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Count On Your Customers

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DQI Bureau
New Update

CRM is getting to be another glorious way of spending your technology budget

when consultants and vendors worry you by telling you that you are not

leveraging your IT assets, not enough to make your organization a

customer-centric one. While white papers and CDs on the subject gather dust on

shelves, the CIO is inundated with ample advice on which one to go for and how

rapidly a CRM solution can be implemented. The ERP vendor professes to do the

best job with his extended ERP capabilities; database vendors remind you that

CRM originates from customer data and that they are the right ones to do it; and

specialist vendors claim that CRM is their religion! The same discourse would

probably have been imparted to marketing and business unit heads. Even the CEO,

fresh from a strategy seminar or an advanced management program, would recommend

his bit. By now, the CIO finds his grip weakening and rushes to decide on a CRM

solution and justify his appointment to the top management. Given the

circumstances under which the decision is taken, what are the chances that your

expectations are met?

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According to Insight Technology Group, 65% of CRM implementations failed to

meet expectations and barely 15% met all expectations–simplified, this means

that the odds are that two-thirds CRM implementations did not deliver, despite

the fact that CRM has emerged as a high-priority business and technology

initiative in most organizations across multiple industries. So what does it

mean when one says CRM did not deliver? It means that the organization failed to

transform itself from a product market-centric organization to a

customer-centric one. It couldn’t leverage data from multiple points of

customer contact to anticipate customer behavior. And in the process, it failed

to retain customers, cross-sell to customers, or maximize profitability per

customer. These form the bare minimum delivery points for any CRM solution.

CRM is not an IT project, it is a strategy initiative implemented through

technology. Says Sanjay Tugnait, principal consultant (CRM practice) at

Pricewaterhouse Coopers–"CRM is not a marketing project, as most people

think, because the use and impact of CRM is different for various vertical

industry segments." The goal of marketing may be to reduce costs through

marketing automation, increase revenues, improve marketshare and effectively

utilize the marketing budget. But these depend on the business processes within

the organization and the IT infrastructure. This is where IT contributes to

developing the business case. "At PwC, such information-enabled enterprises

are called market-intelligent enterprises. To achieve this business model,

global investments in CRM are evenly spread across the value chain in the areas

of marketing, sales and customer service," adds Tugnait.

SCM Best Practices CRM Checklist
l

Based on the supply chain linkages and processes key to your business, develop an action -plan focusing on areas that need improvement.

l

With objectives clearly laid out, ensure management commitment and confidence in the SCM initiatives. Ensure that the system provides relevant and timely information to support decision-making, workflow and inventory management.

l

Define operational responsibilities and provide training to the people and organizations involved in the process.

l

Streamline and prioritize processes to support short-cycle and lower cost performance. Ensure that the trading partnerships and agreements in the supply chain are lucid.

l

Review the logistics models for improvement in distribution planning, movement of goods and customer service. 

l

Transparency is critical so that all players in the supply chain can simultaneously keep track of the order and manage inventory, control manufacturing schedules to deliver on time to a customer.

l

Ensure that data is easily accessible, including product data, sales data, inventory data and promotion data, which is critical for collaborative planning, forecasting and replenishment. 

l

Does this solution fit my needs?



Get a CRM system where end-users don’t have to struggle with complex applications. Start with establishing your key business requirements, then list the features and functions most important to your business. Finally, match these to the strengths of the solutions you are evaluating.

l How quickly can the system be implemented?



It should not take months to implement your CRM system–the best solution is one that gets up and running quickly. Then again, modifications–adding users and fields and changing access privileges–should take minutes, not hours.

l Will the system change and grow with you?



The right CRM solution should integrate seamlessly with your existing systems–e-mail and word processing software. It should enable you to capture and manage customer information right from the point of contact–phone, fax, e-mail, or the Internet–to automatically integrating it into a single shared database accessible to all authorized.

l Will this supplier meet my needs?



Your CRM integrator should act as a catalyst for change–focussing on transferring knowledge to your team members, rather than trying to do everything himself. Take care not to allow the management of your existing intimate business relationships to get ‘contracted’ out to a technology provider.

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The basic concept of CRM involves segmenting customers depending on their

behavior and creating differentiated service levels for them. This is easier

said than done–it requires organizational readiness to be able to track

customer behavior, integrate it with other business processes, make decisions

corresponding to these behavioral patterns, and deliver effective service

through the business process. The technology involves a progressive approach

toward gathering customer data via multiple, interconnected, delivery channels.

This is achieved by aligning all processes and making them customer-centric and

automating these integrated business processes with back and front office

operations. This is the operational part of the CRM exercise. Once this is done,

specialized analytic tools are planted on top of this infrastructure to be able

to derive actionable knowledge out of the integrated customer data that is

gathered. This part is called ‘Analytical CRM’. The success of a CRM

implementation, thus, depends both on operational strength and analytical

capabilities. Depending on the vertical, the operational CRM platform sits atop

the core integrated business system and unifies customer data capture. For

example, for the telecom industry, the CRM plugs into the OSS (operational

support system), for banking, it is the centralized banking platform that does

the trick, and for manufacturing, it is ERP that companies turn to.

Interestingly, in the CRM solution space, there are specialist vendors in the

operational and analytic areas. For example, Siebel, mySAP.com CRM, Oracle CRM

are operational CRM vendors, whereas SAS, E.piphany, Teradata are CRM vendors

dealing in the analytical area. In a way, analytical CRM products help

accelerate RoI from a CRM initiative.

According to a Gartner report, enterprises are increasingly turning towards

CRM analytics, hoping to distill valuable insights from collected data. The

report predicts that during 2002, enterprises will seek to attain and leverage

greater customer insight by doubling their analytic efforts, granting

broader/deeper access to the data, and exploring advanced data-mining

techniques.

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In India, information provided by vendors reveals that there are more

operational CRM implementations than analytic ones but the trend seems to be

that such enterprises are turning towards analytics to seek the full impact of

their CRM efforts. Some of the successful CRM implementations in the country are

Bharti Telecom, DCM Shriram, RPG Cables, ICICI Bank, Airtel, Orange, Goodlass

Nerolac Paints, BPL, StanChart Bank, and Citibank. While Siebel leads in the

operational CRM market, the analytic space seems to be led by SAS which has a

presence in multiple verticals, followed by Teradata, which is the market leader

in the large financial services vertical.

When organizations set out to pursue CRM initiatives, they find the costs

prohibitive. There are costs associated with realigning business processes,

integrating applications, data warehousing, the associated consulting fees and

product licenses among others. And given the statistics that CRM implementations

are very complex and often fail to deliver, this is daunting enough for a CIO to

backtrack on his plans. But the examples of those who have hit the CRM target

bang on are on the rise. This suggests that the benefits of CRM initiatives are

significant and can justify the investments. If implemented correctly, CRM adds

tremendous value to the business in terms of improving customer retention,

improving productivity, enhancing revenue, and advancing competitiveness. After

all, business models and processes can be copied, but customer knowledge and

relationships can never be duplicated–and that’s perhaps the biggest RoI of

any CRM implementation.

Easwaradas Satyen in Mumbai

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The Hidden Costs of ERP

Many who have implemented ERP packages

agree that certain costs are more commonly overlooked or underestimated. ERP

veterans vote the following areas as most likely to result in budget overruns:

Training:

Training is the near-unanimous choice of experienced ERP implementers as the

most elusive and consistently underesti—mated budget item. Training expenses

are high as the staff invariably has to learn new processes.

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Integration

and testing:
Testing of ERP integration should

be process-oriented. Instead of plugging in dummy data and moving it from one

application to another, it is ideal to run a real purchase order through, from

order entry through shipping and receipt of payment.

Migration

Issues:
Moving corporate data, such as customer

and supplier records, product design data from legacy systems to new ERP is

expensive. Although few CIOs will admit it, most data in legacy systems is of

little use. And they are more likely to underestimate the cost of the move. But

even clean data may demand some overhaul to match process modifications.

Data

analysis:
Often, the data from the ERP

system must be combined with data from external systems for analysis purposes.

Users with heavy analysis needs must include the cost of a data warehouse in the

ERP budget–and they should expect to do quite a bit of work to make it run

smoothly.

Waiting

for RoI:
Get over the misleading legacy that

the companies begin to gain value from the application as soon as it is

installed. Most don’t reveal their value until companies have had them running

for some time and can concentrate on making improvements in the business

processes that are affected by the system

Post-ERP depression:

Expect a drop in performance when ERP systems go live. Everything looks and

works differently from the way it did before. When people can’t do their jobs

in the familiar way, they panic and that could send your business into spasms.

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