A Reality Check for CRM
It’s gut-check time for Customer Relationship Management. And I don’t only mean for the marketplace that provides the software tools and infrastructure pieces that help users accomplish superior service. It’s a tough time to be on either side of the business/vendor equation. Heck, it’s a tough time to be a customer.
Why? Because all parties are discovering that the success of CRM rests not in relatively simple customer-contact tools, but in a vastly more complex web of interdependencies that permeate nearly all areas of the organization. And that web is simply not woven yet.
“One of the key issues is the lack of integration between CRM systems and other knowledge-enabling technologies that are required to make it more effective for organizations to find the right information in the right context, and link that information to the correct domain expert who can solve the customer’s problem,” states Andrew Pery, Chief Marketing Officer & Senior Vice President, Hummingbird Ltd.
CRM “systems” themselves may not provide the entire holistic solution presented by the customer experience (see “CRM—It’s Just Good Business” on page 4), they can be helpful in launching and triggering the many various events that ultimately make up a successful customer encounter. But this series of events can occur only if all the systems downstream have the proper levels of integration. And it’s doubtful, as we’ve often heard during these conversations with the marketplace, that all those linkages are fully available to any but a small handful of extremely well-run organizations. For those who do not quite fit that category, will the cost necessary to accomplish a full level of integration make it prohibitive to consider? (More on that later, during the part of the conversation with Dan Vetras, CEO of Talisma Corporation.)
Bottom line: the challenges surrounding customer interaction and service are much more complicated, and fundamental, than many of us have been led to believe. I mean, all you need is a Web site with a FAQ page to solve the service issues ... And a call-center agent with a script will satisfy all those pesky customer inquiries that don’t hit the self-serve site ...
Right? Yeah, sure. And excuse me while this monkey flies out of my butt.
The Big Disconnect
One of the annoying technical issues facing CRM is this: The initial contact with the customer may be database-driven—customer metadata such as order history, account status, etc. drives the initial process—but the remainder of the experience is distinctly content-driven. And the course of the experience is unpredictable and unstructured, by definition. How can you predict what a customer will want to know?
Do most organizations have processes in place that seamlessly and flawlessly transition from the data-centric to the content-centric? There’s that monkey again. Finding the correct thread of documents and other assorted information-types that apply to this particular customer’s unique set of needs , at this particular time, is in no way a core capacity for most organizations.
Document management, thought by many to be deeply saturated in the largest companies, isn’t anywhere near that. Oh, sure, most companies have decent document management for the legal department, or maybe HR. Some information-intensive research and development departments (in pharma, for instance) are pretty well tricked out. But the broad deployment of DM across all necessary repositories and touch-points that can crop up in one of those unpredictable customer encounters is in no way common today. And even if the doc management pieces were in place, could most organizations take the NEXT step in the customer-experience cycle and link that customer with the correct domain expert to solve his problem quickly and satisfactorily?
I’m posing a lot of questions, most of them rhetorical and dripping with cynicism and doubt. I know. It’s a gift. But the purpose of this exercise (and I do have one) is to point out, dear reader, a trend that is gaining respect and credence among successful deployers, and seems like a likely market direction on the vendor side. It’s convergence. It’s a common term for analysts and editors to toss around, but the future of these customer-lifecycle systems depends on solutions providers who can create linkages between systems that are currently boxed into proprietary cul-de-sacs with no reverse gear.
The first challenge toward accomplishing this is to buy solutions that have a commonality in terms of their basic design and interoperability. That means that an unacceptable option for many organizations is to throw away many of the systems they have spent thousands to buy, and many thousand more (probably) to deploy, integrate and maintain. That won’t happen, says Andrew. “They will preserve their existing investments. This is why emerging standards such as Web services are so important...investment protection.”
Of all the enterprise software purchased since 1998, less than 50% has ever been deployed. “The promises of the smart enterprise suite, and an integrated platform have a lot of allure, but the key preoccupation of IT right now is efficiency improvement, consolidating existing infrastructure (including some of this under-utilized software inventory) and risk mitigation,” Andrew points out. “So Web services will eventually become very important to mediate between all these applications much better than they do right now.”
It works for the vendor side as well. An applications infrastructure based on a Web-services API will allow vendors a less-expensive and better way to expose their proprietary hooks to other applications. For those who are creating a family (“suite”) of applications, the cost has been largely the time necessary on the development side (demanding either homegrown upheavals in vendors’ development directions, or has involved many acquisitions of ISVs that likewise disrupt and complicate the development effort). Attempting to solve this linkage challenge resulted in the portal movement, of course, which attempted to integrate applications in the “thin veneer,” as Andrew calls it, of the glass of your monitor’s screen. “It’s a loose integration,” says Andrew somewhat derisively. “Linking these applications at the portal level does not mean there is actually application-level integration among all these components,” he points out.
Yet, economic reality will preclude any massively disruptive changes in information management, Andrew believes, for the foreseeable future. And this is good news for the CRM market. Because of this reluctance to expend energy on “new and disruptive” technology during this time of moderated growth, organizations will be more likely to work on cleaning house, working toward creating systems that emphasize customer retention over gaining new customers, and on deriving new value from existing customers. “After all, a 5% increase in customer retention can increase operational profitability by as much as 25% to 90%,” reminds Andrew. Those are numbers that have a comforting effect on today’s IT and business professionals.
What To Do When It Costs Too Much
For Talisma, responding to the pressures of the current environment demands nothing short of a revolution in the way software is created and delivered. “We’re hitting the apex of how you can re-invent yourself as a software business,” states Dan Vetras, CEO of Talisma Corporation. “You can’t downsize anymore. We’ve cut the fat, we’ve cut the bone. Now we’re hitting marrow. Where can you go next?”
Dan is one of those through-and-through, Central-Casting CEOs. He sees his business almost as a factory, and it’s his job to create the most efficient and competitive damn factory you ever saw. They recruit from the best technical schools in India in their efforts to build software that can be developed and delivered faster and better than anyone else. So in his case it’s not so much a matter of “being in the CRM” or whichever industry segment. They just want to be able to re-invent themselves at will, and this is the means by which Dan has chosen to do so. CRM and call center happens to be one of the areas where Dan thinks his software factory can make a difference.
Just as software development is trending toward a different (off-shore) model, software deployment is also changing to respond to economic realities. The days of the 800-pound software organization moving in and setting up cots in your cubbies for months on end are going or gone. Which may be why some of the largest enterprise application stars of the past aren’t shining quite so brightly right now.
The problem is: the inability—due to out-of-control costs—for your company to slowly and methodically develop business automation processes can be in direct conflict with your goals. “The big systems integrators want million-plus dollar engagements. The customer wants cheaper and faster,” says Dan.
What do you risk in a quick-hit, thank-you-ma’am engagement, where the nuances and interrelationships among your information repositories MAY not be completely addressed? You miss hitting all the touch-points we talked about above with Andrew. It’s a stressful conflict playing out in every enterprise deployment going on right now. Not only is knowledge-based customer relationship more important than ever, it is also harder than ever to achieve.
The successful trend, says Dan, in deployment is to find less-costly ways to deliver and implement software. Dan’s way is to make it less expensive at the front end to build, and then use those same economies (a bench of professional services people also based in India, in this case) on the deployment cycle. Dan says he can basically give the professional services away FREE, because of the cost advantages he has on the “software-building” side of his business.
That’s one way to do it. Another approach gaining momentum is, of course, a services-based Web delivery model, where the application is pay-for-play and integration costs are reduced
Either approach seems to have its merits, and both are a long way from being widespread, standard or trivial to accomplish.
That’s the reality for CRM.