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Constituent Relationship Management Systems: A Primer for Public Managers.

The author would like to thank the following individuals for their assistance with this article: JOSE GARCIA, Public Sector Vice President, Oracle Corp; CARI PEABODY, CRM-Solutions Specialist, Oracle Corp.; KENNETH MUNSON, Director, Public Sector Industry Strategy, PeopleSoft; BEVERLY GIDSON, General Manager of Siebel ePublic Sector; CHRISTINE VIERA, Manager, Industry Solutions, Siebel Public Sector.

This article focuses on Constituent Relationship Management (CRM) technology for public sector. It is based on interviews wtih leading vendors in the CRM field.

Constituent Relationship Management, (CRM, also known as Customer Relationship Management) is a class of software designed to provide governments with the ability to manage their constituent relationships consistently, effectively, and through a variety of channels. As with most technologies, CRM traces its genesis to the private sector where it was designed to both streamline interactions with the less frequent, lower-volume customers and realize even greater revenues from core customers. This technology is now being adapted to the public sector by leading ERP (Enterprise Resource Planning) and best-of-breed vendors.

The Makings of a CRM System

The first concept critical to an understanding of a CRM system is the underlying model. Basically, constituents are able to contact the government via a variety of channels, contact information is logged and analyzed and an effective response is generated. The CRM system is integrated with back-office systems so that the information recorded through the CRM system can be integrated into other business processes. For instance, an individual might contact the government with an inquiry regarding a position opening. This information could interact with human resources (HR) systems to log potential applicants, gauge effective mediums for advertising, and determine commonly asked questions. This model is illustrated in Exhibit 1.

As Exhibit 1 demonstrates, constituents can contact the government via a variety of means, or channels. This information is recorded and analyzed. This analysis is not limited to post-contact analysis, but can provide the government's agents with current information on the constituent and the constituent's prior contacts with the government as the current contact is in progress.

Features of Typical CRM Systems

CRM systems contain the following basic features or applications. These applications and features may be developed to differing degrees among the different CRM vendors.

Internet Integration. CRM takes government use of the Internet beyond simple broadcasting of information or even routine interactions and transactions. CRM attempts to integrate the Internet with the government's key business processes to make the Internet a totally viable means for the constituent to transact all business.

* Full Service. The CRM system receives incoming e-mail and directs it accordingly. Also, the system keeps constituents informed of developments with their request. CRM systems are increasingly making use of Internet portals: Internet interfaces where the government's Web site is effectively customized to meet the constituent's specific needs.

* Campaign Management and Outreach. The system can take a more proactive approach to informing constituents of relevant information via customized Web or e-mail communications. This also could be effective for fundraising campaigns.

* Transactions. CRM systems promise to integrate on-line purchases with back-office functions. This, coupled with the self-service aspect of CRM (the constituent manages their own account) helps to streamline government e-business significantly. Fee-for-service programs that are faced with some degree of substitutability from private-sector goods, such as recreational programs, can especially benefit from CRM through more effective signing-up of participants and tracking of preferences.

Call Center. CRM provides a centralized collection point for all constituent contacts that occur, providing accurate, timely, and consistent service.

* Multiple Channels of Interaction. Citizens can contact the government through a variety of means including phone, Web/email, field personnel, and walk-ins.

* Knowledge Base. A central repository of information needed to resolve constituent contacts is kept by the system, allowing government representatives to answer a wide variety of questions in an expedient and accurate manner.

* Case Management. Government representatives are kept informed of prior contacts with the constituent, outstanding issues, accounts, and other relevant information, all live during the contact.

* G2C and G2B. CRM applications are capable of both citizen contacts and contacts with businesses (suppliers).

* Work flow. CRM routes contacts according to user-defined rules, including escalation procedures.

* Work Orders. Work orders can be issued based on constituent contacts. Constituents can initiate work-orders via the government's Web site, as well.

Integration with Field Operations. This is the latest hot area of CRM functionality, which allows people working in the field access to the CRM system.

* Mobility. The use of mobile electronic devices such as laptops, PDAs, and even cell phones to access the CRM system is a hot, new functional capability for CRM. Of course, the comprehensiveness of the access will vary with the capabilities of the device. For instance, cell phones would not be as effective an interface as a PDA.

* Dispatch. Using workflow and work orders, service crews can be dispatched to fulfill constituent needs.

Analysis. Information is of no use unless it can be used to support the organization's decision-making process. CRM systems provide the means with which to analyze data collected through the system and support management decisions.

* Performance. Government performance can be monitored for quality for different types of contacts, showing where the government is doing well and where improvement may be needed.

* Constituent Profiles. Constituents can be analyzed so that managers segment the government's client base in order to deliver programs more specifically tailored to meet the needs of various groups.

* Integration. In order to perform a complete and accurate analysis of constituent satisfaction and needs, it must take place in the context of the entire organization. CRM systems are integrated with back office systems in order to allow a more comprehensive view of the organization's position to be achieved.

Why CRM Is Important

Since CRM in the public sector has been adapted from private-sector technology originally designed to enhance sales, it is reasonable to ask what CRM applications have to offer the public sector. The short answer is that CRM has the potential to use technology to coordinate the resources of government to provide timelier, more consistent, and higher quality service to the citizens, as well as give citizens greater opportunity to interact with their government. Specifically, there are a number of factors that make CRM important to the public sector.

Public Expectations. CRM is a rapidly expanding technology in the private sector that promises to greatly increase the level of customer service clients receive. This will, in turn, raise the bar for government agencies as constituents come to expect similar service levels from government. This is especially true in the case of the Internet, where the transformation to an integrated and customizable web site environment will be especially visible. Specifically, citizens expect "one-stop shopping." They want to be able to transact all of their business right away and do not want to be shuffled from department to department. They also want to be able to choose the means of interaction, be it phone, Web, or in person. Finally, citizens expect government representatives who are thoroughly aware of government processes and program offerings.

Competition. Governments face many forms of competition. Politicians want to stay in office, while challengers wish to unseat them. Jurisdictions compete for businesses and residents. Departments compete for budgets. Maintaining good relationships with constituencies and meeting the expectations defined above are critical for success in any of these forms of competition.

Technology. Technology is changing rapidly and the Internet is becoming an evermore pervasive and integral part of citizens' daily lives. Government must adapt to use technology effectively or face the disapproval of its constituency.

Repairing the Disconnect. It is well documented that the post-Watergate era has been characterized by a marked distrust of government, which in turn, has led to a disconnect between citizens and government. CRM can help to reestablish this link by facilitating citizens' direct involvement with government and demonstrating government's ability to respond.

Improving Efficiency. Governments are constantly under pressure to meet increasing demands for service with limited fiscal capacity. CRM can help governments improve efficiency by increasing productivity and decreasing costs. CRM accomplishes this by routing a variety of different contact mediums to government agents, so that downtime is minimized. For instance, a receptionist no longer sits around just waiting for a phone to ring, but would be forwarded other types of contacts to respond to, such as e-mails, in the meantime. This routing, combined with CRM's ability to put the requisite information needed to resolve the contact at the fingertips of frontline representatives, means contacts can be answered with all new efficiency. CRM also incorporates workflow features so that forward progress will not come to a halt should the initial respondent not be able to resolve the contact's situation. Bottom line: CRM can slash the cost of transactions by automating work processes and making the most effective use of existing personnel resources.

Growth of the Industry

All of the firms interviewed agreed that the market for CRM in the public sector currently was lukewarm. However, they also all expect the public-sector CRM industry to experience explosive growth in the near future. If the private-sector experience is any indicator, this view will come to pass. Consider the case of Siebel: the best-of-breed CRM vendor (Siebel does only CRM) was at the top of the list of the fastest growing technology companies throughout the United States in the "1999 Deloitte & Touche Technology Fast 500," breaking records with a five-year revenue growth. This rapid growth of a pure-CRM company demonstrates the very high level of interest CRM has generated in the private sector. Given that CRM could still be considered to be in its infancy in the private sector, it is hardly surprising that CRM is embryonic, by comparison, in the public sector. Also, ERP is at the foundation of CRM, yet ERP has not fully taken hold in the public sector yet. Therefore, it would be necessary for governments to solidify their ERP base before being able to fully take advantage of CRM's capabilities.

The Vision for CRM

CRM vendors have high hopes for the capabilities of CRM systems. Internet portals and two-way, mobile connectivity with the CRM system were the most commonly mentioned technical capabilities with the most potential to further enhance the usefulness of a CRM system. More generally, vendors felt that ORM could be a vehicle by which governments can adapt technology to increase cooperation within government and with constituents. The most important dynamic for achieving this cooperation is the integration of back-office and front-office, so that in effect, there is only one office. Exhibit 2 illustrates this change. This is not to say that CRM contemplates payroll clerks answering the public's questions about the price of a pool pass, but rather, employees will be empowered with information, eliminating the need for time consuming and costly shuffling of constituent contacts. Note that although a full-blown ERP system is not necessary to implement a CRM system, an ERP system is necessary to realize the maximum b enefit of the front-office/back-office integration potential of CRM.

Who Should Use CRM?

There are a number of criteria an organization should possess in order to have the best chance to successfully operate a CRM system.

Cultural Aspects. The foremost criterion is a culture that is compatible with cooperation and service. If a very high degree of departmentalization exists, it would be difficult to implement a CRM system because a CRM system necessarily involves sharing information across the organization. A culture of service is, naturally, important, as the organization has to actually want to serve its constituency. Also, since CRM represents a fundamental shift in the way constituents will be serviced, there must be a strong chief executive possessing not only the formal power to gain necessary funding and make structural changes, but also the leadership ability needed to build a vision for support of the CRM philosophy and gain buy-in from the organization. [1] This might be especially important for a diverse organization where the executive may have to forge cooperation among the various divisions of the organization. It is also helpful if an organization has a culture supportive of performance measurement because CRM is used to measure the quality of constituent relationships and improve upon those relationships.

Structural Aspects. The organization should have a number of touch points with its constituency in order that it might leverage the greatest benefit from a CRM system. Also, governments with a more limited purpose such as utility districts may possess a greater chance for success because there is less diversity in functions than with a general-purpose government. Departments are probably more accustomed to cooperating in a special district than they might be in a general-purpose government. This is not to say that general-purpose governments cannot implement CRM, rather it may behoove them to implement CRM for niche needs (i.e., to service a specific department or function) and then expand CRM gradually throughout the organization. In fact, general-purpose governments may be able to realize greater potential benefits from CRM, as CRM can create linkages between diverse departments that might otherwise be almost impossible to achieve. Of course, the organization must be adequately funded to undertake a CRM, a s a CRM implementation is not an insignificant investment.

Not Just for Larger Governments

Since ERP is mainly a back-office phenomenon, it is not immediately visible to the public. However, because CRM deals with the front office, it is highly visible and, due to the expectations promulgated by the private sector's use of CRM, citizens will come to expect the same high caliber of service, especially as it relates to the Internet since the latter is highly visible and is increasing in popularity almost exponentially. Constituents of smaller governments will be unlikely to be satisfied with second-rate service just because their government is not as large as others. Fortunately, there will be opportunities for smaller governments to acquire CRM systems. One factor working in favor of smaller governments is the increasingly open architecture of data systems. Open architecture refers to the ease with which systems can "talk" to each other. This will enable CRM systems to be implemented more easily as data conversion and interfaces with back-office systems become less complicated. Implementation has t raditionally been a major cost of making new systems operational. CRM vendors also have specific plans to make their products available to smaller governments. Traditional ERP vendors do not require their company's ERP system to be installed in order to make use of their respective CRM systems. Siebel follows a stratified pricing approach in order to allow smaller governments to afford their product.

Application Service Providers (ASP) also are seen as a potential mechanism for allowing smaller governments to take advantage of CRM services. (ASPs are basically services that rent out applications over the Internet. For the basics on ASP see the December 2000 issue article, "The ABCs of ASPs.") However, there are a number of questions surrounding ASPs' viability in general, which are beyond the scope of this article. Nevertheless, one concern particular to CRM is that since an ASP solution requires that the organization implement a "vanilla" (non-customized) solution, governments would essentially have to give up control over the design of key customer service processes. Vendors speculate that governments may be reticent to surrender control over these key customer service processes because they are highly visible to the public. However, the mounting pressure to implement modern customer service technologies due to expectations set by the private sector may eventually outweigh these trepidations government s have in giving up this control.


CRM allows governments to handle constituent contacts with improved effectiveness and efficiency. CRM handles contacts through a variety of channels, enhances the organization's efficiency and effectiveness in delivering services, and integrates front-office information with back-office systems. CRM has firmly taken hold in the private sector and almost certainly will become a mainstay of public-sector systems as well. Causal factors of CRMs eventual move to the public sector will be expectations set by private-sector customer service, competitive pressures (both inter- and intra-government), improving technology, the need to increase efficiency, and the opportunity to bring government closer to the people. There are a number of prerequisites for implementing a CRM system including a culture supportive of service and intra-organizational cooperation, and visionary management capable of implementing the organizational change that CRM entails. CRM represents an opportunity for governments to use technology to strengthen their relationships with all types of constituents and significantly improve their constituency's view of government.


(1.) Munson, Kenneth, Director, Public Sector Industry Strategy. Staff Interview. 2/2/01

SHAYNE KAVANAGH is a senior policy analyst in GFOA's Research and Consulting Center in Chicago, Illinois.


The GFOA interviewed four leading firms on their views concerning the development of CRM in the public sector. These firms, chosen based on their prominence in the industry and their strong interest in the public sector, are listed below.

Oracle: A leading ERP vendor, Oracle has been one of the leading CRM developers among ERP firms. Oracle is known for offering a complete e-Business Suite, which integrates the "service side" (CRM) and the "buy side" (G2B) with the "inside" (ERP) systems in an enterprise. While Oracle CRM is designed to be highly integrated with the Oracle ERP system, it also can be used effectively by organizations not employing Oracle ERP. Oracle's approach requires minimal third-party integration, potentially saving integration costs and reducing implementation cycles.

SAP: SAP may be familiar to many readers as the leading ERP vendor in the world. SAP arrived slightly later to the CRM world, but is now offering a CRM application that is fully integrated with the SAP's suite of e-business solutions, including financials, human capital management, and supply chain management. SAP has been recognized for its depth and breadth of product integration and it will be interesting to see if CRM is tightly knit with the other modules.

PeopleSoft: PeopleSoft is the final-tier I ERP vendor that was interviewed by the GFOA. PeopleSoft has had the capability to provide basic CRM functions for some time, but has recently acquired Vantive, a best-of-breed CRM vendor, to augment their capabilities. PeopleSoft's CRM philosophy has revolved around the use of pure Internet technologies, powerful analytical applications, a high degree of functionality, low total cost of ownership, and low-risk implementations.

Siebel: Siebel is the world's leading vendor of customer-centric e-business applications and represents a best-of-breed approach to CRM. Siebel is known in the industry for its very high level of functionality. Siebel has alliances with more than 750 companies that are comprised of experienced business, technology, and consulting partners selected by Siebel Systems for their expertise in systems integration, hardware, software, content, distribution, training, and other critical services. Siebel has partnered with a number of firms to form re-selling arrangements including JD Edwards and Lawson.

(*.) Please note that this section is not intended by GFOA to endorse or promote any one of these vendors. This is not a comprehensive listing of vendors in the CRM market, as there are a number of other vendors with quality product offerings. Also, please note that some information for this section was taken from interviews with vendors.


So, you've decided to implement CRM. What do you look for in a package? Here are some of the most important things to look for according to our interviewees.

* The CRM system should support all points of contact such as telephone, fax, e-mail, walkins, mobile devices, and the Internet.

* The system should allow effective client self-service through the Internet.

* The package should integrate with the government's enterprise platform easily and should be scalable.

* The system should possess powerful analytical capabilities, sufficient to use system data to support management decisions.

* The CRM system should be proven to implement successfully in similar conditions.
COPYRIGHT 2001 Government Finance Officers Association
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Copyright 2001 Gale, Cengage Learning. All rights reserved.

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Author:Kavanagh, Shayne
Publication:Government Finance Review
Geographic Code:1USA
Date:Apr 1, 2001
Previous Article:Taking Stock of Performance Measurement: Information Resources for Public Managers.
Next Article:Proposed Technical Amendments to GASB Statement No. 34.

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