Imagine, if you will, a child’s birthday party. The names at this party will vary for everyone, but the particulars do not. The backyard is filled with toe heads and moptops, running and laughing and playing innocent games. After a few hours, dinner is served, then cake — Betty Crocker. After that, the guests all gather attentively around a table. It’s time for the main event. The star of the show looks at the pile of presents stacked neatly on that table. As if rehearsed for months, he reaches immediately for the long skinny box. He quickly tears off the wrapping paper. The Star Wars Laser Sword. He excitedly opens the box, pulls out the sabre. It’s time to start battling the minions of the dark side. He clicks the on-button. Nothing. Clicks again. Nothing. Mom walks over, reads the box. On the side, in six point type: “Batteries Not Included.” Mom doesn’t have any quadruple D batteries. Well, no worry, she’ll get some the next time she goes to the department store. That’ll be a week from Wednesday. The tears start flowing. For a four-year old, nothing’s worse than ”Batteries Not Included.” Nothing.
Same thing for forty-four year olds. Over the past few years, executives at billion-dollar companies have spent millions to purchase customer relationship management (CRM) applications. The purveyors of those applications have done a good job convincing scores of management teams that CRM is crucial to retaining old customers, and winning new ones.
They may be right. But as many CFOs have discovered, purchasing a CRM application is one thing. Getting it to turn on is quite another. Like most software, CRM programs don’t generally work straight out of the box. Deploying the applications, integrating them with legacy systems, getting software to exchange data — all this can take years. It’s ”Batteries Not Included” all over again.
Ironically, purchasers of CRM software often only have themselves to blame for the tears. The fact is, very few business applications provide a quick, painless fix. But all too often, business managers fail to recognize that software alone isn’t the answers. ”Too many companies have been caught up in the bad habit of merely adding software to automate their existing processes without reengineering them first,” concedes Erin Kinikin, a vice president at research firm Giga Information Group. If the business processes that underlie a CRM system are fragmented, Kinikin notes, then the CRM system won’t deliver — no matter how well it’s designed.
Money For Nothing
Of course, reengineering business processes is no small task — particularly when collaboration across departments is inhibited by different and often contradictory incentives. ”Marketing is often motivated to give sales leads that aren’t good,” Kinikin explains, ”while sales is motivated to sell deals that may never be profitable. Meanwhile, customer service is motivated to get off the phone quickly instead of asking the one cross-sale question that would result in a more valuable customer.”
Gareth Herschel, an analyst with market research firm Gartner Inc., agrees. ”If sales and marketing are not communicating with one another, then there is no way sales applications will talk to marketing applications.”
In a perfect world — read free cake — a company’s CRM apps would work together, from the moment a company contacts a customer with a promotion, to when the consumer makes a purchase, receives the product and gets support. ”The problem is that delivering on that promise is a five to ten year project,” Kinikin reckons.
Another reason CRM initiatives sometimes fail to live up to expectations: they are rarely tied to back-end ERP and supply-chain management systems. Then again, integrating front and back-office applications can be a Herculean task. And as many experts point out, data is only as good as the employees who view it. ”You can have all the integrated data in the world,” Kinikin asserts, ”but if employees are not trained to ask ‘What can I do to make an at-risk customer come back to us?’ then you’ve spent millions of dollars for nothing.”
Not exactly what CFOs want to hear. To avoid rolling out unnecessary CRM modules, Kinikin recommends letting customers point the way. Indeed, consultants say business managers often don’t take enough of a customer-centric approach with CRM deployments. Says Kinikin: ”If there needs to be integration with the back office because customers are dying to know whether you’ve shipped the product they ordered, for example, then selective integration makes sense.”
According to Gartner’s Herschel, application integration has become a serious problem for many companies simply because they’ve gone with a best-of-breed approach. In truth, no one vendor offers a CRM package that is strong across sales, marketing and customer service. Most packages are good for certain functions, not so hot for others. ”Oracle, for instance, is strong on the sales and services side but weak on the marketing side,” Herschel says. “E.piphany is much stronger on the marketing side but weak on the sales and services side.” Hence, CRM buyers pick and choose, and often leave themselves with a hodgepodge of applications.
Managers are then forced to decide whether to integrate applications in-house or purchase an integration package. Both have their drawbacks. Putting together an in-house team for applications integration can be expensive. By the same token, application vendors aren’t always the most helpful in providing the tools systems integrators need, says Aaron Zornes, research director at Meta Group.
Investing in an integration package from vendors such as CrossWorlds, Vitria, or WebMethods, offers one workaround. Here, too, there are cost concerns. Moreover, integration software does not provide a full meshing across all applications, says Zornes. ”You basically have to pay a quarter million dollars for an adaptor, that’s the ballpark market,” he says. ”You then get some business level connections, but you don’t get full integration between the packages.”
Purchasing suites of CRM software may not be a better alternative, either. Typically, such suites require a good deal of customization and integration with legacy systems. In addition, since several applications are cobbled together to create a suite, companies have to settle for less robust feature sets than they would get with best-of- breed applications.