An interview by Carol Parenzan Smalley, Managing Editor, CRMGuru
Which CRM solution to buy? One that touts itself as best-of-breed (specific application such as sales or marketing) or one claiming to do it all? Ask any two people and you are sure to get three different answers. To begin our discussion among colleagues, let me introduce two leaders from both sides of the issue. After you read their words, be sure to share a few of your own.
CRMGuru: Please introduce yourself and the company you represent, including the CRM segment you service.
Lee: My name is Yuchun Lee and I am co-founder and CEO of Unica Corporation, the world leader in enterprise marketing management (EMM) solutions. I am responsible for the company’s strategic direction and day-to-day business operations.
Unica Corporation provides best-of-breed enterprise marketing management (EMM) solutions for innovative companies that want to optimize customer acquisition and relationship management, streamline processes, and empower strategic planning for added profitability and marketing success. Based on an open, scalable architecture, Unica’s Affinium Suite enables marketers to gather and analyze customer knowledge from multiple data sources; identify customer wants and needs; plan, execute and manage tailored programs for interactions through multiple touchpoints; and measure and optimize marketing effectiveness. Affinium is used to achieve customer-focused marketing and to drive customer intelligence throughout the business to deliver value at every point of customer interaction and over the life-cycle.
Unica has over 300 customers across five continents and multiple industries including banking and diversified financial services, travel & hospitality, insurance/healthcare, pharmaceutical, publishing, retail/catalog, telecommunications, automotive and energy. Customers include KeyBank, Lands’ End, Medco Health Solutions, Bank of Montreal, Nordstrom, ABN AMRO, Cintas, Peugeot, Club Med, SNCF, EDF, Scotiabank, United Loyalty Services, Choice Hotels International and AIG.
Grozier: Hello, my name is John Grozier, and I am the Vice President of Global CRM Product Marketing for SAP, the world’s leading provider of business software solutions. mySAP Customer Relationship Management (mySAP CRM) addresses the unique needs of manufacturing and service companies, large and small, across 23 industries.
With more than 2,200 customers world-wide, SAP’s CRM solution allows companies to tie together all of their front and back office functions in a single system, leveraging the relationships customers have with the entire enterprise. As the only vendor to offer seamless integration of customer-centric business processes, tailored industry-by-industry, SAP helps companies increase the effectiveness of customer interactions, enhance the customer experience, and reduce the total cost of ownership through end-to-end business processes.
Developed in collaboration with market-leading companies in 23 different industries, mySAP CRM provides solutions for industries including automotive, chemicals and pharmaceuticals, engineering, construction and operations, consumer goods, high tech, industrial machinery and components, leasing, media and entertainment, oil and gas, professional services, public sector, retail, telecommunications, and utilities.
CRMGuru: To lay foundation for today’s discussion, please share your definition of CRM and the role that technology plays in a company’s customer care strategy.
Grozier: CRM is a connected solution that seamlessly integrates the entire enterprise and business eco-system-from customers to suppliers and partners-helping companies achieve the greatest level of customer loyalty and profitability. CRM provides relevant, personalized information gathered from multiple data sources and business processes for a single view of the customer to enhance customer relationships and maximize the efficiency of customer interactions.
With a connected CRM solution, companies can integrate channels for sales and customer interaction, align their financial systems and metrics, and synchronize all activities throughout the value chain. By linking CRM with the supply chain, product development cycle, financial systems, service delivery and more, companies operate more efficiently, deliver products to market faster and increase revenue through improved customer satisfaction.
Lee: We believe that CRM is not technology but rather a business strategy and the process for delivering that strategy. CRM encompasses not just customer interactions, such as sales and service, but also marketing and product development. CRM embodies a company’s approach to serving a market across the entire corporate operation. Technology can be key to enabling a customer-centric business vision but it is not the sole answer nor does it ensure success.
Technology gives companies the ability to deliver a customer-focused strategy more cost-effectively and with higher returns. In many cases, technology can enable a company to deliver a product, service, or customer experience never before possible. For example, customer analytics help companies accurately understand and predict customers’ interests. Data warehousing allows companies to capture critical customer data and preferences (such as preferred contact channels, acceptable frequency of contact, special services desired). Marketing automation and campaign management technology lets companies deliver a personalized marketing experience based on increased knowledge and known customer preferences. Together, these integrated technologies help companies deliver an end-to-end customer experience aligned with their competitive business strategy and brand.
CRMGuru: Please describe the typical CRM buyer and the approach your company takes in meeting the needs of its potential customers.
Lee: There are plenty of CRM sellers (check out any CRM tradeshow) but there is no single “CRM buyer.” Rather, there are usually different buyers for the different functional applications that are sometimes lumped together into “CRM.” These primarily include sales executives looking for sales force automation, customer service people in need of call center software, and marketers purchasing marketing applications. Elsewhere in the organization, others are responsible for buying e-commerce software, point-of-sale solutions, and many other applications across the “front” and “back” offices. Rarely, if ever, are all of these functions organized under a single individual responsible for the entire purchasing decision. They are usually led by different individuals with differing needs, various buying cycles, and separate budgets-but all with a common goal of fulfilling a corporate strategy for CRM. It’s critical for corporate success to have alignment around a common mental model, brand and customer strategy, and metrics. With alignment, organizations can push decision-making down into the organization.
A common misperception is that because IT is involved in most CRM purchases, somehow the CIO is the “one” buyer. That is simply not true for most companies. IT provides technical due diligence during the buying process, ensures corporate standards are followed, and often provides invaluable advice in the process. Yet, frequently the budget comes from the line of business. Even in cases where IT holds the budget, the complexity of business needs across all these functions means that line of business managers are usually the primary decision makers. IT maintains veto power if an application’s architecture fails to fit the organization’s IT objectives or is unsupportable, but in world-class organizations, the IT department functions in support of the business users’ needs.
Our experience is that the key decision maker for the purchase of enterprise marketing software is the “head of marketing,” such as the CMO, SVP of Marketing, Vice President of Relationship Marketing and so forth. About 30 percent of the time, an IT executive such as the CIO, drives the initiative to purchase marketing software. In these cases the CIO is selecting technology to serve the needs of the marketing constituents and deliver on an overriding customer strategy.
Grozier: Today’s CRM buyer can be any company, large or small, looking to address industry specific business processes throughout the organization and achieve a quick time to value. We find the best success in working with companies that identify specific business opportunities or challenges to address, rather then simply focusing on solving a single customer-facing problem, like improving the call center or analyzing a marketing campaign. The majority of our customers today take the pragmatic approach of tackling one challenge at a time using the step before as a foundational building block for improving the next business process. To achieve that end, customers want a fully integrated suite of solutions-solutions that seamlessly link CRM with key business processes like PLM (Product Lifecycle Management) and SCM (Supply Chain Management), without the pain of tying disparate point solutions together.
Companies today are increasingly demanding integrated technology solutions to increase profitability, reduce total cost of ownership and achieve rapid ROI. To help companies meet their goals with mySAP CRM, we offer an industry-specific solution with complete end-to-end business processes that drive maximum impact to the business.
Trade promotion management is an example of a new industry-specific process of mySAP CRM that integrates with core solutions and systems like supply chain, strategic enterprise management and business intelligence to help consumer goods companies monitor trade promotions-a key business process that an average of 17 percent of revenue is invested in yearly. This type of end-to-end process is an example of the truly integrated approach to CRM that identifies and solves the challenges our customers are facing.
CRMGuru: The Gartner Group claims that “enterprises will rely on best-of-breed applications for 75 percent of their CRM software requirements.” Do you support this statement? Why?
Grozier: No, because customers quickly realize that to make customer interactions more effective, customer focused business processes must seamlessly connect all parts of the enterprise to create maximum value from customer relationships. Companies too often engage in CRM projects with best-of-breed vendors to upgrade only one part of their customer-facing processes, like improving the call center, or launching a self service web site, and soon realize that by approaching each project on a piece by piece basis the resulting CRM program often conflicts with itself and requires costly interfaces that ultimately result in a higher TCO (Total Cost of Ownership) and lower ROI.
In order to be successful and achieve desired results, CRM needs to be the focal point for accelerating business efficiencies across the entire business eco-system, not just an added functionality. Today’s customers need a fully integrated suite of solutions that seamlessly link CRM with key business processes like PLM and SCM, without the pain of tying disparate solutions together.
Lee: Yes. Enterprises will continue to rely on best-of-breed applications because no single vendor offers a complete solution for all customer facing, sales, marketing and service organization needs. The amount of functionality required by the front office groups, sometimes massed together into the CRM market, is vast. With myriad permutations of hardware platforms, database types, vertical industry requirements, and departmental needs, its combined complexity exceeds that of operating system software. Most industry experts agree that CRM suite vendors, and even ERP vendors, do not have the capability to deliver a deep and broad solution to all aspects of CRM for all industries and a diverse set of end-users.
For example, consider the market for marketing software, which is sometimes lumped into CRM by suite vendors. The truth is that the needs of marketers differ greatly from those of sales or service organizations. Marketers require deep customer analytic tools; they need software that can help them with their specific planning, workflow and content creation challenges; they need software to manage and execute the business rules and workflow associated with marketing campaigns and to help manage products, media and brand.
A marketer’s world is more focused on long-term strategy, working with large amounts of data concurrently, and is much less transaction-oriented than sales or service software. Most, if not all, suite vendors fail to understand the sophisticated needs of marketers, which extend well beyond direct marketing. Thus, software vendors who focus on the needs of marketers-customer acquisition and relationship management, branding and product management, and strategic planning-are much better able to deliver the tools marketing requires.
Of course, there is a benefit to having one’s marketing solution integrated with call center, sales force, e-commerce, point-of-sale and other customer facing systems. In fact, it’s imperative that applications are fully interoperable for sharing data, often in real time. The important thing to bear in mind is that systems from the same vendor will not necessarily meet both your functional or integration needs.
The moral of the story? No one supplier can meet all of your CRM needs. Do your homework, choose based on functionality, and check that integration really works. After all, you need a system that will work with current data and existing applications and adapt to changes and new systems in your environment.
CRMGuru: From a technology implementation perspective, how much of a concern is software integration? Is the concern limited just to CRM or is it enterprise wide?
Lee: Software integration is an important consideration enterprise-wide. In regards to CRM, it is important to keep in mind that CRM suites are no better integrated than the best-of-breed approach. While conventional wisdom says buying software from a suite vendor will result in better integration, the truth is that the promise of better integration is a myth.
No CRM suite vendor provides the ability to integrate with other vendors’ applications, particularly other suite vendors. This is disappointing but not surprising, as each supplier hopes to “own” all of your front office applications. This difficulty is fundamental and deeply embedded in the architecture and product philosophy of these applications. Even more astonishingly, often time the CRM suites’ modules for sales, service and marketing and other functions aren’t even integrated.
Companies need to look for applications that separate data and application layers and rely on a services-based architecture for integration. They must recognize that a suite vendor will not be the answer to all their integration needs. According to a June, 2003 AMR Research report, “CRM Architecture Strategy Decision, “homogenization will fail every time, so CRM leadership needs to think in terms of an infrastructure that enables decentralized support for unique requirements at the process or customer touchpoint level, centralizing the core data management.”
Unica’s open EMM platform has been easily integrated with a variety of other applications including Siebel, Clarify, Peoplesoft, SAS, as well as a long list of other ERP, CRM, and in-house developed applications-ensuring the ability to deliver a unified CRM strategy and customer experience continuity.
Grozier: Enterprise-wide integration is a critical factor in determining CRM success. A CRM solution integrated throughout and beyond the enterprise is best able to impact critical business processes for lower total cost of ownership and faster ROI.
Customers should look to focus their implementation expenses on configuration not on the costly prospect of building and maintaining integration points to other systems. Buying a best of breed solution means agreeing to an on-going costly process of integration with other enterprise systems and the maintenance that accompanies integration. It becomes an opportunity cost and a trade-off to providing more value to end-users.
To solve integration challenges and reduce the need for custom implementations, mySAP CRM leverages the SAP NetWeaver technology platform allowing it to operate on an open, flexible, collaborative services architecture that supports both SAP and non-SAP systems, as well as standards such as .NET and J2EE, resulting in a lower total cost of ownership.
For example, a company like Molex, a manufacturer of electronic, electrical and fiber optic interconnection products, estimates savings from integration and cost avoidance of between $1.5 and $2 million. Waters Corporation, a leading manufacturer of laboratory equipment for pharmaceutical and life sciences testing, avoided hiring new technical staff and estimates it has saved $7.2 million in initial license fees to date by selecting a single integrated suite solution from SAP instead of a CRM point-product.
CRMGuru: For the CRM solutions shopper, what are the three most important criteria when comparing vendor-offered solutions?
Lee: The three top criteria include:
1. A services-based, open architecture that separates data and application layers to support integration now and as the organization evolves;
2. Ease-of-use (customer-centric interface) and implementation; and
3. Rich, results-oriented functionality to deliver return on investment now and support the company’s more challenging and sophisticated needs as the CRM strategy expands and evolves.
Grozier: In order to achieve success with CRM, a company must look for a CRM solution that:
1. supports its overall business strategy;
2. encourages user adoption; and
3. integrates information and business processes to deliver key customer insights.
To that end, companies are looking for solutions that integrate easily across the enterprise to solve their very specific industry challenges.
CRMGuru: Looking into your CRM crystal ball, what changes will we see in this market and how vendors serve their customers over the next few years?
Grozier: Looking ahead we see continued vendor consolidation and expect companies to invest only with vendors they trust to address their most critical business needs today with an eye toward long term future growth. Companies will more closely scrutinize their CRM purchasing decisions in search of solutions that leverage existing technology and require minimal allocation of budget and resources, to deliver fast ROI and lower TCO.
As industries become more competitive and each customer pauses to consider purchases more carefully with more information, organizations will increasingly demand comprehensive, integrated end-to-end CRM solutions tailored to their industry that provide the data and insight required to make critical business decisions and achieve growth through profitable customer relationships.
Lee: CRM technology solutions will continue to be segmented into the major operational areas: sales, marketing, service. Vendors that will succeed will understand the business of their clients inside out and, with this knowledge, add measurable value in terms of helping companies leverage technology to deliver results. The CRM-hype cycle is over. It’s time to deliver tangible customer value. I predict traction and growth for CRM suppliers that deliver customer success. The companies that do not deliver success will quickly lose marketshare and position.
I also forsee continued convergence of communications and sales channels, in particular, an emphasis on integrating e-channels (email, Web, Short Message Service-SMS) with the rest of the marketing organization. This convergence has been talked about for several years, but we are still in the early stages of integrated cross-channel and right-time marketing. The convergence is critical to CRM and will become more imperative with the increasing regulation around privacy and permission-based marketing.
Lastly, my crystal ball is indicating that SOX (Sarbanes-Oxley) will dramatically affect marketing organizations by requiring proper controls and measurement of marketing operations. SOX will increase the focus on results tracking, customer interaction auditing, and expense/budget tracking, not only for trade promotion and market development funds, but across the marketing organization. For many organizations, such tracking is done on inadequate systems (those that are “homegrown” or were not designed for marketers). Over the next few years, SOX will drive companies to replace these systems with new systems designed explicitly for marketers.
CRMGuru: Thank you, Yuchun and John, for sharing your insight with the readers of CRMGuru. For those in the CRMGuru community that would like to continue this discussion of “Best-of-Breed” Application-Specific CRM vs. “Multi-Function” CRM Suite Providers, an area has been created on the online forum for this purpose.
Carol Parenzan Smalley is the managing editor of CRMGuru.com, an online community of 200,000+ global members focusing on customer relationship management. She is also an e-professor of entrepreneurship, teaching through a consortium of 1200+ colleges and universities. She and her family find balance with technology while living in a log cabin in the Adirondack Mountains of upstate New York. Contact her at
csmalley@telenet.net
Used with permission. http://www.CRMGuru.com.
