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Because the use of Customer Relationship Management applications within a corporation is the most visible management of information to the consumer, it is imperative for an organization to fully understand the market, the technology, and the variety of service providers of CRM applications.

Market

CRM can be defined as “the comprehensive approach that provides seamless integration of every area of business that touches the customer…through the integration of people, processes and technology” (C.G. Tugwell, 2000). To fully utilize the potential of a CRM software package, effective customer management must also be integrated within a corporate strategy and culture. This is due to the fact that a customer has many points of contact within an organization, and every customer touch-point must adopt the CRM methods to provide quality service, thereby creating another opportunity to sell to the customer.

As a CRM consultant, J.D. Edwards Business Intelligence for CRM enables a company to track key performance indicators, such as:

The company searching for a CRM system has two basic options at its disposal. On the one hand, a corporation could customize an in-house CRM package while utilizing a consulting company such as JD Edwards mentioned above, or on the other hand, an organization could source from a vendor a CRM package that can be customized to fit the corporation’s specific business needs. Depending on the objective of the company, a CRM solution can aid in all five levels of IT-enabled business transformation: localized exploitation, internal integration, business process redesign, business network redesign, and business scope redefinition (Venkatraman, N. 1994, 74).

International Data Corporation estimated the market for CRM services, including consulting, outsourcing, and systems integration, at $33.2 billion in 1998, with outsourcing being the largest component at $24.9 billion (United Customer Management Solutions, 2001).

Although CRM vendors are currently facing a weakening market, demand for applications is expected to pick up in the fourth quarter of 2002, with 10 percent growth this year. AMR predicts that CRM will continue to grow at 19 percent per year for the next five years (Brady, Anne, 2002). The market for CRM is expected to double over the next five years, according to AMR.

Technology

Depending on business needs and the variety of customer touch-points within an organization, the CRM system can either be one software package or it can be several various application systems that are integrated together.

CRM gathers customer information via a combination of customer interfaces, such as call centers, web sites, service departments, and distribution. CRM applications can be as simple as customer name and address or it can be as detailed as the duration spent on web store front, temperament of consumer complaint, order size, frequency of purchases, or product tastes. The diagram at the right refers to typical aspects of a CRM solution, with key/core functionalities in blue and ancillary aspects in grey (Chang, Jay 2002, 1).

The CRM provides instantaneous customer information for various departments. For a sales department, CRM provides services such as scheduling, account management, compensation of salesperson, opportunity and pipeline management, and sales forecasting. For a marketing department, CRM offers market campaign planning, analysis, prospect list generation and management, lead tracking, and distribution. For customer service and support, CRM provides services incident, defect and order tracking, problem and solution database, repair scheduling, and dispatching (IT Papers.com, p 3).

The logical view of CRM function is a large relational database management system that has powerful queries built in. It is also accessible for various departments for additional input and view of all the information and previous dialogue with the customers. The CRM can generate various reports or analysis to aid each department to better service their customer. Furthermore, the CRM allows each department to understand how other departments are interacting with the customers, providing a comprehensive customer care environment.

CRM solutions take raw information about customers, combine it with business rules and other sources of information, and produce interpretable real-time information for business decisions. The following table is a simplified example of how CRM works.

The CRM system typically consists functionally of these several logical components:

But an effective CRM implementation must provide for integration with a corporation’s existing systems, such as legacy or UNIX based systems, to coordinate front-end operations with back-end operations. “The ability of a company to develop a globally wired business network and its implementation as well as managerial components will determine its competitive position. This requires fully integrating the customer front-end with the supply-chain operations,” (Shaw, M.J. 2000, 16).

In the call center and the service and support center, the system interfaces of a CRM system can be linked with the CTI system to provide ease of inputting new information or status of customer request (IT Papers.com, p 4). In order to provide consumer customization on the Internet, the CRM should link to the e-commerce wet storefront server. In the back-office, the CRM should link to desktop PCs to offer ease of access of latest data for office personnel use. An Internet interface or a wireless system should be utilized to link CRM information to the field service personnel.

Product/Vendor Comparison

The chart above outlines the important criteria for comparing vendors. They fall under four main categories: Total Cost of Ownership, Core Business Automation, Ancillary Benefits, and Technical Requirements. Each subcategory of criteria was carefully selected to represent the most important components of functionality.

Weights are broken down into two components: (1) categories of criteria (given a % rank) and (2) subcategories of criteria (ranked on a 3-point prioritization scale where 3=high priority, 2=medium priority, 1=low priority, and 0=no value). This allows companies to weigh the overall objectives of the CRM in addition to prioritizing the individual components of each objective.

Vendors are scored on a 3-point capabilities scale based on their capacity to meet the criteria (where 3=delivered with product, 2=requires slight modification, 1=requires heavy customization, and 0=not available/possible).

The subcategory criteria scores are then multiplied by the vendor scores, for a possible of 9 points in each subcategory. These scores are then divided by the total possible points in each subcategory (based on company’s prioritization scores), added together with the other subcategories within the category, and multiplied by the percentage value for the category.[1] Finally, the points from each category are added together, leading to a final score (out of a possible 100 points) for each vendor. In total, we conducted in-depth analysis and applied this process for 22 vendors (representing dramatically different solutions) under two different weighting schemes.[2]

Abbreviations and Term

Analytics- Using data to detect trends and patterns that should be used to make business decisions.

CTI- Computer Telephony Integration-A term for connecting a computer to a telephone switch and having the computer issue the switch commands to move calls around.

Interaction Management- Recording all details of customer interaction into a centralized database.

Legacy Systems- Outdated database applications, but is still too expensive to replace.

Total cost of ownership- Refers to the actual lifetime costs of a product, as compared to the sticker price. These include costs of implementation, costs of using the product (ease of use), training, and can also include payment options.

UNIX- An immensely powerful and complex operating system for computers for data processing and running telephone systems.

Brady, Anne. May 30, 2002. “Enterprise Software Still Seen Nearly Doubling in 5 Yrs.” The Wall Street Journal.

Chang, Jay. June 2002. “A Guide to Evaluating CRM Software.” The Customer Relationship Management Guide [electronic document] (accessed 6/28/02); available from http://www.crmguru.com/members/papers/solutions_guide.pdf; Internet.

J.D. Edwards. May 17, 2002. Business Intelligence for CRM [electronic document] (accessed 06/24/02); available from http://www.jdedwards.com; Internet.

Shaw, M.J. 2000. Electronic Commerce: State of the Art. In: Shaw, M.J., A.B. Whinston et al. Handbook on Electronic Commerce.

United Customer Management Solutions. 2001. International CRM Market Size [electronic document] (accessed 06/22/02); available from http://www.ucms.net/who/international.asp; Internet.

Venkatramen, N. 1994. “IT-Enabled Business Transformation. Sloan Management Review (Winter).

Web Sites

[1] For example: Imagine that the % value of Ancillary Benefits was 35% and the only Ancillary Benefit desired (i.e. greater than 0 priority) was “analytics” with a priority of 3. If a company scored 3 points on the Vendor Capability scale, it would translate to a score of 35 points towards the final score (because it had achieved the maximum 9/9 of the points that were prioritized by the company in that category).

[2] In a real-life situation, a company would develop their own weights. Here we have demonstrated weights for two generic companies (GSC = generic small company, GLC = generic large company). Because they are looking for different criteria in a CRM solution, their final scores for each solution differ dramatically. Siebel emerges as the best choice for the large company, Optima for the small.