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Superhero to the Rescue
Faster than a speeding implementation. More powerful than a banking CEO. Able to turn around failed efforts in a single strategy meeting. It's a superhero. It's a CIO. No it's The Consultant.
For the rest of the March 2002 issue of CRM magazine please click here
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Faster than a speeding implementation. More powerful than a banking CEO. Able to turn around failed efforts in a single strategy meeting. It's a superhero. It's a CIO. No it's The Consultant. Consultants are becoming the Clark Kents of the CRM world. They're quietly building CRM practices, with big plans to don their red capes and swoop in to help enterprises avoid the perils of failed implementations. With the CRM industry under pressure to make good on its promises to improve customer satisfaction and deliver a solid return on investment, big consulting organizations are becoming the glue that holds a CRM plan together. From setting initial expectations to choosing the right vendor partners to preparing change management, the se consultants are armed with business management and technology strategy know how and are more often the critical component in a CRM plan. Enterprise project managers, top vendors, and analysts agree that consultants' input is essential to any CRM strategy. In our view consultants are the key to a successful CRM implementation," says Simon Walls, vice president of strategy at PeopleSoft Inc. "They are absolutely essential. It just wouldn't get done without them." Enterprises reevaluating their CRM initiatives have seen their CRM systems morph from an ideal solution to worst-case scenarios in which the implementation has become either an ineffective solution or a dead-end opportunity lacking an adequate return on investment. Enter the consultant. Looking to bring clarity to this fuzzy CRM landscape and to resuscitate failed CRM strategies and implementations, consulting organizations and systems integrators are coming to the rescue, armed with their own prescription for what seems to be the CRM headache. Companies such as Accenture (formerly Andersen Consulting), Cap Gemini Ernst & Young, Deloitte Consulting, EDS Corp., IBM Global Services, KPMG Consulting, PricewaterhouseCoopers Consulting, and scores of other strategy and technology firms and systems integrators have over the past year honed their CRM practices to sidestep this CRM backlash to the point that they are now the critical piece to success.
Touting refined go-to-market initiatives, these consulting organizations are targeting the global Fortune 1000 companies and mid-size enterprises that need improved business strategies, CRM tools, analytics, and marketing campaign management plans. As they move forward, large consulting organizations and integrators are offering tailored approaches to CRM, each with its own methodology, which includes varying degrees of strategy, business process reengineering, and market expertise, as well as strategic alliances with vendors of CRM systems software and point solutions. Can't Do It Alone In a market where general IT spending has contracted and where even the top consulting organizations have felt the pinch, the CRM practice is the fastest growing practice within many consulting organizations. For one, Accenture's CRM practice in fiscal 2001 garnered $2.4 billion in revenue. A recent study by Accenture found that 38 percent of 150 high-level executives at Fortune 1,000 firms believe that an investment in their CRM systems is a priority this year. And, with a range of forecasts that put spending on CRM software and services hitting between $12 billion to $20 billion worldwide by 2005, this will be a lucrative and growing practice for consultants, because many enterprises can not take on these projects by themselves, says Kelly Spang, senior analyst at Current Analysis, a research firm based in sterling, Va. "Enterprises are looking for someone who can fix a particular business problem. The consultants are helping customers look at their business processes and how CRM is fitting in it, and they have to illustrate the ROI," Spang says. In fact, a study by PwC Consulting found that many companies have not been able to master their CRM efforts because of the lack of integration of CRM initiatives to the back-office systems. This creates tremendous opportunity for these consulting companies going forward. Many companies admit they cannot go at it alone to tackle their increasingly complex CRM initiatives. And the bigger the company, the greater the role of the consultant. Financial services powerhouse Morgan stanley, for one, plans to spend up to $2.6 billion on its IT efforts this year and will be more aggressive in its CRM investments. So the company will turn to Accenture, Deloitte Consulting and PwC Consulting, says Guy Chiarello, managing partner and chief technology officer at Morgan stanley. "We need [consulting organizations]. We are depending on them for developing the right business strategies to implement the right software to help us stay competitive," Chiarello says. Even smaller consultancies, including Akibia, which solely focuses on CRM, are dealing with more realistic customers. "Customers want quicker implementations. ROI is no longer sufficient. Customers are now looking for a specific outcome of CRM projects. This is a new thing," says Adam Honig, CEO and president of Akibia. In many ways consulting organizations are now looking at CRM not from a functional or technology solution point of view as was done in the not so distant past, but more from a transformational approach, says Adam Klaber, global leader of the CRM practice at PwC Consulting. No matter how good it is, software alone is not the key to a successful CRM initiative. Many companies are finding they still cannot put their arms around their CRM activities, thwarting a wholistic use of CRM, Klaber says. "There are no magic bullets in transforming large organizations to become customer centric. The end-user clients do not have the inside resources," he says. While Klaber is optimistic about the current state of the CRM market, he admits there have been problems in the past. "I think there is a much healthier CRM market today than there has ever been, because we are dealing with more well-thought-out strategies versus a bunch of people quickly moving in to do some quick things to get some quick wins," Klaber says. Companies are now struggling with new and existing legacy CRM packages that are no longer maintained by a vendor. These systems are not integrated into the back-end operations, Klaber says. Despite the current soft economic climate, enterprises are looking to get a better grasp of their CRM systems. Consulting organizations and systems integrators are positioning themselves as skillful agents primed to optimize a customer's CRM engine that may not be firing on all cylinders. "We are taking more of an optimizer role. We are taking the investments that have been made to date and optimizing the value [our clients] get from that and have that tuned to the business processes," says Dan Schwartz, vice president of CRM and the Business Intelligence practice at Plano, Tex.-based EDS, which partners with other big consultants on certain projects. EDS's CRM practice last year was involved in more than 400 CRM projects. Similarly, other consulting firms, such as KPMG Consulting, are taking the same point of view regarding their role as an optimizer. "A lot of the work we are doing is around the contact center and channel integration to move towards a self-service model. What we are doing is optimizing what is there to help customers optimize their business," says Bruce Culbert, senior vice president of the Global Supply Chain Management and CRM practice at KPMG Consulting. But these big consultancies have not proven invincible to date. Many industry experts point to them as part of the cause for the high CRM failure rate and low satisfaction among customers. Essentially, all of the top CRM vendors, along with the big consultant firms, have been accused of delivering lousy CRM implementations, giving bad advice, or designing pie-in-the-sky strategies that can not be implemented or fail to meet overhyped expectations. In fact, various analyst reports put CRM customer satisfaction at the low end, with some pegging the failure rate at about 75 percent. And the immediate future does not look much brighter. GartnerGroup, a stamford, Conn.-based research firm, anticipates that customers will rate more than 50 percent of all CRM implementations "failures" through 2006. Defending themselves, consultants say much of the current problem with CRM dissatisfaction is historical. Panicked brick-and-mortar companies brushed aside sound business strategies from consultants in their quest for CRM technology to fend off the then-threatening start-ups during the go-go years of the dot-com boom. "A lot of people didn't do business cases grounded in fundamentals or set expectations for management," says Dan Hirschbuehler, lead partner for PwC Consulting's CRM ACCEL (Architecture for Cross-channel Customer Experience and Loyalty). But Steve Berez, vice president of information technology and e-business at Bain & Co., a Boston-based strategy firm, blames the Big 5 consulting firms and systems integrators. "Too many firms have purchased CRM software solutions without a clear linkage to business strategy," Berez says, adding that consultants are responsible for it. The large consulting firms and systems integrators, Berez says, face a tough challenge ahead to avoid getting shunned by doubting customers. "The biggest challenge facing systems integrators is overcoming the customer skepticism raised by visible examples of large CRM projects that yielded lackluster results at best. Not every firm requires a full CRM suite," he says. Paul Cole, vice president and global leader of the CRM practice at Cap Gemini Ernst & Young, agrees, adding that strategy alone is not the key, but is just a part of the overall consideration in any CRM initiative. "We get elegant strategies from the strategy house. They are elegant, but cannot be implemented," Cole says. "It's a balancing act between technology and strategy." And the bridge between the two is the consultant. During the past 12 to18 months, these large consultancies have been working to hone their CRM practice methodologies, updating best practices and creating new areas to bring solutions to such as marketing. Accenture, for instance, has spent the past year or so pulling together different pieces of a mosaic comprising strategic alliances, proprietary assets, and unique capabilities to create a stronger go-to-market strategy. "We think we are the only firm that is positioned to bring the client end-to-end value creation from strategy through implementation and business operations," says John Freeland, global managing partner for CRM worldwide at Accenture. Accenture's CRM practice has created a new area to target: marketing. That is an area that has not been focused on enough by the large consulting firms, says Christopher Fletcher, vice president and managing director of CRM at the Aberdeen Group, a research firm based in Boston. "Not that many integrators have focused on marketing automation. They have not jumped into it quickly enough," he says. The new practice area at Accenture will target chief marketing officers. It will show them how to raise their ROI in marketing, especially when it comes to global organizations tying their CRM systems to multiple products in multiple geographies, Accenture's Freeland says. Although CRM gets a lot of hype, in reality most enterprise firms are still in the "stage-two phase" of CRM. They have made sizeable investments in big data warehouses and are looking to deliver the same level of service through multiple channels, Freeland says. The next stage will be when organizations bring CRM to marketing thus transforming their marketing functions, he says. "Customers are getting more sophisticated in terms of how they segment their customers, not just in past buying behaviors, but [also] in being able to predict needs better," Freeland says. Moving forward, Accenture is focused on alliances with analytics firms to support its CRM marketing area. Tailor Made For its part, PwC Consulting's Klaber views the company's CRM strategy as a business strategy. The anchor is its CRM ACCEL solution, which culls knowledge and best practices from 850 of the CRM implementations the company has done. "We like to think of ourselves as a business integrator to help manage the expectation cycle and to understand the business component and the implementation component," Klaber says. The CRM ACCEL Solution is based on an architecture that uses a Sun hardware platform, Siebel Systems software, BEA Systems application server and portal framework, and Avaya's multichannel communications solutions and services. The key to ACCEL is its implementation integrator, an architecture that integrates the supply channel, providing front- to back-office unity. Others, such as KPMG Consulting, like to think of themselves as CRM granddaddies. Its 12-year-old practice started as Customer Care and Sales Force Automation before the term CRM became popular. Just last July it combined its CRM practice with its Supply Chain practice under one roof. "We think there is a natural connection between supply and demand," says Culbert, of KPMG Consulting's CRM practice. Across the business landscape, Culbert says, customers are complaining about "random acts of CRM," because marketing and sales are often not integrated. "Two of the main issues we have seen is the failure in the integration and change management," he says, adding that the strategy piece is central to the company's CRM offering. Last July KPMG wrapped up an implementation of a Clarify package along with integrating a number of disconnected systems for Boise Cascade Corp. The Boise, Id.-based office and building products firm chose KPMG Consulting for the system integration work, and Peppers & Rogers for the marketing strategy, says Scott Williams, director of marketing and strategic initiatives at Boise Cascade. "We needed outside help; we couldn't do it ourselves," says Williams, adding that the CRM initiative won a Gartner award. Challenges Ahead Given the sea change that is occurring, it is no surprise that a recent research report by AMR Research Inc. says that while the IT market is flooded with consulting and integration firms, the success of the engagement still depends on the team of people assigned to the project. Moving forward, that means the large consulting companies must stay sharp to avoid the CRM backlash, says Steve Pratt, Global Leader of the CRM Practice at Deloitte Consulting. "We don't make our money by putting 500 greenbacks on projects. Our economic reality is putting senior consultants to work on projects," Pratt says. "Many CRM projects failed to meet expectations. What we are doing is, we are optimizing the investments made by our customers," Pratt says. His practice teams on projects with IBM Global Services, EDS, and Roundarch, a subsidiary and joint venture of Deloitte Consulting. Cap Gemini Ernst & Young's Cole says his practice has an approach called CRM strategy Alignment. "Our space is the CRM transformation area. We are not creating grand strategies. We are building business cases," Cole says, adding that CRM is more about saving money than making money. While acknowledging past failures as well as the challenges ahead, these big consultants are optimistic regarding the future of CRM. "I believe that companies that get it and stick with it realize the benefit. The market for CRM is still vibrant," Cole says. Vibrant, yes. But still fraught with challenges given that IT spending will be conservative and that consultants will have to work harder to convince C-level executives to continue investing in CRM initiatives. Yet managers need not fear the complexities of implementing CRM. Because when an initiative stalls, consultants are ready to come to the rescue.
PwC Consulting Official name of CRM practice: CRM Practice Leader: Adam Klaber, Global CRM Partner Practice started: 1994 Number of CRM consultants: 3,600 Total Company Revenue (for PwC Consulting): $6.6 billion in fiscal 2000 CRM Revenue: $1 billion-plus in fiscal 2000 Top CRM customers: Works with 40 percent of the Fortune 500 in the U.S. and more than 55 percent of the Fortune 100 U.S. companies. Total number of CRM projects: 5,000
Deloitte Consulting Official name of CRM practice: Customer Relationship Management Practice started: 1995 Practice Leader: Steve Pratt, Practice Leader Number of CRM consultants: 3,500 Total Company Revenue (for all Deloitte Touche Tohmatsu's professional services including consulting, audit, tax, and other): $11.2 billion in calendar year 2000 $12.4 billion in calendar year 2001 CRM Revenue: $686 million in calendar year 2000 $854 million in calendar year 2001 Top CRM Customers: Barclays, Bayer, Cable & Wireless, CIGNA, Gateway, General Motors, Morgan stanley Dean Witter. Total number of CRM projects: 1,540
Cap Gemini Ernst & Young Official name of CRM practice: Customer Relationship Management Practice Practice Leader: Paul Cole, Global Leader Practice started: 1996 Number of CRM consultants globally: More than 3,500 Total Company Revenue: 8.5 billion Euros in 2000, pro forma CRM Revenue: N/A Top CRM customers: Airbus Industrie, BT Cellnet, Virgin Trains Total number of CRM projects: More than 500
KPMG Consulting Inc. Official name of CRM practice: Customer Relationship Management Solutions Practice Leader: Bruce Culbert, senior vice president, Global Leader Supply Chain, Customer Relationship Management Solutions Practice started: 1991 Number of CRM consultants: More than 1,250 Total Company Revenue: $2.369 billion in fiscal 2000 $2.856 billion in fiscal 2001 CRM Revenue: Between 15 percent and 20 percent of global revenue Top CRM customers: Anritsu, Boise Cascade, GE, Microsoft Number of CRM projects: 350 in the past 18 months
Accenture Official name of CRM practice: Customer Relationship Management Global Service Line Practice Leader: John Freeland, Global Managing Partner Practice started: Entered the customer care service industry with the launch of its call center and sales force automation practices in 1993 and 1994, respectively. In 1996 these groups were combined into the CRM practice. Number of CRM consultants globally: More than 5,500 Total Company Revenue: $9.75 billion in fiscal 2000 $11.44 billion in fiscal 2001 CRM Revenue: $1.28 billion in fiscal 2000 $2.46 billion in fiscal 2001 Top CRM customers: Advance Bank/Dresdner Bank, Alactel, GE Capital Corp., Mercedes-Benz AG, Microsoft Corp., Texas Instruments Total number of CRM projects: More than 1,000
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