May 2000

BY RICH TEHRANI, GROUP PUBLISHER, TMC

Q: What are the technology hurdles that must be overcome for: A) in-house CRM and B) outsourced CRM?

Wes O'Brien: Outsourced CRM is the smartest and most cost-effective way for companies to proceed. We believe this to be true because:

1. Outsourced providers are focused solely on CRM. Therefore, their systems are managed and operated more efficiently.
2. The technology used by outsourced providers can be leveraged across all clients, thereby making it cost-effective for their clients.
3. As experts, outsourced providers are leaders in the industry, thus staying ahead of the technology curve. This results in even more efficient, state-of-the-art systems for clients and provides for even higher levels of customer satisfaction.

Mike Littell: A) In-house CRM: In-house, companies have the advantage of an intimate knowledge of their legacy systems. Some companies building a CRM system in-house suffer from trying to reinvent the wheel in areas where they do not necessarily have strong expertise, such as data warehousing or analytics, and wind up with programs limited by a somewhat narrow view of the potential for CRM. Outsourcers bring a different perspective -- an objective eye and a wealth of previous experience.

B) Outsourced CRM: A company needs a clear strategy for its call center, and a goal for what it will accomplish for its business. Without this clear strategy, a call center cannot be successful -- regardless of whether the solution was built in-house or outsourced. What is sometimes called a technology problem is often the result of a mismatch between systems and poorly communicated expectations.

Integration with current legacy or back-office systems is difficult without access to a client's technical human resources. Integration is often the most underestimated concept of the call center technology.

Outsourcers are often in a better position to leverage their existing bandwidth to ramp up a project quickly, and can typically take advantage of the built-in scalability of their systems.

Teleservices face many of the same issues as any outsourcer. It takes a continuing investment in the e-market, in evolving database and data warehousing requirements, and in meeting standards set by COPC. Teleservices also need to have contingencies to manage capacity overflow across contact centers and have the ability to switch volumes of calls across contact centers to keep service levels up during peak demand periods.

Eric Greenberg: A) In-house CRM: Integration of many disparate systems and personnel which were never designed to work together is a difficult hurdle to overcome.

B) Outsourced CRM: There are none. A good outsource vendor should be able to integrate all functions of the existing systems into one portal which seamlessly blends them together.

Ruth M. O'Brien: A) In-house CRM: Companies must take into account the initial and ongoing financial investment, available IT and human resources, ongoing training costs, as well as diverting resources away from the core business. There are now a wide variety of packaged CRM choices, and a company must be able to evaluate the best CRM applications and vendors, and dedicate the IT resources to customize the application and maintain it. Companies must be flexible to changes in requirements, so the solution is not obsolete before it is implemented.

B) Outsourced CRM: To manage the emerging technologies, teleservices agencies must develop a standard platform of base call center technology, which will allow clients to customize applications and be flexible enough to adapt to the new technologies. To meet clients' expectations, teleservices agencies must continue to develop systems, applications and delivery channels that will anticipate the caller's requirements and a system that leads the agents through to the solution.

Timothy F. Kowalski: A) In-house CRM: Companies seeking to deploy an in-house CRM solution must identify technologies that can be successfully integrated. Selecting a contact management, database and e-mail management system that is integrated with a voice and Internet solution is extremely difficult. Many technology vendors are expanding their traditional product set space and overlapping with other vendors. This makes selecting and integrating the appropriate technologies an extremely challenging initiative.

B) Outsourced CRM: A major hurdle in outsourcing a CRM solution is the integration of technologies with in-house back-end solutions. Selecting an outsourced CRM vendor with systems integration experience and technology partnerships is important. Additionally, it is critical that the outsourced CRM solution be integrated, allowing for optimum productivity for customer service representatives (CSRs), which ultimately controls costs and improves service.

Roger LeFevre: Entities that handle their own customer interactions are seemingly at an advantage when it comes to interfacing or integrating new technology with legacy systems, because their focus is on single-enterprise CRM solutions, and the linkage to newly developed and developing technologies is critical for interoperability across the enterprise. Legacy equipment suppliers have the incentive to retain their customer bases by adapting and upgrading systems to perform across the communications continuum, and to link with emerging technologies. Nevertheless, these proprietary concepts may hinder the "openness" concept being touted by so many in the systems arena -- continuing investments in any type of closed architecture flies in the face of the connectivity.

Outsourced organizations have compounded technology issues where it is necessary to report client activity from within their contact/interaction centers, where the outsourcer, acting as host, has to deliver data to a client's incompatible system. Moreover, multiply this problem over varied clients, rather than dealing with single-enterprise constraints, and the outsourcer can have insurmountable difficulties. Electronic Data Interchange (EDI), comprehensive reporting, real-time file access and multiuser environments are challenging, at best, for the well-managed, strategically designed systems organization -- add an outsourced provider that is not symbiotic with a client and you have the makings of a disastrous relationship from the start.

Whether built (in-house) or bought (outsourced), CRM applications must be well designed to fit technically (whether integrated or interfaced) across the entire enterprise. That is entirely possible whichever model is employed. It boils down to virtually crafted perfection.

Robert Scott Moncrieff: Most organizations face unique challenges in this area. SITEL is in the process of migrating to a common set of operating platforms so that the company can better perform global work for its clients and more cost-effectively replicate its processes throughout its network of call centers. SITEL Corporation has designated Siebel as its preferred technology platform. An object-based system, Siebel supports SITEL's goal of a common system while still providing a solution that can be customized to meet each customer's unique needs. Siebel contains all the necessary elements to enable a true eCRM service offering. Siebel interfaces with Oracle as the database engine, and Genesys for the computer-telephony integration. This provides the flexibility and continued return from SITEL's investment in existing switch and dialer platforms.

Basil Bennett: The technology hurdles are the same. An outsourcer can be simpler for organizational conflict reasons, but the work is the same, so the supporting structure is the same.

Q: Which implementation of CRM is faster and more cost-effective?

Wes O'Brien: Again, we feel that outsourcing CRM activity is by far the most cost-effective and efficient implementation.

Mike Littell: If there were an easy answer to this question, there wouldn't be so many IT consultants getting into the CRM business! There are so many variables to consider, perhaps a better question is: What situations are more appropriate for in-house CRM and which situations are better suited for outsourcing?

Even for a relatively modest program where the risks are lower, you need to ask if you are straying from your core competency by dedicating resources to building a sophisticated CRM system. Some e-tailers, for example, may be brilliant masters of the Internet, but many of them are learning the hard way about the complexities of integrating fulfillment and distribution operations with the front end. Remember that a poorly executed call center reflects on the whole company, and the ultimate cost of poorly executed CRM can be high customer churn.

High-volume, complex programs servicing multiple product lines are good candidates for leveraging an outsourcer's ability to scale operations for peaks and valleys in demand.

Eric Greenberg: The fastest and most cost-effective implementation of CRM is integrating all forms of communication with the client. Outsourced CRM vendors can quickly and efficiently combine voice, e-mail and Web queries through one portal.

Ruth M. O'Brien: An outsourcer -- The outsourcer has made the initial technology investment and the costs and time are leveraged across multiple clients. Outsourcers establish many strategic partnerships with many application providers for the integration of the specific technologies and CRM solutions.

Working with an outsourcer, the client can define the CRM solution through the scope of the outsourcing service-level agreement. Technology and application enhancements can be defined and designed to meet the clients' long- and short-term needs. Companies can leverage an outsourcer's automation, technology and the skill sets needed to support their CRM solution, which can offer cost efficiencies. Additional benefits include: a more robust CRM solution, decreased implementation timeline, decreased implementation costs, customizable solutions upon request and decreased training times.

Timothy F. Kowalski: Outsourced CRM is a faster and more cost-effective solution to implement. Outsourcing provides a scalable, affordable solution utilizing proven systems, skilled resources and continuously developed and improved training, quality assurance and operations methodologies to ensure that the most consistent levels of customer support are provided, across all communication channels.

Roger LeFevre: As a general proposition, the speed to deployment of full-blown enterprise CRM is a function of the groundwork that has been laid by the organization in readying for use of CRM applications. If the model is to "own your own," then decisions will be made that are, perhaps, different than those that would be made if outsourcing were the preferential mode. For example, a CRM vendor may convince a client that its application(s) would be best integrated with existing infrastructure, and operated in-house, rather than being contracted to a service provider. That may conflict with the fact that the CRM deployment is not conducive to the organization's core business, or that the prerequisite competencies do not exist presently within the entity. In other words, like the foolish lawyer that represents himself, so goes the organization that attempts to care for that which it is not confidently able. Similarly, to learn as you go and likely make mistakes will counteract cost savings that might be realized from self-deployment. When in doubt, call an expert -- if that means someone to retrofit inside or an outsourced provider, speed to implementation and cost are relative factors. Ladies and gentlemen, choose your weapons.

Robert Scott Moncrieff: Outsourcing definitely has advantages, especially when you consider the important elements of labor and time-to-market. Outsourcing firms have years of experience working with the best technology, just as internal operations do. The difference is that outsourced providers' skill sets are better in the recruiting, hiring, training and managing of human resources. Without a well-trained human link, true CRM will not happen. In addition, internal change of such a significant nature is tough to make happen -- often because of existing corporate structures, departmental rivalries and politicking -- and makes outsourcing an attractive option.

Basil Bennett: Outsourcing, for two reasons: We have already moved up the very steep CRM learning curve, and we may miss internal political bickering as former silos are abandoned in favor of a customer-centric approach.

As you can see after reading these insights, establishing a good CRM program can be a long and difficult road if you decide to set out alone. If you find you need help, there are outsourcing partners out there that can help you provide the best possible service for your customers: contact them before your customers become your competition's customers.

Sincerely,

Rich Tehrani
Group Publisher
rtehrani@tmcnet.com