Industry consultants outline the key drivers that place the processes and people ahead of the technology at the destinationCRM 2006 conference.
Posted Sep 17, 2006
Organization and planning were the name of the game during the first round of breakout sessions at the destinationCRM 2006 conference in San Jose today. Industry experts, including consultants at McKinsey & Company and ISM, stressed the importance of making sure companies have strategies, end-user needs, and corporate goals aligned before embarking on any CRM initiative.
Despite the number of failed CRM implementations since the mid-90s, companies have failed to heed the alignment lesson, said Anupam Agarwal, an associate principal with McKinsey & Company, in his afternoon session, "Organizing for CRM." Companies should first identify the strategic and tactical business benefits for the organization, the value proposition for the end users, and should identify and repair the business processes that drive the CRM strategy. They should also understand how this will improve the customer experience before considering which technology vendor to partner with. "You can't rely on technology alone; define the business solution first and use the technology to support it," Agarwal said.
According to Agarwal, the core problem is that businesses don't pay enough attention to the organizational challenges inherent in any CRM initiative. The continued focus on technology as the primary decision driver continues to be the biggest mistake companies make. Experts agreed that technology should represent only 30 percent of any implementation, with the remaining 70 percent focusing on the processes and people. "The technology should be driven by the goals and needs of the company and end users," said Barton Goldenberg, president of ISM, during his "Executive CRM Boot Camp" session. "The purpose of CRM software is to automate the processes, not drive them. Companies that try it visa versa might as well quit while they're ahead."
There are a variety of obstacles that usually spell doom for CRM programs, but resistance to process change for end users, integration woes, and a lack of consensus on objectives are the top three. Companies should identify the operational and financial impact of improving business capabilities through CRM by understanding how a company interacts with its customers and develop a CRM value strategy and road map based on the businesses process that drive the current CRM practice, according to Agarwal.
The objectives of executives and of end users often fail to correlate when it comes to selecting and implementing a CRM solution. Goldenberg cited an example of one manufacturing client whose executives identified the top-three business incentives for purchasing a new CRM solution. "Those three reasons were numbers 44, 45, and 46 on a list of 50 reasons that came from end users when we asked them the same question," Goldenberg said. It's critical companies identify the reasons and expectations of both the executives and end users simultaneously. Besides finding a happy medium, it also exposes how different departments within the organization use CRM data, which helps to break down the silos. It's also important that organizations map out the business processes and correct any flaws. Goldenberg recommends "supergroups" of approximately 20 end users who represent every customer touch point within the organization to garner feedback from frontline employees.
End-user adoption and executive buy-in, always a potential pitfall for CRM initiatives, should be tackled by a top-down/bottom-up approach, according to Goldenberg. If executives can't identify at least three clear-cut business cases for taking on the CRM project, the plug should be pulled right there. "When it becomes strategically relevant is when you'll have executive buy-in."
According to Goldenberg, The goals of CRM is primarily based on three reasons:
Better understanding of CRM. A clearer definition of CRM is a business approach that applies sales, marketing, customer service, e-business, and business analytics tools and techniques in support of an organization's business strategy. Several elements of CRM are functionally rich, including time management, sales/sales management, telemarketing/telesales, customer contact center, marketing, e-business, field service support, business analytics, supply chain management, multimodal access, and data sharing tools.
Better understanding of blending people, process, and technology. The key success factor is understanding this mix and understanding that it is not the same throughout the entire implementation, Goldenberg said. "During the mid- to late-90s the vendors in this industry overpromised and underdelivered. What the vendors have [now] understood is it's just no longer a technology game," he said. "It's 80 percent about people [50 percent] and processes [30 percent] and if you over emphasize technology, your CRM initiatives will fail. There will be times when technology is more important than 20 percent, and there will be times when it is less important. The message that the executives are understanding is this is not a technology game."
Solid value proposition. Goldenberg detailed several generic factors that he likes to see in a CRM business case: enhanced productivity, lower costs, superior employee morale, better customer knowledge, higher customer satisfaction, and improved customer loyalty/retention.
For the many companies that have implemented a CRM strategy the right way, ROI numbers can be compelling. Goldenberg said companies should expect end users to experience a 10 to 20 percent increase in productivity, thanks to the automation of processes, while financial ROI numbers can range from 50 to 100 percent, all over a period of 3 years.
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