Looking for a silver lining

MyCustomer.com
14

2002 has been declared by International Data Corporation (IDC) as the worse the IT industry has ever seen. This is unlikely to come as a particular surprise to most of the vendors out there which have seen profits collapse to all time lows as spending ground almost to a halt in some cases.

But the cloud of decline also had the beneficial silver lining of shoving the concept of return on investment (ROI) back up the corporate agenda. During those heady days of dot com madness - and doesn't it seem like a lifetime ago rather than a couple of years? - money was cheerfully thrown at any project with an e in front of it with little or no thought given to when any cost-benefit was likely to be seen from the investment.

Those days are long gone and now customers talk of little else but ROI. But Meta Group's report on CRM strategies at UK companies suggests that it is just that: talk, and little else. While an encouraging 80 per cent of UK firms declare that they're doing something CRM-ish, precious few of them can quantify what they expect to see back from this investment or when.

We've heard a lot this year about how companies are unwilling to commit to multi-year contracts with vendors, opting instead for smaller, modular deployments over a shorter time period. All good and sensible, but they still need to have a long term strategy in place. But what the Meta survey suggests is that companies are making tactical decisions rather than strategic ones when it comes to their CRM investments.

All this is likely to result in is fire-fighting of particular business problems rather than creating the enterprise application infrastructure that is needed to maximise ROI. It's no wonder then that most companies in the UK can't quantify their ROI expectations in more than the vaguest and loosest of terms.

It's encouraging that so many CRM projects now appear to have senior level business sponsorship within organisations, but that will count for little if the end result is not joined-up CRM but rather, tactical deployments of islands of CRM. We still seem to have some way to go in making ROI a fully fledged part of CRM thinking in the UK.

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By admin
03rd Dec 2002 09:52

while I very much agree with you in theory, here's what usually happens in practice when companies adopt the "firefighting" approach: they try to "fix" things from an internal perspective, not the customers'; they don't continue on to identify win-win opportunities with customers that lead to customer-centric business strategies; they buy CRM software because it's quick to implement and solves the immediate problem, then keep right on using the wrong software because they already own it; and bottom line, they do little more than automate some stuff surrounding a specific issue, leaving the bulk of CRM's ROI potential untapped. If these "firefighting" companies would let "temporary" be temporary and go the rest of the way, as I know you as a consultant would insist they do, I would be all for it. But human nature being human nature, most of them do a little and call CRM "done," doing themselves great damage in the long run.
To put it another way, I believe you're absolutely right. It's just that firefighting companies usually do it wrong.

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02nd Dec 2002 11:29

Dick

As you know, I'm a great admirer of you and the CRM Guru research and would love to know more about the research.

However I'd still like to push back on your finding that "tactical, "spot" CRM initiatives are out for the gain without the pain, and suffer the same adverse fate we normally suffer taking shortcuts."

If, as a customer I am being burnt in the white heat of poor operations I want the flames extinguished fast.

Now we are both in complete agreement that not all the systemic causes of fire (in my email below I cite failed communications between sales and processing departments; lack of streaming mortage applications; inadequate knowledge at the front end of the processing chain; and could speculate on lack of management attention, the target setting regime and so on) can be adressed by the fire fighters.

But do we continue to let customers burn whilst we work on our longer term fire-avoidance strategy? In practice many of the causes of fires can be adressed within a six to eight week window to the great enrichment of the customer experience, the bottom line and the credibility of the CRM team.

In my experience branding these customer centric fire fighters as 'mere tacticians' devalues their achievements and the customer; works to divert resources away from high impact initiatives; and makes it much harder to build an action-oriented, can do, customer centric culture.

Wendy Hewson
www.hewson.co.uk

PS Despite the topical analogy, please dont interpret any of these observations as pertinent to the real fire fighters!!

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By vkellen
29th Nov 2002 16:35

The other piece of good news for CRM and technology in 2003 is that businesses, by and large, are better prepared to handle this downturn by quickly responding, if not anticipating it. Information technology, most notably supply-chain integration and ERP systems have played an important role. Today's business are a little faster and leaner. The companies I work with in the U.S. (mid-sized manufacturing), while tight on budget in 2002, have barely skipped a beat on their own strategic plans. And improvements in customer-facing business processes for strategic advantage still ranks fairly high on their agenda.

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avatar
29th Nov 2002 15:54

Well said, Stuart!

I certainly agree with your assessment that few companies have been able to quantify the benefits expected from CRM. What is perhaps less obvious is the impact of this failure.

A key issue for many CRM initiatives is how to cash the cheque from efficiency gains. Do you reduce headcount/costs or plan to do more with the increased capacity? Unless a company can predict the benefits in terms of how much, where and when, they can not plan how to cash the cheque.

There is a whole science to realising benefits and the foundation of this is accurate benefits prediction. Hence my contention - supported in the ROI productivity kit that you sell for us - that the ROI is a multi-purpose tool that goes beyond producing the buysines case to get the capital approval.

Wendy Hewson
www.hewson.co.uk

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avatar
11th Dec 2002 11:03


Brett,

You make an excellent distinction between starting a fire-fighting "project", and fixing what's broken with an existing project.

For the last eighteen months I've been thinking about intervention methods to fix broken projects. Indeed the 'CRM - Time for the Late Harvest' paper on our website was our first attempt to set out ways in which this might be done. However, I've encountered three problems which may mean that attempting to intervene will not succeed.

First is the fact that most IT directors do not realise that their projects are failing/sub-optimising. They see no need for a fix (I have a facsinating anecdote to tell here..)

Second is the management of the political and people issues round project ownership, accountability and loss of face. Many attempts to fine tune flounder on these rocks!

Third is the hard fact that if an IT-led CRM project has been set up as a Trojan Horse for change, it will be fundamentally misconceived and inappropriately designed. The only way to create sustainable change is to:

1) focus on changing the behaviour of staff and making the consequences visible using a bottom-up, outside-in approach to work redesign

2)unblock the systemic constraints

3)create an updraft of management attention through rigorous and systematic review

4)elongate the time span of senior management attention.

If an existing project has not been designed round these principles, it is very hard to retro-fit them.

But I do agree with you Brett that for most CRM projects, enhancement built on an understanding of the what, how, why and when of current performance is much more effective than embarking afresh!

Wendy Hewson
www.hewson.co.uk

Thanks (0)
avatar
By admin
01st Dec 2002 20:22

The new CRMGuru.com study linking CRM best practices to ROI that will be released on November 5th found a powerful link between development customer-centric strategies and ROI - and also found that "tactical" implementations don't yield much. The study concludes that most companies doing tactical, "spot" CRM are out for the gain without the pain, and suffer the same adverse fate we normally suffer taking shortcuts.

Thanks (0)
avatar
By admin
03rd Dec 2002 09:52

while I very much agree with you in theory, here's what usually happens in practice when companies adopt the "firefighting" approach: they try to "fix" things from an internal perspective, not the customers'; they don't continue on to identify win-win opportunities with customers that lead to customer-centric business strategies; they buy CRM software because it's quick to implement and solves the immediate problem, then keep right on using the wrong software because they already own it; and bottom line, they do little more than automate some stuff surrounding a specific issue, leaving the bulk of CRM's ROI potential untapped. If these "firefighting" companies would let "temporary" be temporary and go the rest of the way, as I know you as a consultant would insist they do, I would be all for it. But human nature being human nature, most of them do a little and call CRM "done," doing themselves great damage in the long run.
To put it another way, I believe you're absolutely right. It's just that firefighting companies usually do it wrong.

Thanks (0)
avatar
29th Nov 2002 16:38

Stuart,

At the risk of monopolising the ROI converation, I feel compelled to push back on the assumption that fire-fighting particular business problems is tactical and, therefore, unlikely to yield a high ROI.

Anyone who suggests that fixing business problems is NOT strategic and therefore will not give a high ROI is falling into the age old trap of failing to look at the situation from the customer's point of view.

I put it to you that from the customer perspective, business problems tend to show themselves in terms of wrong product service, wrong place, wrong price. In other words, the majority of business problems are the result of flawed or broken business processes which mean that the customer does not get the product or service expected.

My recent experience applying for a second home mortage at the Woolwich was beset by problems that the Analysts might term tactical. There appeared to be several fires that had to be fought: failed communications between sales and processing departments; lack of streaming applications; inadequate knowledge at the front end of the processing chain; problems in the post room.

The impact of these 'tactical' business problems' was an unforgetably bad customer experience for me. For the Woolwich it was a failure to win the heart and mind of a customer coupled with an extraordinary level of costs some 1800% (yes 18 times!) higher than necessary in their internet sales call centre.

If you need more evidence on the way in which 'tactical' problems such as poor operations and business problems can leak away immediate sales, increase cost-to-serve to cripplingly uneconomic levels, and destroy customer and brand equity, look out for our forthcoming research 'Profit or Pain from User Experience'.

My advice to managers is to fix the pressing business problems. Mend the broken processes and practices by whatever means possible and the impact on the hearts and minds of customers and staff alike, and on current capacity and operational costs will be immediate and significant.

If companies don't fix the so-called tactical problems, who will be around to take advantage of the strategic 'enterprise application infrastructure'? And will companies still have the funds to make the investment?

Wendy Hewson
www.hewson.co.uk

Thanks (0)
avatar
By admin
01st Dec 2002 20:22

The new CRMGuru.com study linking CRM best practices to ROI that will be released on November 5th found a powerful link between development customer-centric strategies and ROI - and also found that "tactical" implementations don't yield much. The study concludes that most companies doing tactical, "spot" CRM are out for the gain without the pain, and suffer the same adverse fate we normally suffer taking shortcuts.

Thanks (0)
avatar
02nd Dec 2002 11:29

Dick

As you know, I'm a great admirer of you and the CRM Guru research and would love to know more about the research.

However I'd still like to push back on your finding that "tactical, "spot" CRM initiatives are out for the gain without the pain, and suffer the same adverse fate we normally suffer taking shortcuts."

If, as a customer I am being burnt in the white heat of poor operations I want the flames extinguished fast.

Now we are both in complete agreement that not all the systemic causes of fire (in my email below I cite failed communications between sales and processing departments; lack of streaming mortage applications; inadequate knowledge at the front end of the processing chain; and could speculate on lack of management attention, the target setting regime and so on) can be adressed by the fire fighters.

But do we continue to let customers burn whilst we work on our longer term fire-avoidance strategy? In practice many of the causes of fires can be adressed within a six to eight week window to the great enrichment of the customer experience, the bottom line and the credibility of the CRM team.

In my experience branding these customer centric fire fighters as 'mere tacticians' devalues their achievements and the customer; works to divert resources away from high impact initiatives; and makes it much harder to build an action-oriented, can do, customer centric culture.

Wendy Hewson
www.hewson.co.uk

PS Despite the topical analogy, please dont interpret any of these observations as pertinent to the real fire fighters!!

Thanks (0)
avatar
By vkellen
29th Nov 2002 16:35

The other piece of good news for CRM and technology in 2003 is that businesses, by and large, are better prepared to handle this downturn by quickly responding, if not anticipating it. Information technology, most notably supply-chain integration and ERP systems have played an important role. Today's business are a little faster and leaner. The companies I work with in the U.S. (mid-sized manufacturing), while tight on budget in 2002, have barely skipped a beat on their own strategic plans. And improvements in customer-facing business processes for strategic advantage still ranks fairly high on their agenda.

Thanks (0)
avatar
29th Nov 2002 15:54

Well said, Stuart!

I certainly agree with your assessment that few companies have been able to quantify the benefits expected from CRM. What is perhaps less obvious is the impact of this failure.

A key issue for many CRM initiatives is how to cash the cheque from efficiency gains. Do you reduce headcount/costs or plan to do more with the increased capacity? Unless a company can predict the benefits in terms of how much, where and when, they can not plan how to cash the cheque.

There is a whole science to realising benefits and the foundation of this is accurate benefits prediction. Hence my contention - supported in the ROI productivity kit that you sell for us - that the ROI is a multi-purpose tool that goes beyond producing the buysines case to get the capital approval.

Wendy Hewson
www.hewson.co.uk

Thanks (0)
avatar
11th Dec 2002 11:03


Brett,

You make an excellent distinction between starting a fire-fighting "project", and fixing what's broken with an existing project.

For the last eighteen months I've been thinking about intervention methods to fix broken projects. Indeed the 'CRM - Time for the Late Harvest' paper on our website was our first attempt to set out ways in which this might be done. However, I've encountered three problems which may mean that attempting to intervene will not succeed.

First is the fact that most IT directors do not realise that their projects are failing/sub-optimising. They see no need for a fix (I have a facsinating anecdote to tell here..)

Second is the management of the political and people issues round project ownership, accountability and loss of face. Many attempts to fine tune flounder on these rocks!

Third is the hard fact that if an IT-led CRM project has been set up as a Trojan Horse for change, it will be fundamentally misconceived and inappropriately designed. The only way to create sustainable change is to:

1) focus on changing the behaviour of staff and making the consequences visible using a bottom-up, outside-in approach to work redesign

2)unblock the systemic constraints

3)create an updraft of management attention through rigorous and systematic review

4)elongate the time span of senior management attention.

If an existing project has not been designed round these principles, it is very hard to retro-fit them.

But I do agree with you Brett that for most CRM projects, enhancement built on an understanding of the what, how, why and when of current performance is much more effective than embarking afresh!

Wendy Hewson
www.hewson.co.uk

Thanks (0)
avatar
By admin
10th Dec 2002 17:09

I see the merit in the previous points, and I think the difference of opinion lies in the difference between starting a fire-fighting "project", and fixing what's broken with an existing project. The old (and poor)adage "we don't have time to do it right, but we have time to do it twice" seems to fit. I suspect in time the ROI will begin to show on many CRM implementations, especially if the fine-tuning Wendy suggests actually happens. It's usually cheaper and more effective to fix a "broken" program than to start over. What's truly amazing to me is how few companies actually understand how they got to where they are, and are therefore destined to make the same mistakes again.

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