Opinion: Why Order Management Is The Next Generation Driver to CRM Success

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When the twelve-year old, small business, VimCo decided it was time to expand its retail base beyond its Idaho-based roots, the company knew it would have to come to grips with the lack of visibility in its order management, manufacturing and sales operations once and for all. VimCo is the marketing arm of the company that manufactures the wooden shelving brand called Peg-lok ("real wood made real easy to assemble") that is sold in many of the nation's largest retail stores. Its manufacturing, sales and supply chain operations encompass facilities on both the East and West Coasts and in Europe as well as some 60 service representatives spread across the United States.

The company had an issue getting information out to people. It would have the necessary data in Boise, but would have difficulty rolling it out in real time on a daily basis to our people across the country".

The end result was that retailers and resellers were flying blind as they assessed their capacity and demand needs. They wouldn't know if an order was coming in to a particular store, what the items were on that order or how many. And tracking product movement is key if you want to be able to replenish orders on a real time basis.

Once VimCo solved this particularly sticky pain point and was able to monitor and stock products on a day-to-day schedule, sales increased by 20 percent. Cash flow improved too as the company was better able to manage its expenditures. And as a final benefit, customer service improved. Anybody can field customer service calls and direct them to the correct area whereas before data was too segmented for such a seamless response.

Welcome to the next generation of customer relationship management, a genre of technology that will base its business model on the immutable fact that without the order management piece integrated into a company's operations, customer service and sales will not deliver to their complete potential.

For too many companies, CRM operations and applications are de facto stand - alone projects that have limited integration between order capture and fulfillment – a key component of CRM - not to mention sales and service. The reason is understandable and basic, up until recently vendors have ignored this essential element in their CRM offerings. Rather, they have left it up to their customers to import or integrate the customer data into their systems from other applications. The result is a failed – in spirit, if not in name - CRM operation.

Don't believe me? Think it through logically. There are three components to a standard CRM application: service, sales and marketing. In each instance a company has to jump out of the CRM system to complete the transaction. Once a sale is made – a lead is turned into a prospect who then definitely commits to buy something – the SFA process ends. Irony of ironies -- the one thing you can’t do in SFA system is sell something.

Marketing is the same scenario: if that is, you want to know what your cost per conversion is – a key element to measuring a successful marketing campaign. But to calculate that you have to know what you have sold, and which lead drove that sale.

With service, the connection to the order is most obvious: how can you answer a customer's question if you don’t have the details about his order in front of you.

The bottom line is, order management is the lynch pin for any enterprise, certainly any enterprise's customer service operations. It defines your relationship with the customer on the front end (what have you sold him, what can you sell to him in the future) and on the back end (how will you invoice him, ship to him and tax him).

What most companies do is rely on integration to seed the CRM system with the essential order management data. But herein is the crux of the problem: rarely is the correct or complete data inputted into other systems. For example, a clerk inputting data into the accounting system is not interested in a lead source and will not include that data in the system, if indeed there is even a field for it. Once it is obvious to the CRM side of the house that that data is MIA it can be re-inputted. Now, though, multiple records exist for the same client.

This problem only gets worse when a company's Web site is factored into the equation. Nowadays both business-to-consumer and business-to-business interactions are based in some part around a company’s Web site, be it renewing a contract or making a sale. We can even configure and buy cars online. As such transactions become ever more prolific, the problems inherent in faulty integration will become even more apparent to the end user. Simply put, she expects to see one, and only one, record of her online and offline transactions. Anything less erodes confidence.

Another problem is the fragmented state of many companies' order management systems, which makes integration into the front office all that more difficult. The fragmented order management system landscape in many companies leads to inefficiency and a poor overall customer experience, according to AMR Research, which has found that some 90 per cent of all companies have multiple order management systems, with the average company maintaining 5.2 order capture applications and 4.3 order fulfillment systems.

This disconnect also hinders forward-looking financial and inventory planning. Consider the recent Chicago-based start-up, Big Toys Express, which sells such toys as giant climbers, backyard sandboxes, ride-on toy cars – big toys, in another words. Its business plan centers on opening retail stores on a city-by-city basis as growth dictates, while establishing a national presence via a Web site.

Because online sales are coming from all corners of the country, Big Toys Express can forecast demand for certain items in its few physical stores. "When we see there has been an increase in sales of a certain item from our Web site over a three day period, for example, we know this will translate into greater demand for that product in our physical stores and we alert our suppliers accordingly," Murdough says.

Obviously integration after the fact is not, has never been, and will never be, the answer to these problems – or for that matter, provide more intuitive demand forecasting. While the reality of heterogeneous I.T. environments will never go away, it is clear that the next generation of software vendors must concentrate on building applications around integrated business processes. The days of stand alone CRM and accounting and human resource and financial applications are over.

Zack Nelson is CEO of NetSuite, an online CRM solutions provider. www. netsuite.com

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