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.
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 main CRM vendors. Others iclude ACT!, Chordiant, Clientele, CommenceRM, Exact e-Synergy, GEM-CRM, Legrand CRM, Microsoft CRM, NetSuite, SalesForce Sage Accpac 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.
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. One such system is Sage Accpac CRM.
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 Sage ERP 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.
A few years ago, most small and medium-sized companies had never heard of customer relationship management. CRM was aimed squarely at big companies – some of which spent truckloads of cash on expensive implementations that didn’t live up to their promises. Fortunately, things have improved considerably. The market has opened up to include smaller companies, competition has brought prices way down and the software is more stable and flexible. Now it’s hard to avoid hearing about CRM. In fact, in a survey by Forrester Research, 21% of Australian companies and 33% of European ones said they were planning new CRM investments by the end of 2007.
For the most part an investment in CRM is easily justified. CRM allows everyone throughout a company to work as a team and share information about customers; there are no more silos. “CRM provides employees across the organization with up-to-date customer information, significantly reducing the time spent sourcing and updating critical data,” says Krista Kuehnbaum, CRM product manager for Microsoft Canada Co. For example, CRM would prevent a salesperson from calling a customer without knowing about a serious service problem.
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. Vendors continue to play functional leapfrog as they add new functions and expand the scope of CRM.
But CRM is not just about functionality or technology. A successful implementation could require major changes to attitudes and business processes. First, information needs to be shared – something that many employees are reluctant to do. This might be simply because they don’t have time to update the system, or it they might feel that sharing customer information will diminish their importance or power.
As well, an organisation might need to adjust its strategy to focus on customers rather than products. According to Michael Lawrie, CEO of Siebel Systems, “CRM is not a product. CRM is not an event. It’s a business strategy to drive companies closer to their customers.” Microsoft’s Krista Kuehnbaum echoes this view when she says, “Customer Relationship Management is as much a business practice as it is an application.”
That might be why CRM is one of the hottest technologies around today. In the past, Siebel Systems was the 800-lb CRM gorilla with SAP and PeopleSoft as its main challengers. Today there is lots of competition and the market leaders face big challenges from vendors such as Microsoft CRM and Salesforce.com.
The CRM Options:
Options exist from CRM vendors representing about 40 different systems. The leading CRM systems however can be summarised as: – Sage ACCPAC CRM, ACT, Clientele, CommenceRM, E.piphany E.6 CRM Suite, InterAction, Luxor CRM, Maximizer Enterprise, Microsoft Business Solution CRM, mySAP CRM, NetSuite, Oracle E-Business Suite, QuickBooks Customer/Client Manager, and SalesLogix. The products cover a wide range, from ACT to SAP — which shows that CRM is being targeted to companies of all sizes.
Some might argue that products such as ACT should be classified as contact management systems. Our perspective is that contact management systems are also CRM systems, but offer limited functionality. This could be perfect for a smaller organization. As well, contact management systems have grown in functionality and include other components found in CRM systems.
Some CRM vendors are focusing on specific industries such as Interaction that claim 90% of their customers provide professional, scientific and technical services. Some vendors focus on a component of CRM, such as sales force automation. Some offer their CRM solution through an application service provider. With an ASP, you rent, rather than buy, the product, and you need only a browser on your computer which is connected to the ASP’s server where all the processing occurs and the data is stored.
Our survey includes about 200 questions about cost, user base, target market, technology and CRM functionality. The objective for the functionality questions was to show differences between the systems, assuming the basics were covered. You will see the high-end solutions seem to have it all. For larger organizations, they will be a good fit. But for small and medium-sized companies, too many features and too much flexibility can actually be a negative in that these systems are more complex and take longer to implement.
One big event related to CRM was the launch of Microsoft CRM in January 2003. Microsoft CRM was designed for small and medium-sized organizations, especially those with 25 to 500 employees. Microsoft hopes to woo its 250,000-plus Microsoft Business Solutions customers (Great Plains, Navision etc.), as well as 92 million Outlook users and 200 million Office users. Microsoft seems to be doing well in winning customers; it now reportedly has 2,500 customers worldwide.
Founded in 1999, Salesforce.com shook up the CRM market with its ASP approach. Offering access to CRM applications without the need for making any upfront investments is a compelling choice for smaller companies with lower budgets and scarce IT resources. Salesforce now claims more than 11,000 customers. However, you may find that the total cost of ownership is greater with the ASP approach if you consider the costs over a three- or five-year term.
Since there are many touch points between an ERP/accounting system and CRM, integration can be a major concern. Some ERP systems include CRM; some CRM systems have built links with other systems. Beware of vendors that tell you that it’s a snap to integrate the two systems because they can easily connect the databases through technology such as Open DataBase Connectivity (ODBC). And don’t believe the vendors who claim integration is a snap because their CRM system is on the same database as the ERP/accounting system. It’s a lot of work to integrate the systems and to maintain the links as both systems evolve.
Accounting firms have a specific need for relationship management. For example, accountants would like to know how much new business can be attributed to referral sources. Yet it seems most firms have yet to implement CRM. Accounting firms typically have big problems in sharing customer information; they have different systems (practice management, accounting, e-mail, contact management, marketing, etc.), which all have client information but are not integrated. Explanations for the slow adoption of CRM in accounting firms include partners’ unwillingness to share client information, concern about wasting time updating the system, many CRM systems’ inability to satisfy the specific needs of accounting firms, lack of integration with practice management systems, and cost.
For any professional services organization, the key to success is relationships. You need to leverage existing client relationships and offer clients new and additional services. But relationships can be complex. You will have multiple contacts within an organization and any of those contacts could have multiple relationships that you should know about, such as family members, lawyers or bankers. And you don’t want to set up any contact more than once; otherwise you are duplicating information and possibly giving different spellings of the same contact.
As mentioned earlier, big mistakes have been made in CRM implementations in the past. Some companies proceeded based on CRM hype, and focused on the technology without having a solid business case for introducing the system in the first place. That’s probably why Craig Downing, ACCPAC vp of product management, says to start small with a CRM implementation. Pick portions that will demonstrate ROI within two months. This approach is less risky and will lead to faster adoption of the system. Actually, this is good advice for any project.
Craig also made an interesting comment on the difference between Australia and the US with respect to CRM sales. He finds US prospects are typically upgrading from a low-end CRM solution, while Australians are considering CRM for the first time. It seems marketing is much more aggressive in the US than it is in Australia.
As you probably know, ACCPAC was purchased by Sage in 2004. Best already had two CRM systems before the acquisition – ACT for smaller companies and SalesLogix for mid-sized companies. The acquisition of ACCPAC included Sage ACCPAC CRM, which is also targeted to the mid-market. According to Craig, SalesLogix is designed for companies with more complex needs that require a customized solution, whereas Sage ACCPAC CRM is designed for companies whose needs can be addressed with an off-the-shelf package.
If you have not jumped on the CRM bandwagon yet, there’s still time. Contact the sales team at Provida to arrange a meeting and perhaps a demo of some CRM options.
Use the links to the keft to discover more or visit Provida for sales or Visionetix Software for customisation.