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Customer Relationship Management.gif (1808 bytes)
April 2000

 

Executing An Integrated E-CRM Infrastructure

BY RENE L. WHITE, ECONVERGENT

The Internet is fundamentally changing the relationship between buyer and seller. This change is driving two primary transitions in the customer relationship management market which, in turn, are dramatically improving the effectiveness, productivity and value of customer relationships.

First, multichannel customer interaction systems that combine telephone, the Internet, e-mail, fax and chat are quickly replacing traditional customer interaction methodologies, such as voice-only call centers, Internet-only electronic services and sales channels as customer communications channels. Through direct customer interaction, companies can create high-value, life-long-term customer relationships and deliver new and higher levels of customer satisfaction. With the new generation of more high-touch technologies, companies can provide personalized services and improved problem solving and are moving closer to their customers.

Characterized by many as the move from customer relationship management (CRM), to eCRM, this change is not limited to a small number of "dot com" businesses. With growing numbers of traditional brick-and-mortar businesses creating electronic commerce operations, and virtually every organization either implementing or planning on implementing a business-to-business or business-to-consumer e-commerce strategy, eCRM will likely touch virtually every company that has customers.

Second, the Internet is changing the way companies deploy IT solutions, with Web-based business services quickly replacing packaged software as a primary technology delivery vehicle. In the recent past, organizations had little choice other than selecting, integrating and deploying costly and complex packaged enterprise software applications for a wide range of business functions -- from front-office CRM to back-office enterprise resource planning (ERP). Typically, these applications have required months or years of deployment time and cost millions of dollars. While the productivity gains derived from these applications have played a role in improving efficiency and productivity, deployment time and cost continue to remain significant obstacles.

In response, a number of technology providers have created a new type of business solution. Rather than creating software products, these suppliers are creating more complete business solutions that are accessed through the Internet and can be deployed in shorter time scales. More than simply hosting existing enterprise applications, these business solutions offer a blend of multiple technologies, custom content and proprietary business methodologies. These new solutions aim to cut the time required to create a business infrastructure from years to months, or even weeks.

In this article, I'll discuss the impact of these trends and how e-businesses and traditional brick-and-mortar businesses can use them to their advantage.

The Rise Of eCRM

"eCRM will be the difference between winners and losers in the e-business world of the 21st Century." -- Alex Brown, Equity Research, November 1999

For e-businesses, 2000 will show a dramatic shift in emphasis from customer acquisition to customer retention and satisfaction. While the Internet "land grab" will continue unabated for years to come, some companies are beginning to realize that repeat business from existing customers and a growing share of a customer's overall purchases will be the key differentiators in e-businesses reaching profitability. In the long run, customer satisfaction, and the company's ability to leverage technology to help deliver the ultimate customer experience, will be an essential component in driving overall company valuation.

To meet this challenge, e-businesses will have to master multiple communications channels and provide their customers with an effortless range of communications options. In the Internet economy, it is not good enough to offer only telephone support or Internet support. It is almost as inefficient to offer both options, but not allow customers to move between the two communication channels. Customers will not only want to interact with their suppliers through multiple media, they will demand the ability to seamlessly move from one medium to another -- at will and without warning.

For example, a customer must be allowed to start a transaction on the Internet, receive instructions from an agent using real-time chat, click on a button to have a telephone conversation with that agent to answer a question, then move back to the Internet to complete the transaction. Whether the requirement is acquiring a new customer with their first order, customer service, field service, e-marketing, credit status, sales force automation or order delivery status, tomorrow's business must provide customers, partners and suppliers with the flexibility of integrated Internet, telephone, e-mail, fax and EDI interaction.

A Single View
In addition to providing the customer with flexible and seamless interaction options, the business must also provide its internal personnel with a single view of this multichannel interaction. To be effective, the e-business eCRM infrastructure must provide internal personnel with a single view of the customer, regardless of how they are interacting with the company and which CRM applications they are using.

In an era of personalized, one-to-one commerce, it will also be critical for the e-business to maintain a single repository for collecting customer behavior and business analytics. While many e-businesses have systems and plans for collecting e-commerce business intelligence within a single communication medium, it will be essential that these systems be able to continue to collect business information as customers become increasingly mobile between e-mail, the Internet, the telephone and then back.

The Time To Move Is Now
For new e-businesses or traditional businesses executing e-commerce strategies, the time to start planning an eCRM infrastructure was yesterday.

Historically, businesses have had two options. First, they could integrate various point products from multiple vendors, then either integrate a solution in-house or work with an external systems integration firm. Second, they could create a custom solution, either in-house or through a custom consulting engagement.

While the point product solution is the lower cost of the two, it can represent an elevated risk and reduced success rate. Using today's CRM integration process, it can take two years or more for a company to plan, integrate and deploy a rich CRM system. With vendor selection, architecture development, application integration and client environment integration, the task is complex.

Additionally, this approach requires the coordination of a number of individual technologies and products. In the event that any one technology failed, the company would be required to replace the technology and possibly redesign the system architecture. Finally, and perhaps most compellingly, any solution based on multiple commercial technologies will be very difficult for a company to integrate into a single, seamless system with a common data storage, business intelligence and system management approach.

Fully custom solutions have the advantage of providing an integrated system architecture, but have historically been characterized by higher deployment costs, longer deployment schedules and, in a time of rapid technology changes, higher maintenance costs.

From Software To Internet-Based Services -- The New Business Model
The business solution provider (BSP) model offers a new approach. By blending technology with the services needed to manage and evolve, the BSP can provide the sophistication and integration advantages of a custom approach with the rapid deployment and cost-effectiveness of a basic hosted application. According to Red Herring magazine, the migration from software to services will be one of the most important trends of 2000. It can be assumed that the BSP will take the leadership role in delivering the next-generation of technology services.

The typical BSP is able to leverage significant domain expertise to create a complete business solution. Acting as a "super customer," the BSP builds a predesigned service architecture that captures industrywide best-practice, then determines the best-of-class products that work within that architecture. Wherever necessary, the BSP can create custom technology and content that further capture its workflow methodology.

Over the coming months, BSPs will emerge in a range of markets, including front-office eCRM, human resources, accounting, IT procurement and marketing.

The eCRM Business Solution Provider
The eCRM business solution provider should address all aspects of the customer interaction infrastructure in a single, seamless solution. The eCRM service it provides blends multichannel customer interaction with closed-loop customer analytics and unified administration and reporting. Additionally, a BSP can offer a range of business processes, eCRM methodology and workflow consulting and integration services in addition to the ongoing support and services required to run a customer interaction center and evolve the technology.

Putting The 80/20 Rule To Your Advantage
In addition to providing the tactical advantages of rapid deployment and low up-front costs, the eCRM services approach can deliver other strategic advantages.

Companies are spending as much as 80 percent of their technical resources on tactical software issues, such as vendor and product selection. By working with a BSP, companies can quickly deploy a quality eCRM infrastructure and shift their focus to providing an improved customer experience and create more loyal customers while leveraging their e-business expertise. The company that invests 80 percent of its technical resources on the customer will have the clear advantage.

Companies are investing as much as 80 percent of their integration resources on making multiple enterprise applications work together, and only 20 percent of these resources integrating their eCRM solution with the company's business and customer interaction processes. With significant domain expertise, the BSP can help the company improve its workflow and process and provide its customers with a positive experience every time they go online.

The companies that can make the shift from 80 percent tactical to 80 percent strategic can create a fundamental competitive advantage. There are a number of areas where the eCRM BSP can help companies make that 80/20 shift.

Finally, the BSP enables companies to shift their emphasis from customer acquisition to customer satisfaction and retention. As previously noted, customer satisfaction will be the single most important factor in e-business profitability and, ultimately, company valuation in 2000. The companies that master customer satisfaction will be well-positioned to be tomorrow's winners.

Rene L. White is senior vice president of marketing at eConvergent.







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