Key to CRM Success Found in People, Processes

 
 
By John Pallatto  |  Posted 2005-06-24
 
 
 

Key to CRM Success Found in People, Processes


Too many companies, including small and midsize organizations, put the cart before the horse when it comes to making plans to implement a CRM package.

They start thinking about what type of customer relationship management software package they should buy or build before they start planning on what they want CRM to do for the company, according to experts who spoke during a panel discussion Thursday during the Ziff Davis Internet SMB Virtual Tradeshow.

In reality, "80 percent of success in your CRM initiative is related to people and process. And 20 percent is about technology," said Barton Goldenberg, founder and president of ISM, a CRM technology and services company based in Bethesda, Md.

Some companies already have elaborate business processes in place to serve customers, he noted. But too often top management teams dont actually get into "the belly of the beast" of their business operations to see whether customers are being properly served by these business processes, he noted.

Companies have to fix their business processes, Goldenberg said, before they decide how they will implement CRM to automate them.

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Furthermore, too many companies fail to prepare the way to enable the people to understand what CRM is supposed to do for the organization so they will work with it successfully, Goldenberg said.

Convincing people that CRM will deliver benefits to the organization represents half the effort required to make a CRM implementation a success, he said.

"If you try to force the technology into your organization, you will fail in a CRM initiative," he said.

"If you put into place the right processes and get people to buy into these process changes or process improvements and then use the technology, youve got a better chance of succeeding," he said.

Employees have to be convinced that CRM is actually going to achieve business benefits for them personally, such as "I could sell better. I could market more effectively. I could serve customers more quickly or more effectively," said Goldenberg.

You will know that your employees have accepted CRM, he said, when you discover that if you tried to "take away their PCs and they wont give [them] back to you because they tell you, Listen, thats got my CRM system on it, and Im not letting it go."

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Another problem is that many companies try to implement CRM before they have any information links between their front office sales and marketing systems and their back office inventory and order fulfillment systems, said Richard Lee, principal of High-Yield Methods, a CRM technology consulting company based in St. Paul, Minn.

Lee cited as an example a 100-employee wine and spirits distributor his consulting firm worked with that wanted to implement a CRM system without the ability to give sales staff accurate inventory information when they visited customers.

Sales people also didnt have current accounts receivable information, which was an important factor because state regulations barred distributors from taking new orders from retailers whose bills were unpaid over 30 days, he said.

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The company was able to develop a CRM system that provided real-time access to the back office systems reliably committed to selling goods they knew was in inventory, he said.

The system was responsive enough so that sales people could get instant updates on whether particularly hot items were in stock if the dealer committed to buying it.

Its getting to be easier to link front office and back office systems, he noted, through the use of XML coding, which enables data exchange between formerly incompatible information systems.

Further, customers have pressured CRM software vendors to provide application programming interfaces that enable data exchange links with databases or other applications such as supply chain and inventory systems, he said.

SMBs are actually in a better position than ever to get into CRM because the software vendors are catering to them more than ever, observed Chris Selland, principal analyst with Covington Associates LLC, a specialty investment banking company in Boston.

Most of the recent CRM deployment activity is in the SMB space, he said, because most of the Fortune 500 companies have already deployed their CRM systems.

Large enterprises will "make selective investments to fill technology gaps…,but the fact of the matter is most of the growth in the market now is coming from SMBs," Selland said.

Consolidation in the CRM sector along with the advent of aggressive new hosted CRM service providers, such as RightNow Technologies and Salesforce.com, means that prices have come down while SMBs still have many vendors to chose from and negotiate with, Selland said.

Editors Note: The Ziff Davis Internet SMB Solutions Virtual Tradeshow is run by eSeminars, a division of Ziff Davis Media, parent company of Ziff Davis Internet.

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