Opinion: Unlocking the potential of the CRM ecosystem

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CRM applications need to be integrated with every other application that contains data related to or required by the customer, says Dr. Ian Howells, VP Marketing EMEA, SeeBeyond

Not long ago, companies equated CRM with marketing, sales and customer service. Front office CRM applications were implemented and companies boasted that they could deal with customer enquiries across a range of communication channels. But this is no longer enough. Increasingly, companies are seeing CRM as a way of presenting their customers with a full view of the enterprise and the enterprise with a full view of the customer.

The “CRM ecosystem” includes ERP systems, supply chain applications and a range of back-office systems within the enterprise. It may also include the systems of external partner organisations. The reality of CRM is that it has to be applied to the extended enterprise, which takes into account customers, suppliers, employees and shareholders.

The recent challenges in the economic climate have meant that organisations are increasingly looking for ways of streamlining operations and retaining customers in order to remain competitive. It is becoming widely recognised that improving service provision is at the heart of improved customer satisfaction and retention. Companies are beginning to see that improving customer retention is more cost effective compared with gaining and losing companies after one transaction. In order to retain customers effectively organisations need to be able to offer enhanced customer service that can only be effective if they have a full view of their customer’s history. In the case of an insurance company this would be information from multiple systems, i.e. pension, life assurance, car insurance, etc.

The issues of IT budget restraint has also meant that organisations are increasingly looking to retain their existing systems in place of ripping them out and starting again. Companies need to be able to exploit legacy system data and use the intellectual capital contained in those systems to leverage their CRM ecosystem. In his keynote speech at this year’s user conference in Barcelona, Tom Siebel, the company’s CEO and founder said “30 per cent of IT budgets go on integration. It is the number one issue for users”. A CRM solution cannot be used effectively in isolation and this is why it needs to be effectively linked to all touch-points of the business.

So, how can the CRM ecosystem be integrated effectively? The traditional solution is to build a point-to-point interface for every pair of applications. Interface development, maintenance and upgrading are expensive and time-consuming. Gartner, for instance, has estimated that approximately 40 per cent of a standard IT budget is spent on developing new interfaces and maintaining existing ones.

Fortunately, an alternative approach is available in the form of implementing an integration broker that leads not only to faster interface development but also to major cost savings. In a recent CRM integration project at a leading European insurance company interface development times were estimated to be five to six times shorter by implementing an integration infrastructure than with the traditional approach. A return on investment study carried out at a large European financial services company gave a payback period of 6 to 18 months, with a cumulative return of $15 million to $25 million over five years.

These statistics provide a compelling argument in favour of using an integration broker. However, they do not take into account the major business benefits that derive from CRM integration, which provides end-to-end management of the customer experience “from quote to delivery”. Without this level of integration, many things can go wrong. To give a simple example, the sales function may agree to sell the customer the wrong product: one that is discontinued, or one that is not yet available, or one that is simply out of stock. At the same time, the customer will not be able to perform real-time tracking of the order through to delivery.

Conversely, CRM integration brings quantifiable gains. Among the benefits reported by different companies are:
Reduction in order cycle time from five days to 18 hours.
40 per cent reduction in call centre queries relating to order status.
7 per cent decrease in transportation costs related to order fulfilment.
40 per cent increase in cross-selling and up-selling opportunities.
60 per cent increase in the effectiveness of marketing initiatives.
75 per cent increase in the productivity of customer service representatives.

We are certainly starting to see that organisations consider integration to be their top priority today and that it is the only way to unlock the benefits they were promised by the CRM and ERP vendors, which have still to materialise. For those that have successfully integrated their legacy systems, the focus is shifting from optimising individual, silo oriented processes, to cross-application processes. This is where the next wave of major productivity gains can be made and where integration is best placed to deliver. Integration of systems is often the process of replacing humans performing crude integration. Humans should be used for exception processing, not business as usual processing.

CRM integration requires a large number of systems to be linked together using a wide variety of adaptors. In particular, it is essential to access legacy systems that have accumulated customer information independently using different identifiers. In addition, end-to-end business process management is needed to drive and coordinate the enterprise in real time. Given that integrated software suites are now available to do all this, companies are at last in a position to design their processes from the customer perspective, thereby fulfilling their vision of the CRM application as the customer portal into the CRM ecosystem.

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07th Oct 2002 22:45

While the business benefits of integration of CRM with other applications is evident, there is a critical human element required - even though automation of many people-related processes can occur. Obtaining people's buy-in and their consequent use of new approaches is the critical success factor in making the integrated (and extended) enterprise a reality. Companies need to use effective dialog to achieve people's support - we have found using Structured Dialog Tools (SDTs) extremely valuable in this regard. You can get more information on this technique at www.visionlearningsystems.com

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avatar
07th Oct 2002 22:45

While the business benefits of integration of CRM with other applications is evident, there is a critical human element required - even though automation of many people-related processes can occur. Obtaining people's buy-in and their consequent use of new approaches is the critical success factor in making the integrated (and extended) enterprise a reality. Companies need to use effective dialog to achieve people's support - we have found using Structured Dialog Tools (SDTs) extremely valuable in this regard. You can get more information on this technique at www.visionlearningsystems.com

Thanks (0)