Enterprise Software

The year of CRM: Five issues to consider

Here's an ominous warning: If you don't embrace customer relationship management this year, you'll be left behind. Learn five key concerns when implementing CRM.


Some businesses have taken 20 years to develop an effective customer service call center. But on Internet time, enterprises now have 12 to 24 months to create the same service for a competitive Web site, according to predictions in a recent Gartner Group, Inc. report.

Just as many enterprises are finally getting a handle on integrating their front and back office with enterprise resource planning (ERP) systems, they are being challenged to use customer relationship management (CRM) tools to bring their customer service segments rapidly up to snuff in the e-business economy. The choices include:
  • Best-of-breed solutions that target and solve certain CRM problems.
  • Office suites that provide a basic level of integrated CRM across the organization.

"I think that one key message to IT people is: If you're in the U.S., and you don't at least start implementing CRM this year, you're going to be behind," said Erin Kinikin, an analyst covering CRM for Giga Information Group. "CRM and broader e-business initiatives seem to be taking the majority of the post-Y2K budgets.” Kinikin also said that most of Giga’s clients—from large, multinational companies to mid-market firms—are making decisions concerning CRM and which key vendor to build around.

The selection dilemma
Because no single company can provide a one-size-fits-all CRM solution, selecting a vendor isn’t easy. "For businesses that want an entire CRM solution—that want the sales bit, the call center bit, the self-service bit, and the marketing automation bit—there isn't one vendor out there that is leading it all," said Sharon Chan, an analyst in packaged software strategies for Hurwitz Group. "The pressing thing is, how is the CRM system going to tie in with the back office stuff, and how are you going to use that data from the back office to support the needs of the front office?"

Kinikin said the debate about which is best—best-of-breeds or suites—is over. She predicted that companies would have to use a combination of both approaches until fully integrated CRM suites appear. According to a Gartner report, complete customer service and support suites won't become available on a wide scale until the end of 2001.

"Companies have to look at CRM suites that at least give them a common base of customer data, business rules, and workflow." Kinikin said. "And then the question is, what parts of customer service will you have to supplement with best-of-breed in the areas where you need a stronger functionality than is currently available in the application suites?"

For some businesses, especially at the mid-market level, hiring application service providers (ASPs) to host and maintain some CRM operations can be a less painful and cost-effective solution.

Kinikin offers five steps in planning and implementing a CRM strategy. She predicted the process should take about six to nine months.

1. Understand the problem you're trying to solve
Many businesses fail to pinpoint simple customer service problems. Companies that are successful in understanding customer service problems have reaped rewards. For example, Sprint found that Web-based customer self-service could save the company big money. Sprint decided to take the top three most frequent customer service requests and make them available via self-service on the Web.

“It turns out those are three pretty easy things. What's the status of my bill? What's the status of my order? And how many [cellular] minutes do I have left a month? And Sprint actually believes that they are going to be able to pay for their whole e-commerce initiative just based on the cost savings of taking those routine requests that really don't need a person to answer and letting customers get the answers themselves," said Kinikin.

2. Build a team that's empowered to take on the project
You’ll need to resist the temptation to staff the team too heavily from the IT department. Select personnel with business skills as well.

"Because these CRM projects often change business process while they're implementing software, most of the successful projects I've seen have as many business users as they do IT people on the team," Kinikin said.

3. Win executive sponsorship
CRM applications are big-ticket items, typically half a million dollars to $3 million for the software. High-end packages are often up to $5 million. The cost for implementation is often double what you’ve paid for the software.

”I see a lot of projects where the executives kind of delegated the decision, and then when they see the price tag, all of a sudden everyone has to go through all these hoops to rejustify the project," said Kinikin.

4. Show how CRM will support the company's vision
Kinikin views CRM as a central part of a company’s growth and overall strategy. "Companies are in the process of changing from brick-and-mortar to a click-and-mortar business. And the CRM system not only has to support that transition but lead that transition, and [it] really has to help the business incorporate Web and e-mail information into everything that they do," said Kinikin.

5. Measure, measure, measure
After implementation, check to see if the CRM systems are meeting customer needs. Kinikin remembers a video game company that created a Web site without determining who was actually buying the product.

"The two 20-something kids who founded the company built an edgy and wild Web site because that's the kind of Web site they would like to use. But when they looked at the statistics of who was coming to the Web site and buying, they found out it wasn't them, it was the 45-year-old parents who were buying for their kids,” said Kinikin. ”So now they're saying, 'Maybe I need a parents' corner and video game ratings.’” The video game company improved sales when they changed the site’s strategy.

Kinikin urges you to use the information you gather to focus on key goals:
  • Improve customer relations
  • Help attract and retain more customers
  • Increase the value of your customers
What’s stopping you from implementing CRM? Is the cost just too prohibitive? Are you waiting to hear what works best? Post a comment below or drop us a note.

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