As more organizations look to customer relationship management (CRM) to build and maintain a strong customer base, the challenge is to make CRM responsive to both IT and business needs.

During Gartner’s CRM Spring Summit 2001 in Chicago, Gartner analyst Scott Nelson suggested on Monday that organizations take a broad, enterprise-wide approach to CRM, allowing them to set five-year plans for CRM initiatives. (TechRepublic is a subsidiary of Gartner.)

But what about your organization’s current needs? How can CRM support your business goals during an economic downturn? Should your enterprise use open or closed databases? Is your CRM team implementing CRM for the wrong reasons?

Following his presentation Monday, “A Five-Year Vision for CRM Architectures and Technologies,” Nelson responded to several questions about CRM from conference attendees.
What is the best way for businesses to utilize customer data and make the most of CRM? Read more from Gartner analyst Scott Nelson in “Customer data is the crux of CRM’s future.”
Q: Can CRM still have an impact on profitability in a time when market shares are declining?
Nelson: I think it holds true even more so in a declining market. When we’re in the perfect economy and… lots of money is flowing everywhere, it’s easy for firms to get kind of cavalier and say, “If we lose some customers, there’s always more customers out there to get.”
It’s in a declining market [when] the real test comes out. The ability for firms to hold their customers—especially to hold their profitable customers—and to positively impact those marginally unprofitable customers and make them profitable gives [firms] the opportunity to really gain an insurmountable lead in [their] marketplace.

Q: Can an experienced cross-functional team (a combination of business and IT professionals) focused on sales automation and charged with an enterprise-wide CRM implementation be successful?
Nelson: Yes, it can. I’ve identified what I call the “CRM Council,” which is becoming more and more common in firms. (The council controls the CRM planning in an organization.) That approach is really becoming popular with a lot of firms who [don’t have] a chief customer officer [CCO].
But what if you are undertaking a CRM initiative for the wrong reasons? Can it be successful? If you were charged with bringing in a call-center solution so that you can cut people off the call center, it’s going to be a lot tougher to do a good job with [the CRM solution].
So, if the organization is doing [CRM] for the wrong reasons, it should refocus on the right reasons and try to accomplish [for example] one area of what management is looking for, while still identifying what’s going to be needed to make [CRM] a success in the organization.
Do you have comments or questions about CRM? Would you like to ask other TechRepublic members about their experiences with CRM implementations? Paul Baldwin, editor of TechRepublic’s Enterprise Applications Focus, is moderating a discussion about critical CRM issues. So ask a question, join in the discussion, and learn from other community members.
Q: You mentioned that collected databases can be used to facilitate CRM applications. If my organization needs a new database architecture, should I rebuild with a vendor solution?
Nelson: Right now, with the standards being so iffy, it’s hard for a firm to do that themselves. The initial solutions will be built by vendors. As standards start to emerge, firms will begin to develop in-house options.

Q: Can I use a closed database architecture?
Nelson: You should avoid closed solutions unless they have real value to your CRM initiatives. Make sure you understand the trade-offs of using a closed solution.
Virtually every vendor will tell you they have open architecture, and most vendors will not admit to any part of being closed. So do your homework, kick the tires a bit, and find out how easy this [solution] is going to be to integrate into your environment.

Q: Customer data can accumulate very quickly for a large enterprise. How do you sort and analyze a bottleneck of data efficiently?
Nelson: Optimization is one good way to attack this. The key is not finding one solution but to look at multiple solutions that can move data more effectively and efficiently, and optimization is one way to do that.

Q: How do architectures from application service providers [ASPs] stack up to in-house-built architectures?
Nelson: For the most part, the architecture is similar. The issue is: Where is the control line? Where is the data stored?
They [ASPs] will continue to be a part of this [CRM] market. Some ASPs are coming out with solutions that address a broader enterprise approach.
Look for more articles about the issues addressed at Gartner’s CRM Summit Spring 2001 next week on TechRepublic. Upcoming articles will range from how to utilize CRM analytic applications and how small to medium-size enterprises can use CRM.