What's next for CRM? In the past six months, Microsoft has introduced new technology for everything from customer relationship management to business intelligence. What does it mean for your company?
You Expect More
To start, we have to acknowledge a significant but unspoken consideration that already exists among companies like the ones for which we consult. Namely, many a customer is caught in the market shift from first-generation, monolithic CRM suites to hosted CRM applications. However, recent hosted CRM reliability issues have companies rethinking this approach.
The shift away from monolithic solutions from the once-dominant vendors took place as companies recognized these solutions were not relevant for every situation. As hosted solutions came to the fore, problems with performance, security, integration and service reliability proved that this alternative wasn't right for everyone, either. As a result of their experiences with CRM, many executives are now asking, "Do large deployments really have to be that expensive and complex? Do hosted solutions have to compromise reliability and security?"
At the same time, companies expect to measure even greater benefit from CRM. Vendors are promising "one-stop" shopping for all points of customer contact, resulting in a single view of a customer across sales, service, call center and marketing disciplines. Embracing single-vendor solutions requires significant investment, so it's no wonder adoption is hardly widespread. But even if companies were to migrate to a single CRM platform for all their customer interactions, the end result is yet another silo--one that holds more comprehensive customer information, to be sure, but nevertheless one that doesn't do much to integrate these data into the rest of operations.
This is in marked contrast to the value that people are starting to understand they need out of CRM today: visibility across operations. Instead of function-specific views of each customer, IT and business decision-makers want visibility into the full opportunity lifecycle, from sales lead to product delivery, including related call center activity after the sale. How did a new business opportunity conclude--and how quickly? Why did it resolve in the particular way that it did?
This insight is more than traditional CRM systems have provided, and after years of promise, expectations are high.
Consider The Great And Mundane
Given that companies understand and want more from CRM systems, what's the number one consideration on our list?
It all starts with data.
Data come first, for the simple reason that in the absence of a single system that traverses multiple functional areas, you can be sure that data are being entered at multiple points and muddying your picture of your customer relationship. These data have to be merged, duplication has to be eliminated and data entry points must be limited to improve the quality of data moving forward.
Let's face it--most organizations don't take full advantage of their existing data. Your call center software generates valuable information about hold times, call volume and so forth. But it won't tell you whether faster call resolution was due to great service or because the customer exchanged e-mail with another department prior to making the call. It may not tell you that callers hung up in satisfaction or in frustration--those data are captured in your CRM system or even in your ERP system, which reflects account closures. Insight into the full customer lifecycle still eludes most organizations today.
Which brings us to the second consideration: CRM and add-on CRM business intelligence modules provide an incomplete picture, as do add-on ERP business intelligence modules.
Say a client's order size drops from historic levels. That information in the ERP system, coupled with relationship details from the CRM system, would become insight for better understanding. A spike in certain types of service calls would be more revealing in the context of ERP data that could indicate a part is now sourced from a new supplier. Even better, this trend insight could lead to a repair/replacement offer to other customers before they report part failure.
The true value lies in the integration of CRM and ERP information to provide a complete picture of a customer relationship.
Seek--And You'll Find--More Advanced Technology
From our experience, even where custom integration has been undertaken to unite data silos, advances in new technology should give companies pause to consider more powerful functionality. Here are some of the capabilities companies can look for--without expecting a giant price tag--to prepare for more sophisticated customer insight:
* Sixty-four-bit processing, which makes scalable, high-performance CRM business intelligence possible--at an affordable price, as 64-bit capacity is becoming a commodity;
* Built-in replication capabilities for near real-time change from operational databases;
* Integration capabilities that can provide extract-transform-load (ETL) support automatically and cost-effectively;
* Sophisticated and scalable analysis functions for slicing and dicing very complex data sets; and
* Presentation of a unified data model for advanced analysis as well as operational reporting.
Historically, most firms have used point solutions for business intelligence. These point solutions work fine within their areas, but in aggregate, they result in a higher cost of ownership due to ongoing maintenance fees and the higher price tag on the specialized expertise they require. Dependence on point solutions also seems riskier, given the pace of vendor consolidation in both the enterprise software and business intelligence technology categories.
Coupled with evidence that enterprise reporting architectures are becoming increasingly prevalent, the list of system criteria for next-generation customer insight also should include:
* Broader BI capabilities, integrated reporting and business scorecard management capabilities that support development of active rather than static reports; and
* Technology that does not require specialized programming or other expertise.
We've found that the latest Microsoft database and CRM technology addresses these "must have" capabilities with the benefits of a common technology stack that takes advantage of 64-bit processing for crucial scalability. For example, we just completed a proof-of-concept in which Microsoft SQL Server 2005 running on a four-way Intel multi-core server outperformed a customer's legacy installation.
In addition, Microsoft SQL Server 2005 and Microsoft Dynamics CRM are both built on the .NET application development platform, so IT staff can apply their .NET skills to both types of technology instead of just one or the other. (For that matter, because the .NET development environment can be capitalized for optimization of IT staff, software development and infrastructure.)
New Microsoft technology also tackles a few things that you might not otherwise consider. How will your users use intelligence and reporting tools in their day-to-day work? By our unscientific estimate, about 95 percent of all analytics data wind up in a spreadsheet.
Things like easy integration with productivity applications can make a big difference in how much use employees get out of CRM and BI technology--and how much insight you collect. Microsoft SQL Server 2005 includes Analysis Services so that you can perform customer segmentation and identify customer trends, and then publish them using the database software's Reporting Services function as well as supporting native access from Microsoft Office system software.
SQL Reporting Services data are "live" in the spreadsheet, so that any changes made to the data update related documents. Microsoft CRM takes advantage of SQL Reporting Services and provides a link between CRM data and reports that are "living" documents created in Microsoft Office applications. That's especially relevant for executives who need up-to-date, accurate customer information but don't need to use the full capabilities of the CRM software.
Don't Make Choices You Don't Have To Make
Insight raises the question of data ownership, since CRM systems aren't the sole repository for information relevant to customer insight. Customer data integration (CDI) and master data management (MDM) are two sides of the same coin that has been spent on this issue. As integration becomes a priority, software vendors may present the issue as a decision companies must make to buy or build their own data management solutions. This "choice" is an important consideration, but not for the reasons you might think.
From our perspective, this "choice" bears the same hallmark as the decision to buy or build portals during the Internet boom in the late 1990s. Ultimately, a portal is an exercise in integration. By its very nature, integration originates from within a company--it's not a construct you can impose from the outside. That's important to keep in mind when considering how to approach MDM. Note that over time, the portal functionality that was sold on its own has been subsumed by platform vendors and application vendors such as Microsoft, IBM and SAP.
Another "choice," the one between on-premise and hosted enterprise applications, is becoming less absolute. Sure, on-premise deployment gives you control over the CRM system as well as data integration, data ownership and security. On the other hand, hosted CRM spares you the expense of deployment and maintenance. In some cases, divisions of large organizations have chosen this option--bypassing IT and ceding control to the solutions provider--because they were desperate to start tracking customer relationships immediately.
But there's another option: managed services, which combine the best of control and cost-effectiveness. Some of our clients have determined that CRM is strategic to the organization but that staff skill sets won't keep pace with the system. A managed service can address the cost-efficiency issue as well as provide the strategic capabilities. Some firms recognize the benefits immediately: staff who serve as an extension of their IT department, who don't have a learning curve, and who even may be available to offer round-the-clock service that in-house staff would be otherwise unable to provide.
The managed service option also keeps open the possibility of transitioning to an on-premise--i.e., owner-operated--system. That skilled staff is already on-hand to help make the shift, something a hosted service provider cannot offer.
Look Beyond Customer Insight
The last consideration is empowering employees to make good decisions. We've seen reports on the "danger" of putting too much information into the hands of users. But we're more likely to talk with clients about embedding intelligence into their business processes and operations. For example, an increase in helpdesk reports of a particular type of incident might trigger an automated alert embedded with relevant data, advising sales representatives that updated user manuals are available. Sales below a certain threshold or trends in a customer's portfolio of holdings might prompt a change in workflow or other actions.
Call it next-generation customer insight, or smart business intelligence, or whatever you like; with systems to capture data and the capabilities to do more with that information, what's next for CRM will depend on defining what "doing more" means. Reports could become living documents that are never outdated; changes in data might prompt automated processes--even technology--to adapt accordingly. Could there be something more than customer insight, as well?
Given what we've seen in our work with new Microsoft CRM and database technology, and given companies' great expectations for customer relationship management, we recommend companies consider a vision that's more ambitious in its goals and broader in scope.
Today's advanced understanding of the complexity of customer relationships, coupled with the latest technology, make it possible to strive for and achieve something more. We call it customer intimacy, a state of insight and technology-driven anticipation and responsiveness that makes it possible to forge bonds of partnership. "What's next" for CRM may be the most important consideration of all.
Larry Barnes is director of Business Intelligence for Avanade. He helped lead Microsoft's business intelligence initiative and co-authored Data Warehousing with Microsoft SQL Server 7.0 by Osborne Press. Larry is a founding member of the Open Database Connectivity (ODBC) specification committee.
John Yaggie is the U.S. CRM practice director for Avanade. As a practice director, John has responsibility for sales, business development and delivery of Microsoft CRM solutions for Avanade's enterprise customers. John has spent the last 10 years working with customers to help them design and build highly integrated CRM systems, including complex call center solutions, contact center analysis, optimization and custom CRM applications.
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By Larry Barnes and John Yaggie