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September 2001


Outsourcing For Mid-Sized Business CRM Success


Just when your company decides it's time to implement a CRM system, you uncover a horror story that casts fear and uncertainty into your mind. How can a software system designed specifically to automate complex business processes and add extraordinary value to the bottom line be so -- shall we say -- unfriendly?

The software isn't the cause of the problems. It's the operational infrastructure and implementation practices.

Lengthy implementations translate into business disruptions that most mid-sized businesses simply cannot afford. In addition, these same businesses typically do not have the information technology (IT) resources required to implement, maintain and support a CRM system.

What these businesses want and expect is a fast, dependable solution that delivers CRM benefits quickly, along with the technical guidance to do it right the first time and at a cost that is economically feasible and practical.

There is a way mid-sized businesses can quickly realize the benefits of their CRM system -- outsourcing to an application service provider (ASP). Outsourcing can eliminate months from the implementation schedule by helping build, implement and, most important, manage CRM operations. Businesses can focus more on customers and less on the underlying technology.

Good examples are two businesses that decided to have their CRM software delivered to them as a service. The first, a provider of multichannel customer interaction solutions, needed a robust CRM system quickly so it could service its own customers and bring new services to market quickly. With its IT staff already committed to product development, the company could not quickly deploy a CRM system on its own. Outsourcing was the most practical choice. As a result, the company's system was up and running in less than eight weeks, roughly half the time of an in-house deployment.

The second, an electronic messaging company, knew its success depended on deploying a CRM system that would allow the company's geographically dispersed sales force easy access to key customer and prospect information.

The company was already familiar with the benefits of CRM, but it was also well aware of CRM's reputation for lengthy and costly implementations. The company decided to outsource its system to an ASP that implemented it in less than a week.

Outsourcing Can Reduce Complexity
Outsourcing to an ASP changes the way mid-sized businesses buy and access skills and technology by delivering software as a service. The outsourcer supports the software in its own centralized and secure data center and provides it to customers through the Internet or private lines.

This is an important point when you consider that customers use multiple channels of contact to conduct business at any place and at any time of the day. As a result, CRM systems integrate activities across a number of business functions and processes, meaning that more departments and employees are involved in the implementation. This introduces a level of complexity that mid-sized businesses may be ill-equipped to handle.

Added to this is a demand for round-the-clock uptime. With the advent of the Web and e-mail, customers directly interact with a company's systems, making application availability a customer satisfaction issue. A customer placing a Web order, for example, won't wait for a downed server to recover. The customer will click to the competition. This idea is reinforced with research from Boston Consulting Group, which found that 1 out of 4 online purchases fails, and 25 percent of those who experienced failure say they won't shop online again.

For a monthly fee, users can access their CRM solution unburdened by the need to manage the challenges of availability, responsiveness, expertise and system complexity. The desktop environment can be simplified with thin-client technology, which enables desktop PCs to become terminals and allows all computations to take place at the server level. This keeps all the complexity at the data center.

Experienced outsourcers know how to determine bandwidth, size servers and interconnect with devices, partners and suppliers to get the most from a CRM solution because they work with these solutions every day. Some outsourcers also extend beyond basic implementation and services, so it is important to select one that takes full responsibility for all the day-to-day operations and maintenance of the application, which can simplify the lives of internal IT staffs. As a result, companies can focus less on the technological underpinnings of a CRM solution and more on customer satisfaction.

In addition, some outsourcers provide help-desk services that serve as a single point of problem resolution, thereby reducing end user support burdens on internal IT staff. Application-focused outsourcers may offer support at every technology level, including application experts, operating system and database administrators, and network and security engineers. Automated performance management systems and a full staff of experts allow help-desk personnel to diagnose and fix problems quickly.

As a result, mid-sized businesses can buy a CRM application for its benefits. They will not need to worry about the infrastructure.

Overcoming Data Conversion And Integration Challenges
Two major challenges for any CRM implementation, regardless of whether it is done in-house or by outsourcing, are data conversion and data integration. One reason is the poor condition of customer and sales data. Many companies have not installed tight disciplines around customer data management, which is compounded by the fact that conversion data are typically drawn from many decentralized systems, all of which store data differently.

For instance, a company may have to convert data from as many as 30 different copies of contact management software, such as ACT. Without centralized control, each person may code and record data differently. One salesperson may use "A," "B" and "C" to designate the rank of a prospect, while another might use "hot," "warm" and "cold." Importing and consolidating data can slow down the implementation process considerably.

The conversion process also requires technical expertise. Converted data need to conform to the table structures and the business rules of a new CRM system. The same issues apply when integrating data from legacy systems or loading new marketing databases. Many companies underestimate the time it takes to convert and integrate data, particularly if they do not have the tools or knowledgeable resources that are familiar with the applications.

If conversion and integration are not carried out correctly, upgrades to new versions and enhancements will be delayed and more difficult to accomplish. Many companies are stuck on an old version of a CRM system because the links into legacy systems are too difficult to change or because system modifications during the initial implementation were done improperly.

Some outsourcers bring integration expertise to the hosting table by providing integration between all customer touch points, sales channels and business functions. While some outsourcers are integration experts, others merely function as hosting agents. They may implement quickly, but also may have limited knowledge of integrating solutions with back-end, Web, supplier or partner systems. Choose an ASP with a proven record of integrating CRM applications or get your integration services from elsewhere.

System Availability And Performance Impact Customer Satisfaction
Data conversion and integration issues aside, another challenge arises from the very nature of a CRM system. These systems demand availability like no other applications preceding them because they "touch" the customer like no other business solution. Customer-facing employees from sales, customer service, marketing and field support will come to depend on these solutions as a source of all customer information, such as account contacts, products used, outstanding quotes and orders, service records and agreements. In addition, customers will depend on systems being available at each interaction channel, such as the Web or e-mail.

With CRM solutions, system, application and network availability become a customer satisfaction issue. The "just reboot it" mentality used for running other systems simply does not work for CRM.

When a customer contacts the call center with a problem, the CRM system must be available for answering questions about order status or product pricing. When a field agent refers a customer to a Web site for product information, the Web site must be available. When a sales representative is ready to place an order, the CRM system must be available to accept it. All of these examples set customer expectations for availability and open the door for either satisfying customers or losing them to the competition.

Outsourcing plays a critical role in bringing consistency to system availability and performance by maximizing uptime and minimizing business disruptions. Many outsourcers offer service-level agreements (SLAs) that promise a high level of availability for both server and application environments. Additionally, some offer a money-back guarantee to back up their promises.

Load balancing, multi-tiering, redundancy and fault-tolerance technologies should be at work in a managed operations data center to keep systems accessible round-the-clock. Fully redundant electrical systems and isolated power supplies must be implemented to decrease power fluctuations and spikes that can damage servers. Battery backup and generators provide automatic cutover during power outages for uninterrupted operations.

To maximize uptime and ward off problems before they occur, some outsourcers may offer proactive system monitoring and regularly scheduled maintenance. The results are continual uptime for CRM solutions and uninterrupted business operations.

Outsourcing For Long-Term Success
Beyond initial deployment, implementing a CRM system is about properly maintaining and continually improving the system. As soon as companies go live with CRM solutions, internal IT resources can become consumed with the day-to-day tasks of supporting the expanding user base and systems environment. Desktop support, internal help desk issues and daily operations prevent them from working on more strategic, value-added projects.

As solutions are rolled out, additional users and new layers of technology will increase the burdens on internal IT support staff. When new applications are added and the user base grows in different locations and time zones, support becomes a round-the-clock job. More employees and customers will come to depend on CRM systems, making high availability and fast problem resolution a must.

Research also shows that significant costs are associated with the ongoing management of the computing environment. As more users and technology are added to the solution, these costs are hard to determine and budget. IT labor shortages and budget constraints compound the problem, as IT resources are already stretched too thin. These ongoing issues emerge quickly after implementation and can have a tremendous, negative impact on the value a company gets from its CRM solutions over the long term.

Outsourcers can provide a staff of experts in CRM technologies, including servers, applications, databases, operating systems, networks and back-end systems for inventory, shipping and finance, as well as business-to-business interactions. With outsourced offerings, CRM solutions become available to even resource-strapped companies for a manageable and practical monthly fee.

As a rule, businesses should place heavy emphasis on the outsourcer's expertise and experience with the specific applications being deployed, especially since there is more to managing applications than just ping, power and pipe. Outsourcers who bring true value to a CRM solution should have proven track records in implementing and managing the specific technologies a company wants to adopt. Given that most problems impacting productivity are related to the application, choosing an ASP with an application-centric focus can give businesses the edge they need to get the most from a CRM solution.

Tom Brennan is the vice president of marketing for ManagedOps.com, a managed operations service provider based in Bedford, New Hampshire.

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