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Acronym soup: The fate of ERM, SRM... and more
Will they help your bottom line?

By Anthony Plewes

Published: Wednesday 08 September 2004

When the CRM, or customer relationship management, market was in its heyday, enthusiastic vendors and analysts proclaimed 'relationship management' as an axiom set to revolutionise the way companies dealt with their suppliers, partners and employees. So has the disillusionment that followed failed CRM projects put paid to the whole xRM concept? Anthony Plewes finds out.

The term 'xRM' sprung out of the boom in CRM activity but subsequently has been off limits since CRM's fall from grace. This does not mean, however, that companies are no longer focusing on their customers and other key business relationships.

Rod Street, head of the CRM practice at the business consulting service of IBM, says: "A lot of companies are doing business transformation projects using self service and IVR [Integrated Voice Response] to improve their engagement with their partners and customers, but they are not using the CRM word. The CRM acronym is not helpful and has actually started to get in the way."

Street reckons there has been a sea change in the way that companies are treating CRM projects. "Clients are getting a clear idea about the goals they want to achieve rather than wanting to simply implement a 'CRM' project," he says. "In the boom, companies tended to use the acronym without clear business goals."

"Companies that succeed in CRM have clear business goals," explains Street. "They are not framing the topic in terms of an application, but in terms of a business need: this is where the innovation is."

So if CRM is falling out of favour as a unifying concept, what future is there for xRM - essentially all other relationship management technologies? As recently as 2002, analyst house Meta Group warned that the business performance of companies that failed to manage their entire relationship network with the same rigor and discipline as they managed their customer relationships would suffer. The key to this is to extend CRM principles into an extended relationship management framework - that's XRM with a capital 'X'.

Gartner analyst Ed Thompson thinks the term itself is not particularly useful. "There are a few parts of the xRM family that overlap but they are all different disciplines," he says.

Although the disciplines are different, enterprise software vendors do share databases and data models between the components of any system. In fact, this communality has helped enterprise software vendors penetrate each others' markets. This was done most blatantly by Siebel with the launch of its employee relationship management (ERM) product, which tackled the human resources (HR) market.

"Siebel makes a big noise about ERM," says Thompson. "But it is a small part of its business. It is really HR software and there is not that much synergy with the rest of its product line." Most other enterprise software vendors prefer to use a more traditional term for their HR software.

PeopleSoft has split its relationship management enterprise software components into three different databases and data models: human resources; CRM and partner relationship management (PRM); and supply chain, including supplier relationship management (SRM).

Fabrice Jacquinet, CRM product marketing manager EMEA at PeopleSoft, says: "All databases share a static database description. And we can share part of the product between databases." Some of the information can be linked. For example, workforce information can be shared with a CRM database to guide training programmes, or a customer database can have a direct link into inventory information.

PRM and CRM share many characteristics and can share the same database. Gartner's Thompson says PRM products typically use CRM applications with specific functionality to handle channel marketing, for example, thrown in.

SRM is quite different to CRM and covers issues such as procurement and contract management. However, Thompson says there has recently been a surge in interest in companies wanting to talk to Gartner about using CRM techniques in dealing with supplier relationships, especially for their biggest and most important suppliers.

Even if the xRMs share some common ground, the biggest barrier to having a company-wide relationship management strategy is organisational. "The biggest barrier is still going to be cultural," says Thompson. "Each department has its own requirements and needs and they may be conflicting. The problem of politics is that the different departments may not even want to work together."

"Most companies are still struggling to have a single view of the customer," says Thompson. "Smaller companies might be able to have success with xRM, but it is very unlikely that larger companies will. Given that it is difficult enough to measure return on investment (ROI) in CRM, it is going to be practically impossible with xRM, because what they measure in different departments is going to be completely different."

Some companies have successfully implemented cross-departmental measures such as 'campaign to cash', but many more still have problems getting sales to work with marketing. Even HBOS, which has implemented a comprehensive SRM strategy, has not managed to combine it with other departmental initiatives. Des Quigley, group procurement systems manager at HBOS, admits: "We are keeping it separate from the CRM initiatives. Unfortunately we still operate in silos."

So if the largest and most profitable organisations, such as HBOS, can't break out of silo-thinking, what hope is there for the rest? It all comes down to ROI. Most IT directors are shackled unless they can prove ROI, and yet ROI may be as difficult to prove in xRM as it is in CRM.

It seems most companies are best advised to focus on solving specific business problems rather than develop big ticket, enterprise-wide relationship management strategies.