CRM Evolution, Revolution and You: Are You Ready for CRM?

(Originally published in the May/June 2002 issue of AFSMI's Sbusiness.)

By William K. Pollock, Scott Cabral and Leo A.P. Moerkens

State of Grace?
Even though it has been a good fifteen years since the first Customer Relationship Management (CRM) systems were adopted by some of the more technology-savvy companies (initially in the pharmaceutical sector), many of them can still speak to the laurels of such endeavors to this day. However, in today's uncertain business climate there remain a significant number of organizations that have not yet embarked on such projects. This is primarily due to their skepticism with respect to the actual level of payback they are likely to attain in the face of significant investments of time, costs and resources to support the overall effort. Further, CRM still lacks a universal definition, and the CRM industry continues to be fragmented and volatile, with some industry analysts even calling it a "fad".

We believe that the "final frontier" of business automation lies in integrating front-office functions (i.e., Sales and Marketing) with customer service and back-office functions (i.e., Finance, Distribution, Manufacturing, etc.). Despite the proliferation of front-office technology and a growing reservoir of CRM experience, the successful integration of front-office functions remains a challenge for many organizations today. Thus, it should come as no surprise that the uber-scenario of integrating the back office with the front office represents an even greater long-term, and formidable, challenge for most businesses.

Notwithstanding, we believe that CRM presents a real opportunity for businesses to foster customer care and improve their bottom line, while also affording them an opportunity to fully integrate the systems that are required to do so. While the CRM industry continues to evolve, there is still no pervasive, or ubiquitous "holy grail" solution or best practice to support its development, implementation or use. Unlike traditional back-office business functions such as manufacturing or finance, implementing a true CRM system requires greater effort, design and re-design. It also requires thinking beyond the classical way of doing business, including streamlining business processes and focusing squarely on the customer.

How Has CRM Evolved?
CRM has evolved from three distinct areas: Sales, Marketing and Service. Automation of these areas first evolved as a result of front-office PC and related technology. Ongoing advances in technology fostered increased communications and collaboration, and many companies began to see that customer-related information could be pulled together and used in a more integrated way across multiple business segments. At the same time, salespeople expressed their increased need for a market database that managed their contacts, sales opportunities and new business leads; marketing departments clamored for electronic campaign management support; and services and support organizations led the way with implementing call centers.

Quickly, industry trends forced businesses to provide increased customer service and support to meet heightened market demand, and, for the first time, many organizations gave these departments separate P&Ls. As a result, a new business environment was created, consisting of business "silos" that sometimes worked against each other, often leaving customers caught in the middle. This in turn created the awareness that a more focused model was necessary in order to maximize the performance of all customer-related functions.

The evolution of the front office finally took its cue from the integration of the back office. Historically, financial, inventory control, order processing and manufacturing systems were independent silos that companies attempted to link together. ERP was one of the first developments to integrate the back-office functions. As order processing evolved, the need to integrate sales also evolved. Soon after, businesses began to recognize the need to integrate Field Service, Help Desk and Sales/Marketing Support systems as well (Figure 1).

The Maturation of CRM: Integration & Consolidation
The need to integrate front-office functions, especially in the last five years, has created many challenges for companies. New technology platforms, changing business models, and the need for rapid deployment have led to many CRM implementation failures, and has forced the CRM market to evolve even further.

Still, today, the need for full integration of systems is apparent and the major software providers are taking action. The market continues to reflect the consolidation of software vendors and their respective packages via mergers and takeovers in order to provide this fully integrated functionality to the market. We believe the two key areas of CRM consolidation today to consist of the integration of front-office "silo" packages (i.e., Sales, Marketing and Customer Service) and the integration of the front-office and back-office (CRM and ERP). A few recent examples include:

  • Siebel acquiring Scopus (Sales and Service consolidation).
  • Invensys acquiring Baan, which had earlier acquired Aurum (Front Office and Back Office consolidation).
  • PeopleSoft acquiring Vantive (Front Office and Back Office consolidation).
  • JD Edwards acquiring YouCentric (Front Office and Back Office consolidation).
Other well-known companies have taken a "build" vs. "acquire" approach to consolidation. These companies have expanded the functionality of their own standard offerings by developing (or acquiring) additional modules to meet the growing customer demand. Representative examples include:
  • QAD (MfgPro), having developed a Customer Service module.
  • SAP having developed new customer service functionality and, later, CRM functionality, on top of their existing software.
  • Astea having developed Sales and CRM functionality on top of their existing service modules.

Integration: Hype vs. Reality
Despite the fact that all of these software packages now purport to offer "CRM functionality" on paper, there are still significant differences between the way the functionality is described in marketing brochures and what useful functionality resides in the product. The best way to determine a supposedly "integrated" application's strength is to first determine how the application evolved. Some software have originated from a manufacturing environment and may be weak in customer interaction functionality, while others may have originated as help desk systems and may be weak with respect to field service and logistics functionality.

This is always a major risk factor when an organization embarks on the CRM path. However, when companies are able to articulate a clear vision of what they want to accomplish vis-à-vis a comprehensive business process analysis, they can then best determine the right tool to use for a successful CRM implementation.

Where Is CRM Today?
They key concept upon which CRM has been built is the focusing of all business, technology and processes on the customer to create sustained, profitable customer relationships. As with any concept, the implementation should be looked upon as being a "work in progress", evolving over time, and dependent on related developments in the business world and the technologies to support it.

There are two ways to interpret where CRM stands today, essentially from two different angles: from the user organization's perspective, and from the product/software provider's perspective:

From the User Organization's Perspective
A great many companies have embraced the CRM concept as an opportunity to improve their businesses and create a competitive advantage via a customer and bottom-line focus. However, since the characteristics of vertical market segments and the cultures of individual businesses are so diversified, a universal standard for CRM does not now - or is it likely to ever - exist. This means that each company needs to develop its own detailed strategy and implementation process, and that the outcome of its efforts in doing so will ultimately influence the specific systems and communications requirements that will need to be implemented in order to make it work. This is the underlying reason behind why different companies ultimately come up with different solutions with respect to their own business models, and why there may be confusion about what CRM really is. It also suggests that the CRM concept is still developing, and that not all aspects of it are readily understood, available or ready to implement.

What we can learn from this is that careful analysis and a phased implementation will most likely be the way to go to implement these concepts in the user organization's own business environment.

From the Product/Software Provider's Perspective
Because of the ongoing demand for expanded and integrated functionality, the major providers of software applications have evolved their respective products via either a "build" and/or "acquire" model, in an attempt to integrate all of the required functionality into comprehensive suites of "branded" products.

Looking objectively at these suites, we see that there are certainly varying levels of successful integration, and that many of the presently available offerings remain fragmented at best. While each of the available systems has their strong and weak points and, as stated earlier, most have at least the minimum required functionality from a top-level perspective (i.e., "what functions are covered"), there are still significant differences that may be identified from a more detailed "in the trenches" level (i.e., "how each of the functions are actually performed").

This also leads to another key differentiator from a software perspective - the system flexibility to change and adapt to each organization's unique needs. Some software-based systems are very flexible and can adapt to virtually any business model, while others are more rigid and may force the organization's desired business processes into a certain direction that the system itself dictates. Although both approaches can work in certain circumstances, the user organization needs to be very careful in making its systems choices, ensuring that there will be a close-enough match between the software's system functionality and characteristics and the organization's specific business needs.

As a result, depending on its specific system requirements, your organization may or may not be able find a single, commercially-available software product that can support its unique business model with respect to its CRM initiative. The most common CRM applications available today are generally focused on the basic "standard" front-office interfaces with the customer (i.e., marketing, sales, order processing, customer service and support functions) that, in turn, need to interface with the organization's back-office functions which have been historically supported by ERP systems. Depending where your organization presently stands in these areas, there may or may not be a commercially-available package that meets all requirements.

However, if your organization's management starts thinking "out of the box", there are a great many other areas that lead to additional interface opportunities. Planning and forecasting to integrate supply chain management principles, managing inventory at customer sites, and documentation interfaces and updates are a few examples. These applications are not yet fully embedded in the market's current offerings, nor are they easily integratable between differing systems; however, their availability at all indicates that we are just now at the beginning of these possibilities. Ultimately, increased collaboration between the CRM product/software providers and customers will gain momentum and become a key driver for companies to re-think their present CRM focus.

Another area requiring close attention when considering a commercially-available CRM product is its communications functionality: the interface needs to perform smoothly, in real time, and be highly effective. Especially in cases that involve remote connectivity, any shortcomings in this area can cause major problems right from the outset.

Key Reasons Why CRM Projects Fail
There are essentially six key reasons why CRM projects fail. They are:

  1. Lack of management vision and commitment.
  2. Lack of complete business process analysis.
  3. Selecting the software before the analysis is completed.
  4. Implementing a system without changing the way you do business.
  5. Managing expectations
  6. Becoming locked into a system that does not support the CRM initiative (Agile Adaptability).

Lack of management vision and commitment
Many times, management thinks its involvement ends with the signing of the check to purchase the software. Sustained, consistent management involvement is key to ensuring that the organization's goals are met. Executive involvement is also critical to steer the project so that it is continually in alignment with the company's strategic objectives.

Lack of complete business process analysis
Before embarking on a CRM system program, there must first be a comprehensive analysis of the most appropriate customer-focused business processes for the organization. Too many times, companies try simply to automate their current processes, which are either a mess or not particularly customer-focused. Clear, sensible, and well-understood business processes are necessary for a successful CRM implementation - otherwise you will find yourself merely automating the existing mess, or just doing things incorrectly more quickly.

Selecting the software before the analysis is completed
Selecting software before the analysis is completed is a common - and oftentimes fatal - problem. Many organizations fall under the "ether" of a particular software package's functionality, glitzy screens or the vendor's persuasive sales methods. Many failed CRM implementations are directly attributable to a lack of desired software functionality. This is why melding the organization's workflows into the software's functionality, in a customer-focused, streamlined (and possibly reengineered) business process is generally required when implementing any of the commercially-available CRM products.

Implementing a system without changing the way you do business
Similarly, simply applying a new CRM software application over the organization's existing business processes will not get the job done. CRM is not merely a process that may be used to automate what you have been doing historically; it is a means by which your organization may also use to first assess, and then, possibly, completely change the way it conducts its business in order to provide the truly customer-focused products and services that its customers require. Many companies that have attempted to use CRM primarily as a tool for automating their historical business processes have seen their efforts lead to nothing more than a means for ensuring their status quo in an otherwise evolving marketplace.

Managing expectations
Managing expectations at all levels in an organization is critical. Management oftentimes expects to have all customer information readily at their fingertips and available in an instant, immediately following the first day the CRM project has been implemented. Customer Service representatives may think that the introduction of CRM will also introduce "Big Brother" into their organization, even possibly eliminating their jobs. These cultural considerations and expectations must be continually assessed and, where necessary, mitigated.

Becoming locked into a system that does not support the CRM initiative (agile adaptability)
Any organization's CRM project must show quick progress and must also adapt quickly to changing business processes. This is perhaps the biggest differentiator between CRM and ERP implementations. The challenge of the dynamic front office, including addressing constantly changing customer needs, competition, and technology is often the "Achilles heel" of CRM projects. Therefore, when implementing CRM in such a dynamic environment, companies should deliver functionality in quick, small steps, showing consistent progress, and continually adapt the system to the changing environment. Conversely, any CRM system that "locks" an organization into a "no way out" mode will lead to a situation where the system ultimately dictates what the CRM process will be, rather than the process dictating which CRM systems are used. The implicit agile adaptability of the system will prevent this type of failure.

Where Should Your Organization Focus?
There are basically four areas where your organization should focus to maximize its chances for a successful CRM system implementation. They are:

Return on Investment (ROI)
Return on Investment (ROI) is an area that many companies struggle to articulate. Measuring increased sales, decreased customer turnover, or reduced administrative time do not address the full picture. In some cases, companies rely instead on their instinct that implementing CRM does provide some intrinsic value to the organization, and that the costs of not implementing it will be even greater. Nonetheless, some semblance of measuring success is always necessary. ROI is preferred by most organizations as it will provide a quantifiable measure of when and how you will know you have been successful in implementing CRM.

Time to Value
Many companies ask, "When will our CRM project be implemented." However, what they should be asking is, "When will we start to receive value from using our CRM system?" Implementing CRM involves change, but the time within which individual companies and employees assimilate change may vary greatly. However, it will only be after a certain period of time when an individual organization will begin to see the specific value of projects such as CRM. Oftentimes, the actual time to value is overlooked and many managers think, incorrectly, that they will start receiving value the day after the CRM system is implemented.

Project Costs
From the outset, companies need to understand more than just their optimal business processes and commensurate measurements for success; they also need to have a clear understanding of what it will take, in terms of time, costs and resources, to fully implement their CRM project. This reflects much more than just the cost of the software. Costs related to consulting, hardware, post-implementation support and training must also be factored into the equation. Often, these costs may run 2 - 5 times the cost of the software.

Perpetual CRM
CRM should be viewed as "forever," and not merely as a finite project with fixed start and end dates. As described earlier, the "front office" is a dynamic arena, and business is constantly changing. Companies that think their CRM system and the way they deal with customers will remain constant over the years are misguided. The CRM system must be continually adjusted and adapted to meet changing conditions. Also, for many companies, a CRM project may be the first of its kind to be implemented, and it is always difficult for first-time users to articulate specifically what they want to get out of the system until they start using it. The key to keeping the users (and customers) happy is to be responsive to them - giving them what they want in terms of functionality, improvements and meaningful data. Therefore, CRM extends way beyond the specific rollout date on the project plan, and company management must structure CRM projects and staffing accordingly.

Where Is a Good Place to Start?
There is no universal best way to implement CRM, and there probably will never be. However, there are some key things that companies can do to get their CRM projects started on the right track. First, they must start with the creation of a roadmap that addresses the two most critical aspects for success:

Management Commitment
Without management commitment, the CRM effort is doomed to fail. Executives must set the tone by articulating the high-level goals of the project, and continue to evangelize the importance of CRM at all levels within the organization. Executive commitment is critical to supporting the significant efforts that are required to deliver the overall business strategy. Since many departments will have to be integrated from a process point of view, executive involvement is a necessity. Also, considering the significant investments of time and money required to implement CRM, sustained involvement at the highest level in the company will be required.

A careful analysis and definition of the requirements and measurements for the project, before it starts, will be the foundation for success. The analysis prepares the organization for the changes that are necessary - and will come - and at the same time will serve as the basis for the definition of requirements for selecting and implementing the right tools.

With these two things in place your organization will have a sound foundation upon which to build its CRM solution. Sustaining these aspects throughout the duration of the project will put your company firmly on the path to increased customer satisfaction, retention and loyalty, while maintaining and/or improving profitability.

Given its relatively brief history and the numerous stories and anecdotal experiences of companies who have either succeeded or failed in their respective implementations, CRM remains a risky proposition. However, the rewards in terms of improved customer satisfaction, strengthened competitive advantages, and more profitable customer relationships are great. Your competitors are already implementing CRM, and a "wait and see" strategy betting they will fail is probably not a good one.

All organizations have to first "do their homework" before committing to CRM. We recommend the following steps:

  • Develop a sound strategy.
  • Do an in-depth analysis of the changes that you will need to make in your business processes (and, possibly, organizational structure) before you get started.
  • Clearly define your requirements before selecting the software to support your new business processes.
  • Implement CRM in phases, starting first with the basics, and then building on that foundation to expand functionality.
Many organizations do not presently possess adequate CRM talent in-house. However, as the CRM strategy is being developed, it is imperative to have experienced, seasoned talent working on the project - and leading it. Accordingly, we strongly recommend seeking help from external organizations that are already well-versed in CRM. However, you should always be wary of bringing on too many consultants during the initial phase - in some situations this would be analogous to having the "fox in charge of the chicken coop." Accordingly, finding the right consultants that fit culturally in your organization, and work well with your employees, will go a long way toward quickly and successfully getting your CRM project started.

William K. Pollock is President of Strategies For GrowthSM, a Westtown, Pennsylvania USA-based consulting firm specializing in business planning, customer service and customer satisfaction research. He may be reached at 610-399-9717 or via e-mail at

Scott Cabral is president of Peritum Consulting, Inc., a firm specializing in CRM solutions design and implementation. Scott can be reached at 302-235-1253, or via e-mail at

Leo A.P.Moerkens is president of Hands-on Management Consultants, Inc., an international management consultancy firm that assists clients in developing and implementing business improvement programs. Leo can be reached at 203-888-1671, or via e-mail at

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