A review of new software products that can make a big difference to your business

Second annual CRM survey

By Michael Burns

A lot has happened since last year’s customer relationship management survey. The biggest news is Oracle Corp.'s US$5.85-billion buyout of Siebel Systems Inc. The purchase makes sense, since Siebel has been very successful with larger companies over the past 10 years, but has had a tough time lately competing for new business. (At the time of writing, the buyout was pending approval from US regulators.)

For Oracle, this new move comes on top of its acquisition of PeopleSoft in December 2004 for US$10.5 billion. Siebel adds 4,000 customers and 3,400,000 CRM users to the company’s customer base.

Oracle is just one of the 15 CRM vendors in the survey chart. Others include ACT!, Chordiant, Clientele, CommenceRM, Exact e-Synergy, GEM-CRM, Legrand CRM, Microsoft CRM, NetSuite, Oracle E-Business Suite, Sage CRM, SalesLogix, and Salesnet.

Despite all this activity, there is still a lot of confusion about what CRM is all about. In broad strokes, CRM allows everyone throughout a company to work as a team and share information about customers. A typical CRM system includes contact management, marketing automation (marketing campaigns and scripts for telemarketers), sales force automation (tracking leads through the sales cycle) and service management (tracking and resolving customer service requests). Other features include call centre, help desk, business intelligence, knowledge management and e-commerce.

We added more questions this year -- about marketing automation, order processing, Blackberry integration and the cost of having an application service provider host your system on their site. With an ASP, you pay for the number of people using the system each month on a pay-as-you-play basis. According to AMR Research, the use of ASPs for CRM grew 105% this past year. But it still represents only 9% of total CRM market share.

CRM has been showered with hype from vendors and technology analysts. As a result, companies are still jumping on the bandwagon with no good rationale for doing so. Case in point: when a certain mid-market company noticed its sales were far below forecast, it figured the numbers couldn’t be trusted. So it turned to CRM, assuming that its problems could be solved by providing marketing and sales with better tools. What’s wrong with this picture?

First, new technology does not automatically fix inefficient and ineffective business processes. In some cases, it can make them worse. If the staff members lack the skills, training or motivation to provide more accurate sales forecasts, great technology won’t help. Second, CRM cannot solve every sales and marketing problem. At the company in question, the biggest problem was that the two standalone order processing systems were disconnected from the company’s other systems. Sales and marketing feed those systems with quotes and forecasts, but they also need feedback. Most CRM systems don’t include order processing. So for this company, CRM wasn’t enough. The company is now investigating ERP systems that would replace their standalone order processing systems and include integrated CRM.

People used to look at CRM as software for the front office while ERP was for the back office. However, the front and back offices need to be in constant touch. In the early days of CRM, companies spent fortunes integrating CRM with the back office only to discover it still did not work very well. Today many CRM vendors offer integrated CRM and ERP systems that work seamlessly together in the same office.

This leads to the issue of best of breed vs. ERP integration. With the best of breed approach, you work with what is deemed the best software for a particular function and integrate it with other best of breed systems. Although this approach offers advantages in terms of both software and service, problems can arise with integration and synchronization – i.e., knowing which system owns the data and what happens when a contact is added, changed or deleted. Also, different user interfaces make for a longer learning curve, and there is a potential for finger-pointing if problems occur between systems.

CRM moved into the mainstream for small and medium-sized companies when Microsoft launched Microsoft CRM a few years ago. Now other vendors, such as Salesforce.com and RightNow, are shaking up the industry with their ASP approach. Others such as NetSuite (also an ASP) and SAP Business One are offering CRM as part of their ERP solution. All this competition is putting downward pressure on prices, so there’s never been a better time to invest in CRM.

Michael Burns, MBA, CA, is president of 180 Systems (http://www.180systems.com/), which provides independent consulting service, including business process review, business case development and system selection. Michael can be reached at 416-485-2200 or mburns@180systems.com.