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.” |
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.” |
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.” |
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.” |
"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
