The Gartner view of making the most of your CRM project

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This week in Paris, Jennifer Kirkby of Gartner Group presented a methodology for CRM implementation which is the best for addressing the issues that we have yet come across. We are pleased to have played a minor role in developing some of the thoughts in that presentation, and consider it significant enough to publish the major concepts this week.
You can find it at: CRM Program Management: The Art of Change

If you are at all involved in one or more CRM implementation projects, we strongly recommend that you take the time and trouble to read and digest this presentation.

I do not intend to use this space to explore the presentation - you can read it yourselves. However I would like to use its starting point as my own starting point for this editorial. It can be summarised as follows:

In increasingly competitive markets, enterprises are turning to CRM. To do this quickly and successfully, and to gain competitive advantage, enterprises need to estimate requirements and plan actions. The result of failing to do this is now being felt by many. Systems lie unused, expected benefits have not been realized, and customer satisfaction is falling.

Why? Because it is being done as a technology solution to the problems of individual areas, accompanied by a mass of uncoordinated initiatives.

Quick wins are fine. When done in a framework, they trigger the momentum for change. But quick wins on their own fizzle out and change nothing.

Only 3 percent of European companies currently are creating effective CRM capabilities — mainly startups. Forty-five percent are still wondering what to do, while 35 percent have a variety of unintegrated projects. But 17 percent have realized they need a holistic approach.

Recommendations by these companies is to take the task step-by-step, keeping the ultimate destination in view at all times. Success through steps builds up confidence, interest and buy-in. Knowing the destination keeps you on track, particularly when budgets are being cut.

In other words, companies want to adopt CRM, but they are unsure what it is, and often even less sure of how it applies to their business. In the desire to have a positive impact quickly, (or because it is fashionable), companies initiate major CRM projects, usually implementing CRM infrastructure or systems, often without having a clear view of what that infrastructure is to achieve.

The Gartner approach then goes on to outline how, given a clear view of our objectives, we can best address the significant issues involved in developing our CRM capabilities.

What I want to address is how we define what we want to achieve through CRM. As I outlined last week, (6 major impediments to change and how to overcome them), the problems we face in CRM are not dissimilar to those faced by the new governments in the US, the UK, and elsewhere.

In the UK, Tony Blair has got some sort of mandate (a large majority in parliament, based on votes from less than 25% of those entitled to vote - due to a very low turnout) to spend significant sums on improving services. The British population wants a better National Health Service, an improved educational system, and a better transport system, and no doubt large amounts of money will be spent on trying to achieve this over the coming 5 years.

In the US, President Bush wants to spend large amounts of money on improving US defense systems through star wars developments, and chooses not to believe in the negative impact of technology and the gross over-consumption of energy by US citizens on the environment.

In CRM, we want to improve our relationships with customers through the use of new enabling technology in marketing, sales, and service. As Ed Thompson of Gartner points out in his presentation of the Gartner perspective on CRM (Customer Relationship Management: The Gartner Perspective), CRM has both an external and an internal focus which, by improving the relationship, should benefit both the customer and the enterprise.

So many of the issues facing government and business revolve around what use we make of new technology. This is obvious but usually ignored. For the rest of this editorial at least, let's treat it seriously.

For example, in CRM it is becoming a truism that CRM is a business strategy and not the implementation of new technology. This is a useful statement if it prevents people from focusing solely on the technology, but not useful if it allows people to ignore the enabling role of that technology. Large organisations can't do CRM without the CRM technology, and it seems unrealistic to devise a CRM business strategy without an understanding of the opportunities that the technology opens up.

So what do we need to do to come to a considered view of how we should use the new technology in our business? Let's use Ed
Thompson's paper as a starting point, but expand that with our own ideas.

If CRM is about improving customer relationships through the use of technology, we need to have a clear view of how the technology is going to add value for the customer, and how it is going to add value for us. In other words, what's in it for them, and what is in it for us? In addition, given the power of the technologies we are now implementing, I suggest that we should also consider the future: what impact can we foresee this will this have in the future?

If we are serious about this, we need to have a clear view in a number of areas:

  • Firstly, we need to have a good understanding of what our current relationship is with our customers. This means understanding both why they use our products and services and how we make money from them. It is remarkable how few people working for an organisation can make a clear statement on this, and it is probably only at board level that you can get a useful perspective.
  • Secondly, we need to have a clear view of what the technology is, and the opportunities that it opens up. This is often a major area of difficulty, because the people with the understanding of the technology are usually technicians who often find it difficult to express what the technology is capable of in business terms.
  • Thirdly, we need to understand where the likely areas of benefit are. How can (or has) the technology be used to deliver benefit to organisations? Again this is an area of difficulty for CRM (and other new technologies) in that increasingly the benefits are not in saving costs in existing process, but in the adoption of new processes (see last
    week's editorial: 6 major impediments to change...). This means the adoption of new methods of justifying projects which are not based on saving costs, but on opening up new revenue streams.

When we have a good understanding in all these three areas, we can bring them all together to identify how we can apply the new technology to our business, provided we also have an understanding of how our marketplace is developing. This should allow us to develop alternative strategies for how our organisation could adopt CRM in our business.

There are two further thoughts I would like to add to this. We should expect that our strategy will need to develop and change over a considerable time period, perhaps a generation. Customer relationships will be defined not only by us, but also by the customers, and in the long-term it is their views of how they want the technology to be used that are likely to prevail. They vote with their wallets. Typically, new technological developments take a generation to be used maturely by consumers: think of how the young are using mobile phones; or the acceptance of Personal Computers. It is only when the end-user has become familiar with the technology and knows what (s)he wants from it that the applications become mature.

Finally, my own view is that we should try to look a little further than the immediate opportunity to make a buck. The technology we are adopting now is so powerful that it will have significant effects, and we should consider whether we can avoid the most painful of them. For example, are we certain that taking many business decisions on the basis of a rules-based computer system won't have a deleterious effect on the initiative of staff who implement those decisions? Or will the reduction of the number of face-face transactions undertaken, as call center and e-commerce transactions grow, have a bad effect on social cohesion?

What I've tried to do in this editorial is outline the process we need to go through to come up with a reasonable strategy for the use of CRM within a specific organisation. In summary, we need to bring together:

  • a good understanding of the current business, its value proposition to customers, and how it makes money
  • a good understanding of CRM technology and how it can be used to make money
  • an understanding of our marketplace and likely developments

With that knowledge base we can develop alternative business strategies for the implementation of CRM, in a way which allows the strategy to develop and change, and also take into account the longer-term impact of our strategy.

Obvious perhaps, but this is not a process that most organisations have managed to do well, and it will be interesting to see how well the UK and US governments will manage it over the next four years or so.

It is a subject for detailed further study, and we hope to return to each of these areas in future editorials.

If you have any comments or feedback, you can add them to this article - or simply email me at: [email protected]

Best regards,

Richard Forsyth

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