CRM doesn't add up for UK Plc

MyCustomer.com
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The news this week that UK Plc doesn't seem to believe it's getting its money's worth from CRM software should come as no surprise to anyone. Nonetheless the findings of the Vanson Bourne/JD Edwards survey of 100 UK IT directors and CIOs make for depressing reading.

A mighty 91 per cent of those surveyed said that overall IT investment had delivered tangible benefit - and I'd be interested to know exactly how that was measured - but 76 per cent said that CRM had delivered less value than their applications, such as supply chain and ERP.

One of the problems of course is that too many companies raced into CRM as the marketing bandwagon hurtled past without considering more realistic considerations that should have been taken into account up front. The horror stories of back office ERP should have been ringing loud and strong when the bulk of CRM spending got underway, but no, the chequebooks were flashed and the – largely standalone – CRM projects got underway.

More to the point, they got underway with nary a thought given to the need to undergo a close examination of the underlying business processes. I've said it before, but if a company's fundamental premise is that the customer is a bleeding nuisance, then all the software packages in the world are not going to improve the situation. All that's going to happen is that the lousy customer service stance will become more automated so that companies can be indifferent to their customers more easily.

Of course that early spending took place in the midst of the dot com boom when IT directors and budget controllers took collective leave of their senses and were ready to spend vast amounts of money on unproven projects. It's only three years ago, but already it's being conveniently forgotten that profit was a dirty word; openly questioning the long term commercial viability any technology issue was something akin to belching in front the Queen Mother on the faux pas scale.

With the dot com hangover still with us, it's clear that many companies are waking up to realise that the money they spent on that lovely CRM system is returning none of the investment made in it because it sits in splendid isolation. In contrast, older applications – such as ERP – have had time to bed in and now have a sort of familiarity that lends them respectability.

Talking to CRM vendors over the past couple of months, a common theme that emerges is that the size of orders has declined. There are no more five year, big bang extravaganzas. Instead there are five one year phases to the same project and each phase is being carefully budgeted with a keen eye to how quickly that money is being reaped back on the bottom line.

For some vendors, this seems almost offensive. With pained expressions, some shake their heads sadly and talk of this bizarre predilection among users to want to know what they're getting for their money. All very regrettable obviously...

But it's not of course. It's entirely sensible and it's been a long time coming. More power to the customer, say I. Vendors are having to scale down their expectations, but it was only to be expected after years of flushing money down the IT drain.

No-one should doubt that CRM can deliver tangible benefits to the bottom line. There are more than enough examples of successful implementations in action that have enjoyed substantial ROI. It is to be hoped that if this week's survey were to be repeated in five years time, the results would be very different.

The survey can be found at:
/item/76126/345/701

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By alfien
28th Mar 2002 15:57

My CRM idol is "Jonesy" from Dads Army, the butcher who knew all his customers by name, knew exactly the right cut of meat they wanted and slipped in a little something for their husbands breakfast. And not a computer in sight.

The problem arises when people decided that a Customer Relation Management system is a piece of software. At that point they might as well throw their money away. CRM is delivered by people from the top down of an organisation having a customer-centric approach to running their business. I would venture to suggest that in 76% of the cases, this hasn't happened and the system has been added to ISO9000, BPR and other bullets that have been ducked.

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avatar
28th Mar 2002 15:15

Your leader suggests that dealing with poor CRM should focus on the business processes underlying IT. Surely IT is the underlying process? The leading CRM processes are motivatiion of employees and taking a strategic focus in order to motivate customers. These need integrated IT support. Firms which tackle the issue the wrong way round are unlikely to achieve long-term customer value.

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By jovett
01st Apr 2002 13:13

We have seen many companies think that software is the answer. If they buy it , it will solve the problems and they don't have to manage it. It's not. When the people at the companies realize that software only supports the business process they will then understand how to fix the problem and manage their own expectations.
The issue that arises from there is that many businesses do not have "on paper" a clear definition of their process at all. Because if customer service and sales processes are "broke" before CRM. All you will get after CRM is they "break" faster. No surpises, that where learning from best practices comes about.

Thanks (0)
avatar
04th Apr 2002 12:08

This is a typical variation of the old story of a bad workman blaming his tools.

CRM does work but it’s about more than bolting on a piece of software. It’s the people and processes behind the technology that brings about success and helps achieve return on investment (ROI).

Before embarking on any CRM project, a proper needs analysis must be carried out first and clear business benefits must be identified to help measure, manage and control a successful IT system. Measurements must be set to ensure that a programme is in place to exploit those benefits and a clearer return on investment identified.

Furthermore, staff need on-going encouragement and support on the adoption of new business practices to help CRM work throughout an organisation and make sure it isn’t treated simply in isolation.


Thanks (0)
avatar
04th Apr 2002 12:08

This is a typical variation of the old story of a bad workman blaming his tools.

CRM does work but it’s about more than bolting on a piece of software. It’s the people and processes behind the technology that brings about success and helps achieve return on investment (ROI).

Before embarking on any CRM project, a proper needs analysis must be carried out first and clear business benefits must be identified to help measure, manage and control a successful IT system. Measurements must be set to ensure that a programme is in place to exploit those benefits and a clearer return on investment identified.

Furthermore, staff need on-going encouragement and support on the adoption of new business practices to help CRM work throughout an organisation and make sure it isn’t treated simply in isolation.


Thanks (0)
avatar
By jovett
01st Apr 2002 13:13

We have seen many companies think that software is the answer. If they buy it , it will solve the problems and they don't have to manage it. It's not. When the people at the companies realize that software only supports the business process they will then understand how to fix the problem and manage their own expectations.
The issue that arises from there is that many businesses do not have "on paper" a clear definition of their process at all. Because if customer service and sales processes are "broke" before CRM. All you will get after CRM is they "break" faster. No surpises, that where learning from best practices comes about.

Thanks (0)
avatar
By alfien
28th Mar 2002 15:57

My CRM idol is "Jonesy" from Dads Army, the butcher who knew all his customers by name, knew exactly the right cut of meat they wanted and slipped in a little something for their husbands breakfast. And not a computer in sight.

The problem arises when people decided that a Customer Relation Management system is a piece of software. At that point they might as well throw their money away. CRM is delivered by people from the top down of an organisation having a customer-centric approach to running their business. I would venture to suggest that in 76% of the cases, this hasn't happened and the system has been added to ISO9000, BPR and other bullets that have been ducked.

Thanks (0)
avatar
28th Mar 2002 15:15

Your leader suggests that dealing with poor CRM should focus on the business processes underlying IT. Surely IT is the underlying process? The leading CRM processes are motivatiion of employees and taking a strategic focus in order to motivate customers. These need integrated IT support. Firms which tackle the issue the wrong way round are unlikely to achieve long-term customer value.

Thanks (0)