×

TMCnet - The World's Largest Communications and Technology Community
ITEXPO begins in:   New Coverage :  Asterisk  |  Fax Software  |  SIP Phones  |  Small Cells
 

Outsourcing
September 2001

 

Outsourced CRM Trends And Tactics

BY TIM EVANS


During the Civil War, Abraham Lincoln demonstrated a penchant for changing generals. One of his more difficult choices regarding leadership change was his decision to replace George McClellan. By all accounts, McClellan had amassed great resources, developed a sound strategy, established a finely honed organization and appeared poised to turn the tide of the war. Despite these apparent advantages and promise, Lincoln chose to replace McClellan because the general had what Lincoln described as "the slows." McClellan was reluctant to commit his resources and fight.

To modern day observers, it might seem that corporate America is also suffering from "the slows." Despite the great promise of customer relationship management (CRM) and the multichannel contact center, companies have been slow to make investment decisions about this technology. According to a recent report by eMarketer, spending on CRM is projected to expand to $10.4 billion by year's end, a 167 percent increase over the amount spent in 2000. These estimates are reinforced by a recent Forrester study which indicates that 88 percent of Fortune 500 companies say the multichannel contact center/CRM model is critical or very important. (See Figure 1.)

The same Forrester study indicates that 70 percent of Fortune 500 companies say they have not implemented any of these applications. Forrester's findings are supported by a Yankee Group study in which over 50 percent of companies surveyed reported they were not currently using the Web for customer service, though they said they were planning to do so. So, despite its projected growth, the promise of investment in multichannel customer service/CRM is still to come and despite its acknowledged importance, the market so far is predominantly characterized by hesitancy, uncertainty and confusion on the part of corporate decision makers.

The Best Solution Is Not Obvious
The hesitancy in the market is a result of the current economic environment. Large-scale, IT-related spending initiatives are being delayed, postponed or cancelled. In addition, companies are much more risk-averse. Many companies are still smarting from large-scale, enterprisewide resource planning implementations or protracted re-engineering efforts and are therefore hesitant to undertake another project with far-reaching consequences.

Corporations are uncertain about the impact of multichannel/CRM solutions on their businesses and how best to incorporate Web-based channels into their existing service offerings. Companies are struggling to understand the technology, the relative strengths and weaknesses of different eCRM solutions and the likely viability of each vendor. At the same time, they are trying to determine whether their call center agents have the right skill sets, while gauging likely impact on contact volume.
 
Last, there is confusion in the market regarding how best to implement a solution. Does the company have the right set of skills in-house and appropriate bandwidth to pursue an in-house/direct purchase solution? Should the company consider bringing in consulting resources, look to a hosted solution or to an outsourced or a hybrid co-sourcing arrangement?

Two primary trends emerge as a result of these factors:

  • Companies are looking to pursue smaller scale, incremental solutions as a means to minimize risk and avoid getting mired in protracted implementations (e.g., ERP/re-engineering).
     
  • Companies are looking to external partners to help them deal with the complexity introduced by multichannel/CRM implementations.

The Moment Of Truth
With regard to scale, one of the beautiful things about the Web is that service can be made available (or not) at the moment of truth: when the customer decides service is needed. Unlike traditional telephony-based services through which calls arrive randomly based on publication of a toll-free number, Web-based customers determine their need for service while they are on a Web site. This difference can be leveraged as a means of controlling the scale of implementation. For example, customer service links can be embedded on specific pages or offered to a sub-set of customers. Similarly, multichannel implementations can focus on adding a specific channel before offering all channels.

The Pull-Through Effect Of Multichannel Services
As multichannel options are added to a company's contact center infrastructure, the need to share contact history across the enterprise increases. This is true whether or not the volume of these contacts is large or small. Typically, while initiatives and volume of contacts may be small, the fact that customers will also continue to use traditional telephony channels drives the need to extend the CRM platform into these traditional centers.

This notion of multichannel CRM driving platform changes may seem somewhat surprising given that call centers are often the last to adopt new technologies. In the recent past, while nearly all call centers had their own switches, some smaller number were able to justify the purchase of computer-telephony integration (CTI) hardware and software (and fewer still actually implemented the technology). Since these technologies were mostly related to operational efficiencies, the impact of how or whether the solution was implemented was masked from the customer.

With the introduction of multichannel CRM solutions, seams are more visible. A customer who follows-up an e-mail message or chat session with a phone call is immediately made aware that there is a lack of integration when he or she is asked to repeat the inquiry, or when the customer gets switched to a multichannel agent. Companies that don't integrate technology, intending to reduce costs and improve customer satisfaction, will actually increase costs and customer dissatisfaction.

Companies that think they can dodge the front-line integration bullet and keep call centers operating in silos will only have to revisit the issue in the not-so-distant future. Technologies and tools such as XML, which facilitate information exchange between applications and Web servers, are already available. Emerging tools, such as Microsoft's BizTalk Server (one of the new Microsoft.Net servers) are on the horizon. These technologies will help drive back-end integration to further support front-line personnel. Companies that implement multichannel CRM solutions and have integrated front-line centers will be able to quickly reap the benefits of back-end integration and customer service will be a differentiator for them. Conversely, companies that fail to integrate will be at a competitive disadvantage.

Focus, Bandwidth And Expertise
As companies adopt multichannel/CRM models, the complexity of their service operations will increase materially, creating a greater need to seek assistance from third-party subject matter experts. This leads to an increase in the outsourcing of the management, maintenance and monitoring of the CRM service platforms and/or personnel. This is accomplished via a hosted (application service provider, or ASP) model or by outsourcing either a portion (often referred to as co-sourcing) or the entire call center operation.

The decision on which solution to implement comes down to focus, bandwidth and expertise. The outsourcing decision becomes somewhat binary for companies that feel the need to own the customer relationship. Hosting and co-sourcing come down to questions of degree of complexity of the solution and a company's desire to focus on core elements of its business. Using external resources also permits a company to focus on integration with legacy systems.

Since companies will be moving to hosted and outsourced options based on the need for technological support, they will increasingly reward providers who have the best solutions with higher margins. This will pose a threat to traditional outsourcers who don't expand their multichannel capabilities and decide instead to continue competing on price. Increasingly, their business will be awarded to multichannel providers or their margins will be squeezed below existing levels.

While expected growth in the multichannel/eCRM model remains high, initiatives will be smaller in scale. These initiatives will occur both as small-scale pilots at large corporations or as full outsourced/hosted implementations at small and mid-sized companies.

Growth in outsourced and hosted business from small and mid-sized companies will also increase. These companies share the need to provide multichannel support with their larger brethren, but are limited in their ability to deliver this capability internally. Inherent in these limits are both the availability of technical personnel and the affordability of eCRM software for smaller companies.

Additionally, the availability of platform-based speech recognition solutions and usage-based pricing makes this technology affordable to smaller companies. Speech recognition is ready for prime time. It has all of the cost benefits of IVR but much greater appeal from a human perspective. Here again, the increased complexity of this solution will further drive small and mid-sized companies to look for support via outsourced and hosted providers.

Outsourcers looking to serve this market will need to act as service and technology consultants, able to provide a number of solutions including hosted (ASP) and co-sourced solutions. They will also need to be more specialized and flexible, and build processes and organizational structures that facilitate their ability to support smaller implementations.

Last, outsource companies that can transition to the multichannel/eCRM model will be able to realize higher margins, while those that fail to make the shift will face disintermediation, leading to a loss of business or lower margins.

Corporate America need not be exemplified by "the slows" when exploring the potential of CRM and the multichannel contact center. Options such as outsourcing, co-sourcing and application hosting remove the uncertainty that is present in today's CRM marketplace, while the external partners that offer such options can assist businesses in understanding complex technologies and deciding which options best solve current challenges. Our advice is to look to the past and listen to advice that Lincoln gave to Major-General Joseph Hooker, upon Hooker's taking command of the Union Army. Lincoln wrote, "Beware of rashness, but with energy and sleepless vigilance go forward."

Tim Evans is the chief operating officer of Ziptone, LLC., a provider of live, Internet-based customer support channels for e-business. The company offers a suite of services that facilitate online commerce through integrated and customized applications of traditional voice, chat, browser-sharing, e-mail and voice over IP.

[ Return To The September 2001 Table Of Contents ]


Upcoming Events
ITEXPO West 2012
October 2- 5, 2012
The Austin Convention Center
Austin, Texas
MSPWorld
The World's Premier Managed Services and Cloud Computing Event
Click for Dates and Locations
Mobility Tech Conference & Expo
October 3- 5, 2012
The Austin Convention Center
Austin, Texas
Cloud Communications Summit
October 3- 5, 2012
The Austin Convention Center
Austin, Texas

Subscribe FREE to all of TMC's monthly magazines. Click here now.