The recent Forrester Research Enterprise Software report on full suite CRM vendors lists four contenders, but any member of the Customer Management Community knows that the list of enterprise customer solutions is much broader, argues Andy McEwan, EMEA General Manager, Epiphany.
Less is becoming more in enterprise application software these days, with an emphasis is on solving specific business problems by plugging in or augmenting existing IT investment, rather than "transformational" CRM initiatives. The advice Epiphany provides to our customers has always been to think big, but start small with their CRM initiatives - not to automatically default to the "big bang" approach of simultaneously replacing all existing systems, which is the solution generally espoused by the largest CRM solution providers.
With the freewheeling days of the late 1990s now but a fading memory, few companies appear interested in ripping out multimillion dollar enterprise applications and replacing them with the very latest models. Short deployment cycles, incremental performance improvements, and rapid returns on investment are the rule of the day.
One of the challenges facing enterprise software companies is how to carve out smaller pieces of their large packages so that customers can adopt and deploy them more quickly. Not only do customers want bite-size servings, they want them to integrate seamlessly into their existing applications and systems, even ones built by rival software makers.
We have now entered a new stage in the evolution of enterprise applications. Application servers have reached maturity and have become the platform of choice for new applications and development. And service-oriented architecture is quickly becoming the accepted best practice for a wide variety of applications.
The reason that the industry is rallying behind service-oriented architectures is that there are a number of distinct benefits related directly to two key issues: flexibility and agility. Previous-generation architectures have made it difficult for IT organizations to integrate functionality and systems, and made it difficult for them to respond quickly to changing business needs or competitive demands. In a world where no single vendor delivers all the competitive functionality required, it is highly desirable to have applications that are not rigid and restrictive.
SOA offers the following specific benefits:
- Simpler configuration of composite applications using business process management tools
- Easier integration of functionality into multi-channel solutions
- Faster integration of multiple pieces of in-house and third-party functionality
- Safer upgrades of individual services using platform administration and version control
- Better support for large or geographically distributed development teams by dividing development using services
Customer relationship management applications can benefit greatly from service-oriented architecture. For many organisations, CRM applications typically require extensive customisation and integration, and service-oriented architecture promises to make this easier and reduce associated costs. The future of CRM applications will likely be divided into two camps: large monolithic applications with built-in processes that are difficult to customize, and applications built using service-oriented architecture that are more nimble and enable customized processes.
The general benefits of SOA described above can be applied directly to CRM applications. In order to understand why these benefits are so critical, it is important to understand a few key principles of CRM applications:
- CRM applications usually require integration with other systems, such as order management and shipping
- CRM solutions are almost never entirely from one vendor; they are typically a combination of multiple vendor systems and some home-grown functionality
- CRM functionality is multi-channel—addressing customers on the Web, over the phone, or in person
There is one more principle that most customers have traditionally faced: CRM solutions are time-consuming and costly to configure and deploy. The main benefit of SOA, discussed in more detail in the sections below, is that it invalidates this third “principle” by enabling quicker, easier customization, integration, and maintenance.
As discussed, CRM applications must share customer processes, customer intelligence and customer data to be effective. It is desirable, for instance, to integrate marketing functionality into call center applications so that phone agents can provide cross-sell or up-sell offers. The call center application needs access to the processes, intelligence and data that drive effective in-bound marketing offers. To drive intelligent and profitable customer interactions, the boundaries between the traditionally separate domains of marketing, sales and service must be broken down.
An excellent example of this trend in practice is ING DIRECT, a 21st century retail bank with more than 10 million customers worldwide. Eschewing the traditional brick-and-mortar branch expansion model, it offers simple financial products direct to consumers via the Web, the call centre and mail. ING DIRECT has integrated Epiphany Interaction Advisor into its existing contact centres and on its Web site.
Leveraging its existing IT infrastructure and investment, the solution is now used daily by some 500 customer service agents and embedded on many pages of its Web site. And what’s more, the solution has generated more than $5 million in incremental profit over the past year.
The times are changing, and application vendors must change with them. Companies purchasing CRM applications are leading the charge because they have seen the high costs of integration and the unrelenting demand for agility. Service-oriented architecture is a key part of the answer that can let companies meet the agility demands at a reasonable cost.
CRM applications have long suffered from difficult integration challenges and rigid, inflexible application architectures. Although there may be a place in the future for such applications, it will only be with companies that are to a large extent willing to accept the vendors’ model of their business. For companies that want to implement CRM solutions that fit their business and provide competitive advantage, the application architecture of choice will be service-oriented architecture.