds, hence the new acronym CMR, which is paradigm shift to Customer Managed Relationships.
Vendors quickly point out their success stories. point on which CRM veterans agree is the need to encourage companies that have experienced difficulties with CRM, to keep going. Like love, they say success often comes with second or third try. Real lessons are learned in the repeated attempts.
Laurence Buchanan, CRM lead business development at SAP ANZ, echoes this point with his case study. Property company Jones Lang LaSalle (JLL) tried CRM but made the mistake of limiting it to senior managers. Then SAP and JLL worked together to change JLL’s whole philosophy. The CRM was major installation as JLL operates across more than 100 markets on five continents.
“MySAP CRM now offers JLL the ability to seamlessly connect and align people, processes and knowledge around customers throughout its entire value network. Our effort involved merging 35 separate databases into one,” says Wally Scales, JLL’s CRM project manager. “Our new environment required total reassessment of the way we do things. We needed to share knowledge to provide real estate services internationally and consolidate information on clients in user-friendly manner. We wanted our users to feel empowered by providing personalised work experience.”
Scales describes his sales team as “technophobic” but they must use the CRM reporting tools in order to get paid! “It had to be simple to operate and it had to be customisable. Many time-consuming processes became automated to ensure that data captured is fully used.” Finally, JLL wanted platform that provided enhanced functionality once primary features were fully adopted.
JLL was originally unable to capitalise on its extensive network. “Our previous CRM systems were limited for use by senior personnel. We wanted our new solution to be available to all operatives with regard to their level of business.”
Scales did not want to confuse the sales teams by offering too much too soon. But the ability to offer enhancements needed to be inherent in the system. In the future, the sales team is likely to benefit from interfaces with mobile phones. JLL’s employees in New Zealand and Australia are now beginning to see the benefits as the body of information multiplies. The message to staff in both countries is that “by levering off each other they will do better than by relying on their own contacts”, says Scales.
Another large local player is UCMS Solutions (formerly MSC Solutions). Its clients include NZ Dairy Foods, Ravensdown Fertilizer and NZ Post. Paul Whiston, business development manager, is often asked to what extent should CRM projects be driven by the executive committee or marketing or IT department?
“In our experience we find that CRM initiatives are more successful if driven by senior manager (preferably on the executive team) as this tends to ensure that the initiative remains part of an organisation’s strategic fabric. Adopting new CRM strategy is as much philosophy and cultural change as it is technology change, therefore cross-functional and company-wide change management is more successfully managed via the company executive,” says Whiston.
What is the most challenging aspect of CRM integration for New Zealand organisations? Whiston believes it is finding the balance between operational efficiency and effective CRM. “The customer should drive organisational behaviour not the financial or production process.”
How can New Zealand organisations be sure CRM integration is not being hyped (as research by international research company, Gartner Group, suggests) by enterprise resource planning (ERP) vendors capitalising on the waning, traditional ERP market to augment their revenue streams? “The best option is to work with organisations that have significant experience in CRM application and the integration of these applications to multiple ERP systems,” says Whiston.
Mike Graham, manager of business intelligence projects at CDP (New Zealand’s Cognos partner), believes small companies are still looking for quick return on investment gains rather than taking long-term approach. “The focus is still on getting system in place rather than using it as an opportunity to change the business process. We see reluctance to ‘complete the loop’ – put in new system with some reporting included as an after-thought – rather than including analytics as core part of the system. It is the evaluation of the data from the CRM system that enables changes to be made and benefits realised.”
How integrated are CRM systems these days?
Tony Bullen, managing director Asia Pacific at StayinFront, explains that previously there were two types of CRM packages: standalone packages and suite packages. Standalone packages have typically offered superior CRM solutions, largely because of focus and architecture, but have had high integration cost during implementation.
“Normally companies would invest in middleware to provide bridge to link the CRM system to their corporate systems. Suite packages come pre-integrated into ERP and other software solutions. CRM functionality is less as it is only one of many areas of focus for the vendor. But the solutions are less flexible because they are based on the same architecture as the ERP systems and the integration to their other modules is rigid. Our latest product Visual Elk 9 incorporates encapsulated data integration, kind of integrated middleware. This provides all the benefits of standalone packages with greatly reduced integration costs.”
It is impossible for single vendor to design CRM package that includes the business rules of all possible users. This new modularity to CRM software helps second-time CRM shops as well as companies just getting into technology.
Another big player that offers modular architecture is JD Edwards & Co. “We have separated the rules for how different parts of the CRM system interact from the code that makes the software work. This makes it easier for our clients (like F&P, and NZ Sugar) to tweak CRM applications to fit the quirks of how they do business,” says Joel Reed, director of CRM product marketing.
There is growing trend in New Zealand for companies to recognise the value of existing customers and be more proactive about retaining their business.
SalesForce is customer development telephone-based company looking after the protection, development and growth of existing business customers for Compaq, Air New Zealand, Mobil NZ and TelstraClear. In all cases the target market is the lower value SME accounts which are collectively huge market segment.
“The work we have done for Mobil NZ has now deve
