One of the great challenges of implementing customer relationship management is getting CRM to work together with your existing systems. What is the best approach for connecting CRM?

CRM touches many--perhaps most--areas of an organisation's operation, so some degree of integration with other systems is needed in order to take advantage of the data stored by them. To achieve the functionality and integration you need, should you look to:

• your current enterprise software vendor,
• a best-of-breed CRM supplier, or
• somewhere else?

Do you need live integration, or will replicated data updated according to a batch schedule suffice? Is it realistic to seek integration between your current systems and a hosted CRM application?

"What are you really trying to achieve from a business perspective?" asks Brian Prentice, senior analyst enterprise applications at META Group, warning that some organisations look at CRM without identifying the benefits they want to achieve. Woolly expressions like "putting the customer at the centre of the business" are all very well, but what do you expect that will do for you?, he asks.

Having identified the business processes that you intend to improve or re-engineer, you can identify the systems that will be affected, says Prentice. For example, if management seeks better visibility of the sales pipeline, this will reveal the competency of individual salespeople regarding different stages in the sales process, and that raises human resource management issues. It should also lead to better forecasting, which feeds into the ERP system. "CRM is not an isolated function within the organisation," Prentice warns, so a holistic approach is needed rather than stovepipe implementations.

CRM addresses three distinct domains, he says:

• operational (the processes of dealing with customers),
• collaborative (interaction between the sales, service, and marketing divisions, and with the organisation's partners), and
• analytical (eg, campaign management or customer segmentation).

Prentice says the trick is to identify specific projects in any of these areas that will deliver ROI in an acceptable timeframe. "ROI is king," Ad Nederlof, president and CEO of Genesys, recently told the company's user conference. Most organisations set 12-month ROI hurdles, he says, and consequently massive projects have given way to a series of smaller incremental steps.

On the operational side, "we believe you have to approach CRM from a total perspective," says Gavin Nixon, general manager, northern regions, at Intentia. Someone in a customer-facing role requires all the information and functionality needed to deal with requests. One person should be able to handle any reasonable request in one call, he says. "If you can empower the person, you have a better and more efficient interaction with the customer."

An example of collaborative CRM can be found in the way FrontRange's HEAT service and support software combines with the same company's GoldMine contact manager to provide a single view of customers and prospects across sales, service, and marketing. FrontRange also offers a free connector between MYOB and GoldMine that allows the display of accounting information within GoldMine.

It is possible to implement analytical CRM without using a CRM product at all. For example, Credit Union Services Corporation (Australia) Limited (CUSCAL)--a major service provider to nearly 90 percent of Australian credit unions--uses business intelligence software from Brio to provide individual credit unions with insights into the behaviour and product preferences of their customers.

"Brio helps us provide credit unions with a more up-to-date view of their customer data than has ever been possible before," says Mike Roberts, CUSCAL's movement marketing database manager. "By linking member data with data captured on credit unions' Internet sites through permission marketing, we can understand customer needs and psychographics, which in turn improves the results of marketing initiatives."

“CRM is not an isolated function within the organisation; a holistic approach is needed rather than stovepipe implementations.”

Operational data is moved into a data warehouse, and from there Brio generates the reports for access by credit unions via the Internet.

Prentice also points out that analytical CRM tends to be a stopgap measure, installed to meet a specific, immediate need until an enterprise-wide CRM system is installed.

Whichever aspect of CRM is key, he says you should focus on business needs rather than feature and function checklists, and look for a vendor that is prepared to commit to a long-term relationship. He says it is also important to take into account the overall enterprise architecture, such as your choice of .NET or J2EE: "a key consideration," he says.

Ben Guss, national solutions manager at systems integrator Integ, says "generally there is never just one integration in a project." Relevant information is not only stored in enterprise systems, but also in Excel spreadsheets, Access databases, and on paper. Extracting customer data from those informal systems and then reconciling the spelling mistakes and other errors to provide a unified database can require a major effort. Keeping that database clean requires constant vigilance, he says.

Even when that has been achieved, integrating the business processes can be a bigger challenge that the technical integration, he suggests. Stephen Teh, marketing manager at Pivotal, agrees: "The technology is only an enabler of the business strategy." All the integration is useless without getting buy-in from all affected divisions of the organisation and getting the business processes right, he says.

Going with what you know
Enterprise software vendors have a fairly convincing sales story when it comes to CRM. They provide off-the-shelf integration with other applications in the suite, and they claim their software embodies best practice principles, so it makes sense to change your processes to match the software rather than vice versa. "There is definitely validity in that message," says Prentice, but he warns that in today's soft market vendors are finding it easier to sell extra software to existing customers than to drum up completely new business.

"Do you really want to maintain the interface between the CRM application and your other applications?" asks Prentice. If not, it makes sense to install CRM from your existing vendor or--for certain vertical and geographic markets with specific requirements such as the Australian pharmaceutical industry--from one of that vendor's partners.

"CRM is a hot topic for us... our most important target is our existing customers with SAP ERP," says Laurence Buchanan, head of CRM at SAP Australia and New Zealand.

An organisation selecting a best-of-breed CRM will spend 60 percent of that on integration, and that cannibalises the budget for customer strategy and change management, he says. With SAP CRM, integration costs are reduced to less than five percent, effectively halving the cost of the project, claims Buchanan. "It's a very powerful message to our installed base," he says, and apparently one that is getting through, because the company is the leading supplier of CRM software to the SAP installed base.

“Many CRM projects fail to take into account the importance of integration cost and risk during the initial evaluation of packages.”

"The most risky and difficult part of a CRM project has always been integration," says Andrew Tan, chief technology officer at Streamline Solutions. "Many CRM projects fail to take into account the importance of integration cost and risk during the initial evaluation of CRM packages," he says. While selecting a CRM module from the ERP vendor can be a good approach from an integration perspective, more often than not an organisation's view of what constitutes best practice is not the same as the ERP vendor's, he warns.

Most CIOs spend 80 percent of their budgets on maintenance, Buchanan says, and half of the expenditure on new components goes on retrofitting. Adopting suites wherever possible reduces the integration costs and leaves more to spend on real innovation. Savings can also be achieved through reduced support and software maintenance costs, and through reduced need for user training as existing skills are leveraged. A closely coupled system can also reduce storage costs by avoiding data duplication.

Run-time costs such as processing power and disk space also come into the calculation, says Brett Kennedy, director for solutions, financial services at Oracle. These costs are reduced by the single-vendor approach, and the savings become significant with increasing scale.

Furthermore, SAP CRM has caught up with best-of-breed products in terms of features and facilities, Buchanan claims, while Kennedy says "it's no longer an argument about best-of-breed, it's over 'best of suites'," adding "bells and whistles aren't necessarily a good thing if they can't be applied." But he concedes "it's going to be a long time before Oracle or SAP or whoever offers every function needed by every customer."

Kennedy suggests the answer to the key question "Who are the customers?" can be found in information stored in product operational systems rather than core enterprise systems. Turn that information into knowledge, understand how you want to deal with customers and then you can decide how to treat, service, and sell to each segment.

There is also value in having a "single source of truth," he says. Enterprise vendors are offering an increasingly complete information model with the minimum number of connections. A single underlying data store means the risk of reports containing inaccurate data is reduced, for example, if you always access the 'true' data rather than a copy or secondary data source.

You can take one of two paths, says Kennedy, either you add the capability to handle the information you need, or you choose a ready-integrated package--and the latter is less complex, and easier and quicker to install and maintain. "What is going to give you the best return on investment?" he asks, taking responsibility for the integration or getting one vendor (or at worst a very few vendors) to do it for you?

Ian Hay-Smith, solution consultant--CRM and enterprise asset management at J.D. Edwards (recently acquired by PeopleSoft) takes a similar view, pointing out that while his company's CRM offering may not be considered best-of-breed, it provides most integrations at no cost. Customers typically start with ERP and then move into CRM, he says, and "integration is a key strength of ours." By buying a CRM package that is pre-integrated with ERP, organisations can be assured that the CRM will reflect true data concerning order status, prices, and so on, he says. Rather than maintaining the separation between front office and back office, J.D. Edwards' use of a common database provides a "one office" perspective.

Integration with third-party products may involve accessing information directly from the underlying databases, bypassing the application logic that determines whether a particular transaction is valid. That means you need to duplicate the validation and business rules in the middleware layer, says Hay-Smith.

“Best of breed in many instances provides a better return on investment than staying with the existing vendor.”

Prentice suggests we should think in terms of "right time" integration rather than batch or real time. For example, if the ERP package only updates stock figures once a day, CRM users won't see real-time stock levels however closely the two systems are coupled.

Whether real-time integration is necessary depends on the industry and the particular scenario. In manufacturing, real-time integration with product information and the supply chain is essential. Most enquiries received by tax authorities concern payments, so contact centre staff need real-time access to payments received in case someone makes a payment via the Web and then rings about it.

"Integration is used and abused," says Buchanan, explaining that you can connect two systems in "batch time" to swap almost any information, or put a portal in front of two or more systems so that data from each can be viewed on one screen. SAP approaches integration from the business process level in real time. For example, a call centre agent may need to check a customer's available credit, the status of an existing order, or look into the supply chain to see when a certain item will be available.

A single supplier strategy may be cheaper, but it may also involve functional compromise. The question is whether the value of the missing functionality exceeds the cost advantage. It often doesn't, says Kennedy, because the organisation hasn't changed its culture to take advantage of those features. CRM involves a series of organisational changes, not just one big IT change, he suggests. "There will be no success in CRM until organisations reassess their cultures."

Best of breed
"The most important thing is to come back to 'What are the business objectives?'" says Prentice. If you can see a gap between your future requirements and your main vendor's CRM roadmap, you must question whether it makes sense to choose its CRM module, he warns.

Archie Wilson, vice president, Asia Pacific, at FrontRange Solutions says companies such as Oracle provide a good connection between sales force automation and back office functions including financials and ERP. "It makes a lot of sense to source CRM modules from your ERP vendor," he says. "Probably 50 percent of the time [organisations] will stick to their ERP vendor" and the rest opt for best-of-breed sales force automation software.

But it's a different story when the CRM emphasis is on support, he says. "None of the big guys are really in that space." The overlap with back-office systems is minimal, and integration with other functions such as self-service Web support is more important. "They will go for a special purpose solution providing it's got the integration points" such as connections to business intelligence systems or software that analyses customer feedback, says Wilson.

Just because you've settled on a best-of-breed CRM vendor, that doesn't mean you can't integrate the new software with your existing systems. Such vendors have integration components (using third-party middleware, Web services, or other technologies) for various ERP systems, and the integration process is not necessarily any harder than with a single vendor, he says. "Many organisations are, say, an SAP customer and are using Siebel... there's nothing wrong with that approach."

John Thompson, managing director of POINT Australia, says CRM must be sufficiently flexible at the business level to handle even daily changes to the front end. POINT's e-point CRM product provides this flexibility and provides live integration with back-end systems through a variety of technologies including DCOM, CORBA, and XML. Without real-time integration, "you can be in danger of having records out of track".

Tan agrees: "As a rule of thumb, live integration is always better then batch integration because there is no delay in the completion of business transactions and it makes available the latest information.

"Many business processes require live integration and batch is not an option," he adds. For example sales transactions in a CRM have to be reflected in the ERP system for billing and delivery purposes, but on the other hand CRM analytics does not require live integration.

“It seems simple to say ‘let’s copy the information’... but the devil is in the details.”

"There's got to be one database of record for every piece of data," says Thompson, and for business process-related information this can be e-point. "We've never found a back-end system we can't integrate," he adds.

"Best of breed solutions tend to be the most economical," says Astea International's director, program management Brian Ainsby. His customers typically have an existing ERP system, so "why would we want to duplicate that?" he asks. Instead, Astea provides the CRM functionality plus the middleware to synchronise the data with back-office applications as often as needed, which can be a matter of minutes or hours.

The problem with live links is that many back-office systems--especially custom-built legacy applications--aren't built on standard databases such as Oracle or SQL Server, so it can be hard to access the data, says Ainsby. Even when it is possible, IT management often restricts such access, he adds. "Middleware that synchronises the data is the most accepted solution."

Real-time integration is not usually necessary, he says, as being a few minutes behind real time isn't usually an issue, especially when synchronisation is easily achieved using standard APIs and can be dynamically maintained without manual intervention. Live interrogation of external systems by the CRM application is less efficient, more expensive and probably slower, he says, especially when a few hundred CRM users start hitting an ERP system.

The cost of keeping additional copies of data isn't a real issue, and is generally outweighed by the cost of getting live data from other applications, he says.

Despite this preference for synchronisation, some Astea customers do use live integration, for example to financial data. If you're about to phone a customer about an outstanding invoice, you want to be confident that they haven't just paid up.

Ainsby recommends organisations look for CRM systems that would meet their needs, then compare the result with their current enterprise vendor's offering in terms of overall ROI. "Best of breed in many instances provides a better return on investment than staying with the existing vendor," he claims, adding that 'single supplier' policy decisions by some organisations has removed this flexibility from their subsidiaries or divisions.

Companies such as Oracle and SAP have core expertise and are looking to expand into new markets such as CRM where their best practices from other domains do not necessarily apply, he says

Portal

"Our approach is to provide CRM functionality with our RAD toolkit and methodology to reflect the customer's beliefs about the business processes and rules that will improve their efficiency and set them apart from the competitors," says Tan.

A lot of organisations have unique business processes that do not fit into standard CRM packages, he says. "It is not cost effective to customise existing functionality to fit their business requirements. This is where we come in," says Tan.

"If you're thinking about CRM, you're thinking about customers," says Nixon, but you need to consider what is necessary to support everyone in a company as they deal with customers. Customer-facing systems are complex, but you want customers' experiences to be "as brilliant as possible".

Customers expect whoever they talk to will know everything about the issues. "A portal is a very good way to do that," he says, because portals are easy to deploy, flexible and can collect data from other systems when it is needed, avoiding the need to keep up-to-date copies of data.

"It seems simple to say 'let's copy the information'... but the devil is in the details," says Nixon. For example, if a customer's name is copied from the ERP system into the CRM, and then the customer advises a change of name, how and where do you change your records? "Who has responsibility for the accuracy?" he asks. With a portal approach, every piece of data has one owner.

The situation is even harder with pricing information, especially where complex pricing models are involved. "We go through hell and back to make sure information is only stored in one place," he says.

"You have to be super-careful with copies," Nixon adds. Like Ainsby, he points to the example of chasing a supposed debtor who has in fact just paid. Such calls and payments are typically both made at the end of the month, so batch updates should only be used for non-operational information, he says.

Nixon acknowledges that the load imposed by access to back-office systems can be an issue. He says ODBC is often used, but it is "relatively inefficient and slow," and also requires substantial network bandwidth. Intentia's approach is to use the Movex Information Engine, which runs on the server and delivers bricks of data (similar to a small spreadsheet) that are then assembled by the portal. This approach is more efficient and reduces the bandwidth required.

It is also important to ensure that new software versions are deployed automatically when users connect to a CRM, he says, and the portal approach makes this automatic whether a desktop computer or a notebook or PDA are used for access.

Kennedy says that if you can collect the right set of Web services, you can integrate the required functions, but that can be a costly exercise. It's feasible if you have the existing resources and you can get the required return on investment, but "the trend is to simplify, and have those processes done in a system that comes integrated and ready built." By and large, customers don't want the responsibility of making IT systems work, he says.

Others are more bullish on the potential for integration through Web services. "Over time, Web services will be the integration mechanism of choice," says Hay-Smith.

Integration through invoking Web services for the transfer of data and business transactions means you don't need to know about the technology used by the other side to complete the task, and that reduces the risk and the cost, explains Tan.

Why buy when you can rent?
As we have seen in previous articles a majority of CRM projects have been judged failures. Application service providers (ASPs) offering CRM claim they can get you up and running quickly and cheaply.

Greg Gianforte, CEO and chairman of RightNow Technologies says the idea that there is a contradiction between the hosted model and integration "is mostly a myth" although "there are certainly some constraints". Most integrations in this environment are carried out using Web services and XML: "They're less brittle, they're less dependent on the specific versions of the software," Gianforte explains.

One example is a US general insurance company that uses RightNow in its call centre with links to back office systems to automate common processes such as generating proof of insurance documentation for vehicle owners planning trips across the Mexican or Canadian borders, or reporting fire damage. Those processes "required a lot of customer account information that was stored back in 'vaults' [typically mainframe applications] at the company," Gianforte says.

"Most enterprise vendors have made their software too complex," he claims, adding "we're bringing shrink-wrap methodology to enterprise software."

Doug Farber, SalesForce.com's director, international product marketing, says many customers migrate from products such as ACT! or Siebel, and SalesForce.com provides an import utility to handle the necessary conversion. Once up and running, if integration is needed to other systems, this is achieved using Web services, possibly in conjunction with middleware from Tibco, Informatic, Data Junction, or other suppliers. This approach makes it possible to integrate the SalesForce.com system with applications running at customers' own data centres or at other hosted service providers.

"CRM is critical to the business, but is not considered mission critical," says Farber, so organisations are more comfortable with the idea of using Web services for integration than they would be with other applications.

Many Salesforce.com customers integrate in this way with Oracle Financials, says Farber. One example is Segway--when a customer places an order, the SalesForce.com CRM interacts with Segway's Oracle Financials software.

"We can be the system of record... or peripheral to an ERP system," says Farber. Front-end initiatives with companies including Microsoft, Borland, and Sun mean custom software such as applications created using Visual Studio can access data stored at Salesforce.com.

-You're actually better off doing the rip and replace model. It's better and cheaper to replace your old systems."

Echoing Buchanan, Farber points out that "people's definitions of integration are wildly varied" and may include real-time data integration, process integration and so on. Where appropriate, batch integration is easier and cheaper than live integration, which can be overkill, he says. "How much extra cost will you incur to get that last piece of integration?" Farber asks.

Net Return is preparing the Australian launch of the NetSuite Web-based SME service, covering financials, CRM, employee management and productivity, purchasing, and e-commerce. Managing director Stuart McLean says customers will have the choice of migrating completely from their existing applications to the complete hosted service, or of using the Net CRM module and integrating it to their existing systems via XML. "You're actually better off doing the rip and replace model," he says. "It's better and cheaper to replace your old systems" and prospective customers are amenable to the idea of replacement if the price is right. "We're 10 percent of the cost of some of our competitors," says McLean.

Typical customers will have grown out of packages such as MYOB, Quicken, GoldMine, or ACT!, so loaders are available to transfer data from such programs, and most customers are able to handle this task for themselves.

Integration with external programs is generally hard and expensive, says McLean. "Our view is that you don't need it," as NetSuite is a single integrated application running on one database. But when external integration is required, it can be as dynamic as the old system is, he explains, using real-time or batch updates as appropriate.

"We provide award-winning functionality," Farber says, but without requiring customers to buy hardware, software or endure a long implementation process. It's possible to take a phased approach, starting perhaps with sales force automation and then adding the aspects that involve integration. "That incremental approach is pretty powerful," he says. One example is AAPT, which started by using Salesforce.com as a standalone application for sales processes and is now beginning to integrate it with other systems. "If you try to bite off too much at once, the whole project is in peril," says Farber.

Astea offers a hosted service as an alternative to in-house deployment of its software. "You have to have the application designed correctly," says Ainsby, and unlike some of its competitors, Astea designed its software to handle multiple organisations within one database.

Buchanan argues that since customer data and processes are central to a business, there is a case for not outsourcing CRM, although it may be done selectively. Kennedy takes a different view, suggesting that CRM success comes from the use of knowledge gained from the system, not from its deployment so there's no disadvantage in going to a supplier. "IT is no enabler of customer relationship management," he says.

Executive summary