Analysis: CRM - get involved

Whatever the size of your business, if you're looking to roll out CRM, you must involve all parts of the organisation, says Ron Condon. Recent developments, though, do favour smaller players.

When the dot-com bubble burst at the beginning of the decade, a lot of customer relationship management projects came to a grinding halt or just faded away. No wonder then that by 2002, research companies such as Gartner were saying that barely half of CRM implementations had been completed or had delivered any real benefit.

In the heady days of the boom, many companies had been seduced by the prospect of being able to track their customers' every move - and thereby gain some deep, new understanding of their own business.

Retailers especially began to construct huge data warehouses and even small corner shops started launching their own loyalty card schemes. According to those technology companies pushing the concept, CRM would give companies exciting new insights into the way shoppers think.

One example that did the rounds for a while was the close connection between the sales of beer and nappies. Analysis of customer data, it was claimed, had revealed the phenomenon of working dads popping into the supermarket on a Friday night to get the beers - and to do their paternal duty by picking up the weekly nappy supply.

Unfortunately, no other great insights emerged and the beer-nappy theory turned out to be an urban myth anyway. CRM had hit the buffers, and the whole area seemed to go quiet, with some big supermarkets such as Asda and Safeway canning their loyalty card programmes. The rewards just didn't seem to be worth the trouble and the huge expense.

But the failure of so many CRM projects cannot be blamed purely on bad timing. Giles Hutchins, head of the CRM practice with consultants Atos Origin, says: "A lot of CRM projects were run out of the sales or marketing department, where they just wanted to capture their customer information. But CRM needs to be an overarching application across the organisation, not just the front office."

The failure to integrate it with other areas of the organisation meant that CRM could only deliver limited benefits. Without links into other aspects of the business - finance, order processing, supply chain, distribution, complaints handling - the CRM system was just a glorified contact management application.

Part of the problem was that companies concentrated just on technology without seeing that a customer-centric approach to business was going to require changes in processes, procedures and also in the way people in back-office functions operated. According to Paul Brewer, head of business development for BT's CRM practice, technology should account for just 30 per cent of a CRM implementation - with people and processes taking the lion's share of the budget.

As with any system that is going to touch the whole organisation, a CRM project needs board-level backing and sponsorship, plus co-operation and input from all departments. It also has to be underpinned by real business goals, such as a greater choice of sales channels, better product availability, ability to offer better, faster service and the ability to identify the most valuable customers.

In other words, no matter what the size of the organisation, CRM has to be part of an overall business strategy with a clear model of where the business wants to get to. According to Juliet Armstrong, a partner at consultancy The Berkeley Partnership, development of that strategic model will help to involve senior management from the whole business - channel management, supply chain, product development, marketing and HR - and force them to decide overall priorities at an early stage. It also stops CRM being just an IT or sales project but one that the whole organisation will use.

That in turn sets the stage for greater integration between systems. Armstrong makes the point that new integration technologies based on web services, XML and common object models now make it far easier to create the seamless flow of information that is needed. "The challenge of integrating new technologies with legacy systems was unachievable with the tools that were available in the late 1990s," she says.

In addition, most of the big CRM applications have created open APIs to allow an interchange of information with other systems. For instance, Salesforce.com, which began life very much as a sales automation service, now reports that more than 40 per cent of all its transactions come via its API - in other words, through other applications.

For complex integration projects, where the CRM system needs to interact with three or more other applications, point-to-point links via the API can start to get messy. In those cases, Atos Origin's Hutchins recommends going for some kind of enterprise application integration (EAI) tool from the likes of BEA, IBM or Tibco.

But Berkeley's Armstrong counsels against trying to make everything integrate regardless of cost. "Consider any integration on a cost-benefit basis but also look at the impact on business process of implementing the resultant workaround [of not doing an integration]. Usually it's best to create a strategic target architecture and justified road map to achieve that architecture. This clearly explains the reasons for integration or business process workarounds at each phase of delivery."

Despite the far-reaching nature of a fully integrated CRM system, most practitioners advise a phased introduction, so that some success can be won early on. Hutchins says: "Start small and adopt a phased approach. Keep phase one succinct, so you can ensure success and buy-in for the completion of the project."

Armstrong agrees: "Each phase should have a clear business case and consider the wider impact on customers and the business - such as customer marketing and employee training. Importantly, each phase must minimise risk to the business and consider operational data requirements."

She also notes that any integration should take into account the need to comply with the raft of corporate governance and financial regulations. With so many applications transmitting or sharing information, the company must be able to maintain an audit trail and ensure back-up and recovery if things go wrong. This may well influence the choice of integration mechanism.

She advises: "Synchronous message-based integration is appropriate for order management solutions but unsuitable for transferring financial data in an auditable fashion. An ETL tool is likely to be more effective."

The availability of so much technology to help tie different applications together means that smaller companies could have an advantage in the CRM stakes. While big companies, especially the high street banks, are struggling to integrate huge legacy systems, smaller companies are less weighed down by past investments and can make the most of a newer, more streamlined approach.