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When NextiraOne was founded in April 2001, arguably the most unenviable job fell to CIO Loren Tobey.

The network services operator was formed by bolting together three companies on two continents, each running a different enterprise resource planning (ERP) system. Tobey's task was to put together a coherent customer relationship management (CRM) strategy quickly, one that would enable the Platinum Equity-owned company to slash costs but still improve customer service and loyalty.

To start, the three ERP systems needed to be consolidated. "Because the company was created through the merger of three other companies, we had three of everything: Three financial packages, three cultures and so on," says Tobey. "The sets of legacy systems also meant three ways of doing business," he adds.

The company lost business to rivals because sales staff lacked a rounded view of customers and their needs - customer-related data might be in any one of three unconnected systems. As a result, sales leads were lost in the labyrinth and often not followed up until well after potential clients had signed on the dotted line with competitors.

Tobey therefore decided to consolidate on SAP, one of the NextiraOne's three ERP software suppliers, and then develop a CRM strategy. "You need a CRM strategy before you even consider purchasing an application," he says. That strategy document needs to dictate the objectives of the CRM strategy and map the business processes by which it will be achieved. Given the fundamental operational changes that this will entail, it requires support from the very top of the organisation downwards, he adds.

Anthony Bosco, CIO at US construction and engineering group Day & Zimmerman agrees. He says his current CRM software roll out involves developing a more proactive business strategy, rather than purely technical matters: "Our effort is not to roll out a CRM technology, but to develop a strategy." The biggest mistake organisations make, he says, is to try to implement the CRM software before addressing the CRM strategy.

The second biggest mistake, he suggests, is to try to roll out the software before changing the organisation and culture of the company to make it more responsive and proactive towards customers.

Quite simply, say analysts, implementing CRM software demands a complete overhaul of the way an organisation handles its customers. And that requires new business processes and an acceptance of the need to change from the CEO downwards. "Real business change is required to succeed and no amount of software integration will compensate for groups who don't trust each other or want to work together," says Erin Kinikin, an analyst at Forrester Research.

Michael Maoz, vice president and research director for Gartner, supports that view: "Central to presenting a satisfying customer experience will be a suite of CRM applications that define a consistent set of business rules for customer interactions, both direct and self-service, across channels and throughout the customer life cycle." But organisations should not underestimate the difficulties of persuading sceptical staff to make full use of the new technology. "All the customers we spoke to highlighted the challenge of user adoption," he says.

Sales staff, in particular, are notoriously resistant to new technology, he adds, and even more averse to sharing sales pipeline information. Contact centre staff will often resist additional data entry demands because of the pressure to meet performance targets.

At the same time, says Chris Eldridge, a senior project director at Business Link for London, in many cases, staff will need to get used to having less leeway over how they structure their working days. They will therefore need to be prepared for that change. At Business Link, a publicly funded body that provides help and advice to small business owners, the organisation as a whole had no concrete understanding about the scope of the services it offered - all that information was locked up in the heads of consultants.

The implementation of PeopleSoft 8.8 CRM enabled Business Link to codify and document the services it offered, to identify areas of overlap in the organisation and to improve efficiency markedly, says Eldridge.

As a result, the organisation has increased its targets exponentially, from an initial objective of helping 1,500 businesses a year before the project was completed, to 100,000 a year after the implementation.

But although a well-defined strategy, strongly endorsed by the board, can help to cut through potential resistance among staff, too many of these are simply based on vague, well-meaning statements such as achieving "exceptional customer service" or a "360-degree customer view", say analysts.

"CRM [strategy] must begin with company objectives and continue with specifics such as the desired customer result, required employee and partner involvement, necessary information and biggest opportunities," says Kinikin. A lack of clarity, he adds, will only fuel resistance and possibly stoke-up feuding between departments in the organisation.

Vendors have subtly changed their approach in the past two or three years in a bid to improve implementation times and bring the way systems operate even closer to real-time.

In the late 1990s, a CRM system was largely a standalone package with limited integration with other elements of an organisation's systems. Typically, customer data would be exported from other operational systems, so staff dealing with customers would effectively be working on an old copy of data. Also, this created another 'island' of data that would need to be looked after. Today, suppliers such as PeopleSoft, Oracle and SAP are offering CRM packages customised for particular vertical industry sectors in a bid to speed up implementation and to make projects more likely to succeed.

Such packages include typical business processes used in those sectors - which can be customised, if necessary - combined with pre-built integration with other popular ERP systems.

According to Kinikin, this approach is re-igniting the interest of many organisations that were burnt earlier, flawed CRM implementations. "Increasing depth of vertical CRM offerings will encourage many of these companies to re-look at packaged CRM once they can see clear returns for a reasonable cost," he says.

Improved integration means that a call centre agent today, for example, can easily examine product inventories, check the payment history of a customer and confirm the status of a complaint, details of which may well be held outside the CRM system.

"At any point, you have got visibility [of the customer] in any direction along the business process," says Brad Wilson, vice president of marketing for CRM products at PeopleSoft. "Being able to link these processes and access the data live and connect applications live, is what real-time CRM is all about," he adds.

A key enabler of that kind of real-time CRM has been the increasing ability of systems and databases to handle more and more transactions. Now, says Wilson, it is even possible for business managers to conduct basic analytics on operational data stores without affecting the performance of the applications they are supporting. Only five years ago, that would not have been possible. "You can do a certain amount of lightweight management reporting against base tables without degrading transaction performance," he says.

Indeed, the whole idea of real-time CRM - or even near real-time CRM - would have been preposterous five years ago because applications were still based on two-tier client server architectures, rather than on the Internet, and there was a lack of reliable bandwidth. It would simply not have been possible to run call centres out of the Philippines, Vancouver and Bracknell from the same single instance of data, for example.

But increasingly, that multi-site CRM is just what organisations such as BT and banking group HSBC are doing today. Not just to improve customer service with a 'real-time' response, but to improve efficiency.

Common mistakes

1. Trying to implement the software before working out the customer strategy

2. Rolling out the CRM software before changing the organisation to be more customer facing and proactive

3. Assuming that any CRM technology will be better than no technology. It is not necessarily about the technology, but business processes and culture

4. Once implemented, using the software to stalk, rather than woo customers, by bombarding them with sales calls, emails and junk mail

5. Failing to implement a company-wide performance management process to assess the effectiveness of the new strategy and sales and marketing campaigns

Source: Anthony Bosco, Day &Zimmerman

In practice: Sainsbury's

Until the appointment of Sir Peter Davis as CEO in 2000, new technology had almost totally passed Sainsbury's by. Its IT department was stuffed with relics of the 1970s and 1980s and even email was delivered on a green screen by a mainframe computer. So when Davis ordered the launch of the 'Sainsbury's to You' online grocery service shortly after he arrived, CIO Margaret Miller and her staff faced an awkward challenge.

The brief was to build rapidly a responsive ecommerce site that would provide a high degree of targeting and personalisation. But initially it would need to plug into many of those ageing legacy systems as well - at least until the company replaced them. Without such integration, no real-time CRM element would have been possible and the amount of manual intervention required would have made the venture costly in the extreme.

"Sainsbury's to You touches most areas of the business. It connects to all of our trading systems to provide product data, to our routing systems enabling us to schedule delivery slots, to our in-store picking system, and to our EPOS [electronic point of sale] system to actually take payments," says Penny Slater, head of online marketing at Sainsbury's.

To handle this integration, Accenture, Sainsbury's outsourcing partner, and Blue Martini, the ecommerce site software supplier, created a data abstraction layer. That involved exporting data to and from Sainsbury's to You in a simplified file format that could easily be read by Sainsbury's legacy systems.

"We created a data abstraction layer rather than using a specific EAI [enterprise application integration] tool because many of Sainsbury's systems were so old that they really wouldn't support the adoption of a modern EAI tool," says Mark Katz, director of international professional services at Blue Martini.

The advantage of such an approach was that these interfaces could easily be transferred when the legacy systems were replaced. Information gleaned from regular online and offline purchases drives the site's personalisation. This unification is driven by Sainsbury's loyalty card, which is now part of the Nectar multi-retailer loyalty card network. "We actually show a different home page according to which of the three corporate segmentations the customer falls into," says Slater.

In addition, this data is used to configure the menus of the online store and the links to in-store systems enable Sainsbury's to You to emulate offers online that a user might find in their local branch. On top of that, knowing the customer's shopping habits when they log in enables Sainsbury's to You to target 'cross-sells' and 'up-sells' more effectively when certain goods are selected.

Finally, both online and offline data is unified in a customer data warehouse outside the scope of the Blue Martini suite software running the Sainsbury's to You web site, so that further offers can be tailored to individual loyalty card holders.

In practice: Business Link for London

Chris Eldridge faced some tough challenges when he was asked to implement a CRM system for Business Link for London - an advice and support service for people running small and medium-sized businesses in the UK capital.

First, cultural issues needed to be balanced within Business Link for London, which is a governmental regional body. "We have lots of civil servants, but we have also recruited lots of people who run their own business at the same time," says Eldridge, the senior project manager. In addition, it was formed by merging 11 similar bodies across London, which created a range of challenges, such as absorbing their different processes and dealing with the resulting highly decentralised structure.

The organisation also had to balance input from Europe, the UK government, various public sector bodies across London and, of course, London's mayor and Members of Parliament. And because it is publicly funded, it first needed to win that funding from various government departments.

Eldridge was given only six months to do the job. His first step was to locate core processes in the business and to see how these could be implemented in the CRM software. He found a plethora of procedures and the same tasks being performed by different staff in different offices. "Ultimately, we needed to create one core business process for the organisation, which we called the 'customer journey'," says Eldridge.

The idea was to build a system that could track customers - small business owners who contacted Business Link for help - from their first call or email, right through to their final contact.

Business Link needed such a system - it chose PeopleSoft 8.8 CRM - to bring the work of its consultants into the 'view' of management, to improve efficiency, for example by reducing the overlap between different offices.

Before, consultants worked on their own with clients and the knowledge of what could or could not be done was locked in their heads. Now, the organisation has a list of nearly 40 'products' that it can offer, and has extended the CRM package into finance so it can monitor projects more easily.

Originally, the organisation set a modest target of dealing with 1,500 businesses in the first year. It quickly increased this to 50,000 when the early pilot projects showed the potential efficiency savings. And, when the system was finally implemented, it increased its target again to 100,000 - without any increase in staff.
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Publication:Information Age (London, UK)
Date:Jul 10, 2003
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