A Room With a (Point of) View

At the Frost & Sullivan "Realizing the Potential of CRM to Drive Revenue and Growth" executive summit recently held in Scottsdale, AZ, a group of notable industry insiders gathered as the SuperPowers of CRM panel to offer their views on making CRM successful in the near term. The panelists included Lisa Arthur, vice president of services and CRM product marketing at Oracle Corp.; Dr. Martha Rogers, partner, Peppers & Rogers Group; Roger Siboni, president and CEO of E.piphany Inc.; Jim Steele, president of worldwide operations at Salesforce.com; Pat Sullivan, vice chairman, CRM division of Best Software; Dr. Patric Timmermans, director of marketing and product management for Baan CRM; and John Wurfl, director of CRM communications for SAP AG. CRM magazine Editor Ginger Conlon served as moderator. CRM magazine: Do you agree with the prophecy that by the end of 2005, 80 percent of today's CRM vendors will fold or be purchased by larger players? Jim Steele: It's clear that the industry can't sustain its past performance. There was a lot of money spent over the past two or three years on CRM systems that did not get utilized by the people who bought them. It's clear that the CRM companies out there today cannot continue [their negative growth]. So there's going to be lots of consolidation of players. John Wurfl: The CRM industry has a lot of potential for growth. We know that there are external factors like the economy that are really holding back overall investment levels. If the economy got back on track, we would see the CRM market grow, and then as a consequence, keep those smaller players in the market. Roger Siboni: We have way too many CRM companies in the marketplace right now, but it's hard to kill a software company. The way this thing is going to play out is that there are a whole host of companies that are just either out of cash, or have cut every single expense just to survive and that can last for only so long, and you just eventually run out of steam. What you'll see is some consolidation with the top-third tier of existing companies, the lower-end companies will consolidate to get more critical mass, and some of the larger companies will make some acquisitions to get more of a credible presence in the space. But the bottom two thirds will not get consolidated the way people think. They'll slowly get delisted or slowly go out of business, and they're not going to get acquired, because they've held on to stagnant assets. CRM magazine: Should integration be selective, point-to-point as necessary, or should it be holistic, trying to integrate every single piece of a company? Wurfl: I believe in holistic systems. If there's anything we've learned from the collapse of the dot.com industry, it was that a demand system that couldn't drive the fulfillment system was a key element of failure. So the fact is that business processes that are holistic in nature--meaning that they adapt themselves just as companies are now looking to adapt the supply networks that allow them to recognize all the interaction channels, reinforce the ones that are warranted, and dynamically respond to market needs and conditions. So this approach for holistic CRM is where the market lies. Martha Rogers: We don't have to choose between [holistic] or point-to-point, because both of these are exactly right, depending on the situation. The mistake we often see is that there's a dependence on the integration of the software, making us believe that that brings the entire company together in some important way. That culturally, it's going to automatically happen. It won't. It has to be integrated in a completely separate effort. If we [integrate technology] point-to-point, we've got to have best-of-breed where we need it to be. Then we've solved all of our problems in that way. That doesn't mean that we've solved the real integration problem. The biggest impediment to seeing CRM happen is that culturally, the integration doesn't happen across the organization--the ability of people and process to align no matter what the format is or what the architecture is of the software itself. So, we just need to make sure that the company is going to make it work. Lisa Arthur: It's not a black-and-white issue. For instance, Oracle takes an approach called Business Flows, which addresses process integration and the selective configuration of that flow. How do I want to do a click-to-order over the Web? How do I sell over the call center, but make sure that we book the order through order management? That approach allows selective configuration of how that process and how that product is used, and delivers on a holistic approach. But Martha is right: You have to have the culture to deliver on the implementation, and you have to have the use of the software. You have to simplify the processes and the technology underneath. Steele: Customers want simplicity and speed-of-execution, and not long, drawn-out implementations that cost multiple millions of dollars. They're not willing to spend that kind of money. Customers want to integrate to their key business processes--front end and back end, but not across the board. That's what adds the complexity and the cost, and that's why the traditional legacy-software sales have slowed down to a dramatic crawl. Siboni: There's a whole world of new technology coming out largely built on J2EE and open standards. .Net will eventually come along, and we'll have this whole world of Web services. Large companies will either embrace J2EE or .Net, then buy solutions from vendors that deliver aspects of an end-to-end solution that are open and interface with one another. CRMmagazine: Is CRM the last remaining competitive differentiator? Rogers: It depends on how we define CRM--I would agree strenuously, or I would disagree strenuously. If we define it as some personalized email, or maybe personalizing the Web site, or getting our CRM software installed, or any of those things, than I would say no, it's not. We can accomplish those things and be very disappointed in our results. But if what we do is put into place a capability wherein we can get customers to talk to us, we can learn something from them that our competitors don't know, and then we can act on that and remember it in the future, so we can act on it over and over. Then we can do something for that customer they can't get elsewhere, and I think that is a way to decommoditize, a way to overcome some of the most deadly forms of competition characterized by the 20th century. Therefore CRM can in fact be the most powerful source of competitive advantage. Patric Timmermans: I agree. I think there are also a few other areas that still are differentiators, like total supply chain integration, although some people have started calling that CRM as well. Pat Sullivan: If any company feels like CRM is the only thing that is going to differentiate them, I think they are in real trouble. Lots of companies have succeeded extremely well and don't use CRM. We've unfortunately over many years oversold this grand vision of CRM. CRM is a fabulous tool when used properly, and when used for things that are appropriate. To oversell CRM is a huge mistake, and making a statement like "CRM is the only way you are going to differentiate your company" is pretty foolish. Arthur: It's about broadening the definition of CRM beyond just the application, and about how CRM is utilized within the company. If you're a product company, are you differentiating your products and are you using your services to differentiate your product? If you're a services company, how are you delivering economically to that customer? It's not just the technology, but how you apply that within the organization to deliver to that customer. CRM magazine: It has been said that many executives still don't understand the business value of CRM. Is this true? Wurfl: Companies will blindly go into CRM projects with no idea beforehand about the types of measurable gains they wish to make. This is a display of ignorance on the part of executives, almost as if they have blinders on. That to me it's an indicator of a lack of understanding that CRM is about making value for yourself and your customers. Sullivan: I think people, all companies, all CEOs, all executives, intuitively do know the value of CRM. They know if they track their customers better, if they have information on their customers, they know if their salespeople have access to information that's in the back office and the front office, they know that if someone looks on the Web and they come through and recapture them, they know intuitively that that is extraordinarily valuable. The frustration has been that over the past seven or eight years companies have spent 30, 40, 50, hundreds of millions of dollars only to have none of that. So, the frustration lies in trying to digest the technology to get what they intuitively value. Siboni: There isn't a CEO who is securely in their job who doesn't understand the value of acquiring, retaining, and growing customers, and [who] absolutely understands every last metric of their financial statement. They totally understand the value of CRM. What they don't understand is the kind of work and discipline that has be brought to bear to have a successful CRM engagement. They do not understand how deeply and how profoundly it impacts their organization. And they're unwilling to put in place the kind of project management that will cause the transformation of some of the thoroughly entrenched silos in their organization to do the behavioral things to make a CRM project successful. So they all get it, they all understand the value of incremental sales, they can tell you chapter and verse what CRM will do for them, but they don't have the will to transform the organization. Steele: CEOs think they want CRM, but they don't know how to use it themselves. They want their organization to use it, but unless they're also a user, they really can't get the transformation in their business and get the visibility to their customers that they need. Arthur: CEOs understand the value, but I'm not sure their whole executive teams do or are willing to make the hard choices and sometimes give up their empires to destroy the silos that prevent the true value of CRM emerging.