Customer relationship management (CRM) has definitely been at the forefront of information technology (IT) managers' minds in recent months. After the Y2K efforts of 1999 and the subsequent recovery period in 2000, IT managers are now finding they can concentrate more of their efforts on developing and maintaining customer relationships.

Given the nature of the business world today, and the recent shifts in customer expectations regarding customer service and satisfaction, many organizations have their work cut out for them. With strides being made in communications, analytic tools, integration services and e-commerce applications, the face of CRM is definitely changing. It is no longer simply a matter of finding out what your customers purchase and when. CRM has evolved into a complete and complex cycle of activities, from targeting, customer selection and acquisition to product development, sales, support and ongoing relationship support.

Added to that is the fact that customer touchpoints have expanded beyond simple face-to-face, mail or telephone contact to encompass a whole range of Web-based activities. Businesses are now facing the dilemma of servicing both the real and the virtual customer – the latter being more difficult to target and identify and, more importantly, more difficult to maintain.

If one were to identify the elusive holy grail in the realm of customer relationship management, it would be the ability to achieve real-time access to a centralized single image of customer information. However, the complexity of the CRM cycle, combined with the veritable flood of information coming from multiple sources, means that this goal may appear more remote than ever.

Centralized data management may have been a relatively straightforward goal a few short years ago; however, with the complexities that the Internet and e-commerce bring to the situation, it is now becoming one of the most difficult and challenging aspects of the CRM equation. At the same time, given the intensity of the competition today, it is also becoming one of the most important.

The E- Volution of CRM

CRM has definitely evolved both in terms of its function and its execution. CRM in 2001 is a concept that combines an organization's business strategy, process, culture and technology to enable it to optimize revenue and increase shareholder value through a better understanding of the needs of customers. Today's CRM initiatives factor in a wide range of parameters, from sales and marketing to customer service, fulfillment and follow-up, with the intent of understanding not only why your customers stay, but in some cases why they leave.

Architecting a centralized CRM solution is becoming increasingly complex as the Web becomes an integral part of the customer profile. The Web has not only triggered an incredible expansion in the reach and data-gathering capabilities of organizations, it has also brought with it increasing fragmentation in the collection and management of that data. Now systems from the front line to the back end are collecting, analyzing and disseminating information – all for different purposes and end users. The value of that data, regardless of its source, is undisputed. The challenge is capitalizing on the value of that data by ensuring that it is accurately shared between systems in virtual real time.

A few short years ago, data collection was limited to specific sources - an automatic teller machine (ATM), a point of sale/service (POS) terminal and/or personal contact – that could feed the relevant information relating to the transaction to a central database. Transaction information, customer statistics (age, address, etc.), purchase histories, etc., provided organizations with the ability to engage in targeted marketing functions and improve sales.

As Web-enabled applications have increased and customer touchpoints have expanded, this simplistic view of data management has quickly become outmoded. In today's CRM world, customer information is no longer as easily controlled, managed or categorized. Customer contact information can be initiated from store or branch locations, during sales calls, through call centers, on the Web site, using handheld PC devices or any other number of sources. An added challenge is that the closer the information flow is to the customer, the more complex the management of that data is for the business.

The New E-Customer

Customer profiles and expectations have also changed. Customers are smarter, more technologically sophisticated (more than 40 percent of the U.S. population owns personal computers) and more mobile. Communication devices are far more complex, and search capabilities are increasingly intuitive. The information being gathered in various databases is expanding exponentially, and more organizations want to use this wealth of information more effectively to respond to ever-increasing (and less forgiving) customer demand.

With the advent of the Internet, information is no longer secret and the definition of a customer has grown from being simply an end user. The average e-consumer can use Web tools (such as agents, bots, metasearch engines) to be far more knowledgeable on product specifications than a typical salesperson. Suppliers, for example, now need to access corporate databases to check inventory, examine sales histories or track deliveries. Manufacturers have a vested interest in accessing an organization's database in order to streamline manufacturing processes and manage inventory.

It is therefore increasingly imperative that information not only be accessible in real time, but updates to that information - whether the change is generated by a customer, a supplier or someone internally – be posted and available to all parties involved.

CRM Among the Islands of Information

The goals are clear, but the execution is far from simple. As companies scramble to keep pace with rapidly increasing data collection requirements, many are finding that the data that has been collected over the years has been parceled out to different databases for very different functional purposes. Sales, marketing, systems support and administration – each of these divisions can be working from individual databases using specific analytical tools. This, in turn, means that entries can be duplicated or even overlooked and synchronization of that data and the analytical information that evolves from it is hit-and-miss at best.

A customer change of address, for example, may reside at a company's head office but not be available to the call center. A transaction at an ATM will reflect a current balance that will not appear at the branch or head office level until the next morning. In fact, a customer could contact a company's head office, branch and retail store at any given time during the day and be given three different answers to an account balance inquiry.

A car dealership may have less information at hand on specific car models and availability than the corporate Web site. An online shopping site may be up to speed on order processing and shipping, but be missing data from the customer's financial institution regarding a credit problem.

The level of database fragmentation to some extent is contingent upon the nature of the industry in question and its evolution on the technology front. For example, traditional paper-based institutions such as banks, insurance and manufacturing operations tend to be more decentralized. These are the groups that installed systems in the 1960s and 1970s – a time when real-time transaction processing was in its infancy, customers' expectations were that they had to wait for information, and legacy systems were architected to handle massive volumes of transactions in batch mode. Although these systems have served these companies well over the years, the original infrastructure was not designed to handle the real-time requirements of the e-business world.

As a result, the transition to Web-based applications has led to increasing decentralization of data. Over the 30 or 40 years of business operations, applications continued to be added, new databases were incorporated into the system, and middleware patches (called upgrades) were implemented to allow disparate databases to communicate. For example, over its three decades of operations, one Midwest bank had accumulated 310 applications and seven different database structures.

On the other hand, forward-thinking organizations that developed their IT strategies in the 1980s (e.g., airlines, brokerage firms) built their infrastructures based on the assumption that virtual real-time transaction processing was the norm. As a result, they have more centralized operations that can better manage high volumes of customer data. Schwab, for example, has built its entire infrastructure on the premise that all transactions conducted online are real-time in nature. The survival of an airline company is also contingent upon having up-to-the-minute information, 24 hours a day, seven days a week. Having information on a reservation or flight schedule change on all systems is critical from a customer relationship perspective.

Crossing the Chasm of Re-Architecture

The victims of the earlier IT implementations are now putting considerable effort into standardizing data where possible. Clearly, it is important for these types of operations to reduce the applications they must support and, at the very least, centralize their database structure. While there are vendors that provide very effective data translation tools to move data between different databases, in the grand scheme of things, this is a short-term solution to a long-term problem.

The long-term strategy, however, is not without its challenges - with price being one of the main hurdles. Quick fixes in the form of translation software, data marts, etc., can represent one-tenth of the cost of a system replacement but have very limited life spans. At the same time, institutions that have supported millions of customers over many years have an incredible amount invested in their legacy systems that, for all intents and purposes, with a few adjustments can still get the job done. There are always tools at hand that can help meet capacity needs as they evolve.

However, when looking at the problem from a CRM perspective, short-term gains can translate into long-term problems as competitors enter the fray with highly evolved IT infrastructures that can easily support the escalating and increasingly complex demands of today's consumers. The question for many businesses today is not whether they need to make the transition, but rather when to make the transition to a new CRM model without compromising customer service, data integrity and overall performance.

In developing a CRM strategy, there are a number of critical issues to be examined. First and foremost, the strategy must align with the company's overall business objectives and be driven by top management. Second, planning is everything. It is important to assess the future benefits of a CRM strategy and weigh the cost of implementation against the long-term benefits. Another critical step is to plan, execute and manage the strategy against a return on investment objective, and then build a baseline for measuring ROI benefits. Also, it is critical to gain an understanding of the financial impact of every proposed change as your initiative evolves. Third, to facilitate a CRM build/buy/outsource decision, organizations must realistically examine their functional requirements and core competencies within the business and end-user communities. They must contrast these results against the business and technology risks for CRM projects to mitigate overall risk.

Those transitioning to a new CRM model should always bear in mind that it is a full cycle. The main goal is to develop and maintain the end-user relationship by managing all end-user contacts. However, this involves many sequential operations involving four customer actions: attraction to interaction to transaction to satisfaction.

The processes involved are:

  • Analyzing internal data to target selected customers.
  • Finding out what those customers want.
  • Developing the right products.
  • Producing those products in a just-in-time model.
  • Setting up your marketing to attract the selected customers.
  • Having your sales methodology in place to facilitate the five previous processes.
  • Satisfying your customer.
  • Finding out what more they need and repeating the process.

For each organization, the CRM cycle can differ, but the procedures for effecting a transition are essentially the same. In order to understand how an organization needs to implement CRM to suit its particular environment and customer base, it must first analyze the customers in terms of their expectations and how they want to communicate. Following analysis, the next stage is to architect a transition program to see how the new business model affects the current mobile office, contact center and back office, and the impact this will have on the data center.
A solid CRM architecture needs to support all these processes, and the customer needs to become interlinked. However, from a vendor standpoint, there are no systems in the market that are capable in all areas.

Implementing a fully integrated CRM solution, whether short or long term, may be a challenge, but it is certainly not an impossibility. There are ways and means for organizations to transition to a new CRM model without compromising the integrity or quantity of the data that has been accumulated over decades of business. Methodologies and technologies can vary, and transition schemes can be scaled according to current and future needs. Whatever the choice, there is no question that centralized management of data is a critical cornerstone of an effective CRM strategy. It is not just a question of corporate efficiency. It is a matter of survival.

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