MarketView: ROI through Integration

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In an interview last year, Tom Siebel stated that: “Enterprise software vendors have failed the customer” therefore implying that businesses had wasted huge amounts of money on technology that doesn’t work. Whilst Siebel’s comments may seem to rival those of Gerald Ratner in terms of business suicide, he made this statement because his company is seeking to tackle the issues at the heart of this wastage: integration.

According to the analyst house Gartner, the average Fortune 1,000 company stores customer data in a minimum of 10 disparate applications and this environment will not simplify anytime soon. With the prime cited aims of CRM being to “enhance customer experience” and “increase customer intelligence” this dissipation of data presents obvious obstacles. There is also the need to “integrate” CRM into the business mindset and adapt or develop structures to govern this information. Therefore it should come as no surprise that 75 per cent of those asked in PwC’s Multi Channel Value Quantification Survey (December 2001) cited integration as the highest priority for enabling CRM to deliver its benefits. But it is still astounding how few companies put in place a comprehensive integration strategy in advance of their CRM programme.

Such a strategy is needed because while integration is an operational necessity for a CRM programme, such programmes are particularly susceptible to problems in this area. Initial mindset is key: CRM has long been presented as a technology solution, with little appreciation of the hidden costs of business and cultural change needed to implement it. Then, as the Gartner statistic suggests, legacy systems are a huge issue, particularly as it is these systems that usually own the key data. CRM spans different technologies, themselves constantly evolving, and needs to interact with a mix of “best-of-breed” and legacy applications and databases – requiring a complex integration architecture. At a higher level, because it touches so many other systems, the CRM project often uncovers underlying problems of data and process ownership, which were not previously apparent.

Poor integration planning and development are therefore key reasons why CRM programmes have failed to deliver ROI and gone over budget in the past. Gartner estimate that integration cost and effort counts for up to 60 per cent of a CRM programme but too few companies really budget for this. However, simply treating integration as an extension of application deployment it will guarantee failure of the programme, it is essential to decouple the CRM application from the integration services to ensure delivery as well as avoiding technology lock-in in the future. As a company’s technology develops over time so the CRM integration architecture needs to be able to develop with it. If CRM is to be at the heart of an organisation, a specialised approach to integration is necessary. Such an approach will reduce the project’s risk, assure its delivery and prepare the way for a strategic approach.

What are the key aspects of this strategic approach? Firstly, to put in place a comprehensive and workable strategy of CRM integration, businesses first need to understand that CRM is enterprise wide and business centric. CRM projects often only identify and define integration needs when the project is well under way - this is too late. Integration needs to be a planned process. This planning process should begin with making integration compatibility a key selection criteria; when choosing a CRM vendor, integration needs to be as important as functionality. Many CRM packages grew out from their core business logic and are not optimised for integration, which dramatically increases the cost of implementing the programme.

However, as integration becomes a key selection criteria, vendors will increasingly seek to make their products more integration friendly. As suggested earlier one of the vendors trying to tackle the issue at present is Siebel, with its new Universal Application Network (UAN) architecture. This is designed to take a standards-based, vendor independent approach to the development of application-independent business processes that can be executed by various integration servers. In other words, Siebel is aiming for an 80 per cent fit with horizontal applications which in turn it hopes will help businesses save 60 per cent on integration costs. Siebel is not alone in focusing on integration and in other contexts SAP and other ERP vendors are doing the same. But increasingly, whereas vendors were differentiated through functionality alone, they will now be differentiated because of the integration support they offer.

But any vendor initiative will only get a business so far down the integration track, and there is still a lot of hard work to get the most out of CRM. Siebel and others are making steps in the right direction, but this is still not the whole solution. CRM requires an application and database independent integration infrastructure, with high level ownership/sponsorship. The benefits delivered by an independent integration infrastructure will increase with its ability to manage business processes. It will also allow businesses to prioritise the best areas to integrate with the CRM system and thereby allow businesses the flexibility to move towards full integration within budget constraints.

Integration is now clearly recognised as a key issue for CRM projects, but recognising the problem is not the same as solving it. CRM is not a one-off initiative: it constantly evolves as an organisation anticipates, identifies and/or responds to its customers needs. A planned and specialist strategic approach can help CRM become a manageable integration project and allow the programme to evolve with the business as needed.

Gareth Lloyd is CEO and founder of glue: ltd
www.glue.co.uk

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29th Jul 2003 14:39

CRM without integrating back office systems will ensure a difficult if not unsuccessful implementation; however, platform rationalisation is expensive, costly and requires a strategic thought process running in parallel with the CRM project.
A quicker solution, if not perfect (bearing in mind Lloyds TSB can only update my account with transactions in real time, and not the whole relationship), is the consolidation of data from the disparate sources to create a single customer view, allowing the identification of relationships across multiple product streams and within households.
The data can utilised to drive CRM solutions, marketing databases and update operational systems without the need to re-engineer platforms.
The key benefits behind consolidation will be felt in three key areas:

IT Support and Maintenance
- less duplication means less data repetition
- reduced volume mean reduced costs in terms of hardware for storage etc
- transactional linking means more accurate and fuller information (see below)
- improved analysis & reporting because of product & customer linking
- improved selection performance because of reduced post database processes
- platform for new derivations and field consolidation and customisation

Business Benefits
- improved suppression matching such as mortality, TPS, MPS and Goneaway screening reduces unwanted contact and cost – for marketing activity
- consolidation improves campaign management by providing campaign tracking
- reduced marketing costs because of removal of duplicates
- transactional consolidation enables improved opportunities for cross sell and up sell
- authentication for fraud prevention and a source for CCJ screening
- better value and promotion analysis
- improved retention and attrition analysis by best customer identification
- household and family product identification
- product analysis supports future promotions
- single customer view provides a platform for layering and flagging information for improved screening and scoring

Enhanced Reporting
- Through the identification of business, product and family relationships, enhance database activity and information reliability for reporting, resulting in improved business performance.
- Enhanced decision making through improved management information

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