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Rich Tehrani

The Birth Of CRM 2.0

By: Rich Tehrani, Group Editor-in-Chief,
Technology Marketing Corporation


For many people, Siebel Systems is the first company that comes to mind when they think CRM. Siebel has been so active in promoting CRM for the past 10 years that it's hard to think of one without the other. How many customers have been better served because Tom Siebel decided to help popularize customer relationship management?

After 10 years of promoting CRM, what's next? Where do we go? After all, there has been a great deal of innovation. Do we have room to move forward? Is there anything left to do? Can customers be made happier than they currently are? Is there room for more improvement? Can companies leverage technology in a way that makes them more productive and increases profits to a greater degree?

According to Siebel, the answer is a resounding 'Absolutely.' The next generation of CRM is all about adaptation ' the ability to be more nimble and quick. The term the company uses for this concept is 'Customer Adaptive Solutions' (CAS). I think of it as transforming your business so it has the reflexes of a cat'a cheetah, if you will. A cheetah, when it goes after its prey, sprints at incredible speeds. When a gazelle turns left or right, the cheetah, the fastest of all land animals, follows. The problem is that it's not easy to turn at 60+ miles per hour, and you can easily lose your balance. That is, of course, where the cheetah's tail comes in. The tail acts like both a stabilizing force and a counter-weight at speed. The tail, coupled with the eyes, nose, ears, claws and teeth, all come into play to make the cheetah a successful predator.

But why does a company need such attributes? Why adapt so quickly? The concept of adaptation is needed, in Siebel's opinion, for customer-facing knowledge workers. These employees are required to rapidly conduct situation analysis based on a broad set of disparate data and then immediately act on the analysis to implement the best possible decision. The data, in many cases, come from a variety of sources ' some structured databases and others that are unstructured.

Siebel Customer Adaptive Solutions are based on four 'pillars,' as the company calls them.

Outcome Modeling. The question addressed here is: what benefit are you trying to achieve? Outcome modeling is based on Siebel's Customer Experience Blueprint methodology and an integrated data model that provides companies with a better understanding of their customers, products and processes. The data model is embodied in a transactional container with process- and policy-based relationships, data quality and auditing for rich, real-time applications access. The data model is also embodied in a warehouse merged with other corporate data where deep, analytical insight can be derived.

In cheetah language, this is the cheetah's game plan. It is the calculations a cheetah makes when it decides which prey it may want to go after ' a young animal or an older one that may not be so nimble. It weighs the risks and rewards carefully before progressing.

Informed Action means using the information derived from outcome modeling to proactively guide customer-facing employees and applications toward taking the right action in real-time based on their role, the customer's specific profile and their organization's desired business outcomes.

To the cheetah, this is its ability to turn in either direction in response to the prey.

Predictive Insight is designed to maximize the customer service level of every customer interaction in real-time. In addition, the goal of predictive insight is to maximize profit. These capabilities leverage Siebel's predictive analytics and business-process-enabled applications that make systemic recommendations based on pre-processing and information synthesis to drive optimal behavior across an organization's business.

To the cheetah, this step could be the choosing of a specific animal to hone in on.

Rapid Realignment. As the name implies, with rapid realignment you have the ability to quickly change how your business reacts to customers to maximize the ability to meet or exceed targets set in the outcome modeling phase. In addition, Siebel customers are able to use these tools to respond to changes in the market, new ideas or changing corporate goals or ideals.

I have to liken this pillar to the cheetah using its tail to effectively bring down its prey. The only way to turn quickly at over 60 mph is to use some sort of counterweight, and that is exactly what the tail is. It allows the cheetah to match its prey, turn for turn.

To summarize, Siebel is building the infrastructure for the real-time, adaptable, customer-facing enterprise. If you think of a small company, the one advantage it virtually always has over its large competitors is its ability to turn on a dime. A company owner or manager can immediately change company policy, enabling prices to drop quickly or to increase. This change can be by region or by customer type. Large companies have so much more data to crunch and so many more data points that if they were able to harness technology effectively to process this vast store of knowledge, they could do what small companies do, but even more effectively. To me, this is what Customer Adaptive Solutions is all about: the ability for every customer-facing interaction to be shaped by market conditions and specific, real-time customer needs.

I have never been a fan of theory. In engineering classes at the University of Connecticut, my eyes automatically glazed over whenever a professor began to go into the theoretical realm. I have always been about practice. So if you have made it so far though this article and your eyes are beginning to water, rest assured, here comes some real-world examples.

If a customer tries to charge something but is over his or her credit limit, the customer will be denied credit. CAS allows a credit card company to flag both this denial and the subsequent phone call made to the credit card company by the potentially irate customer. Rather than take the customer through a long series of menus, a company can immediately route that customer to a live agent in a priority queue and ensure that the information about that customer is immediately available so the agent can help solve the problem. The system could analyze the spending habits of the customer and suggest a different payment schedule that will reduce the risk of the customer going over his or her credit limit again.

Siebel executives believe that by increasing the level of service in this manner, customers are more likely to purchase additional products from your company. I tend to agree. They say the ability to adapt is a competitive advantage. Again, I concur.

There are a number of products that fit into the CAS strategy, and one worth noting is Real-Time Decisions, a tool that employs a Bayesian learning system for offer optimization. According to bayesian.org, scientific inquiry is an iterative process of integrating accumulating information. Investigators assess the current state of knowledge regarding the issue of interest, gather new data to address remaining questions, and then update and refine their understanding to incorporate both new and old data. Bayesian inference provides a logical, quantitative framework for this process. It has been applied in a multitude of scientific, technological and policy settings. The concept here is that customers want to be helped, not sold to. They want you to offer products and services they can use.

Component Assembly is another tool in the package that glues together existing services into a cohesive whole. It uses visual diagramming and directed graphs allowing the entire business process to be detailed in a flow chart of sorts. The look of the business process is not unlike the graphical IVR scripting language with which you may already be familiar.

While this may seem complex, it isn't. Well'it is, but it won't be. It's complicated behind the scenes, but once up and running, the result should be a seamless front-end that business people can use to graphically change how their businesses functions.

Think of Microsoft Windows, Excel and Word. There is tremendous complexity behind the scenes, but a user has incredible control of how documents look and doesn't have to worry about arcane codes to make a character bold (like in HTML). Users can change fonts, colors, spacing and many other factors until they have achieved the perfect document according to their business needs. Users can embed a spreadsheet into a Word document, allowing the marketing department to have access to real-time accounting information, for example. This real-time information can help shape marketing decision making. The concept of CAS is to allow the business rules of an enterprise to easily be changed by business people without the involvement of technical people. The integration power that MS Office applications give desktop users can now, for the first time, be taken advantage of in customer-facing applications and throughout a corporate supply chain.

Another real-world example can be found in the telecom space, where the market is extremely fluid. Imagine a manager who has an idea he or she wants to try. But it would take months to reprogram systems to make the attempt, so the manager decides in the end not to bother. Or if the manager does try, by the time he or she gets the project done, market conditions have changed, making the offer less competitive than it would have been when the idea was fresh. This isn't good for the manager with the idea, the customers, the company or the manager's standing in the organization.

Using CAS, a manager should be able to set up a new offer such as, for example, free SMS for 10 days or free voice mail with every two-year contract. The idea can be tweaked as needed until perfected.

I can see that once implemented, CAS has fantastic potential, but the complexity of what I have written above is not lost on me. Just wrapping my head around all of this took some effort. Siebel executives tell me this is a work in progress, and not all the pieces are in place yet'but they are close. I asked about the complexity level of this concept and reminded my contact what happened with complex CRM implementations. The response was that you can't fix what you can't measure, but now with business intelligence tools and analytics, you can see how you are doing. You can measure progress effectively.

I asked about the Oracle acquisition and my concern that Siebel will no longer be the leader in CRM, but just a simple division of a huge software conglomerate. The response I received was that Oracle has decided that Siebel is at the heart of its CRM strategy going forward. The Siebel brand, in fact, will not only survive but it will thrive.

The Future Of On-Demand?
I asked about the on-demand market, and if this would still be a focus of the company. I was told that the on-demand business is extremely strategic to Oracle so, by default, the on-demand business Siebel has built will be bolstered going forward.

The next logical question focused on the complexity of the myriad products and services and multiple code bases. I mentioned that now Siebel not only has to upgrade and integrate its current offerings, but has to integrate them into Oracle's products and services. Just thinking of this makes me dizzy. The answer to this challenge was that Siebel had already been working to integrate into Oracle applications, as many of its customers had many disparate systems in place and needed them to 'speak' with one another. In fact, the purchase is being billed as a way to ensure there is even more support for customers on the different versions of the various software products the company sells. The reason? Oracle's deeper pockets.

I had to ask about Marc Benioff's comments about large software acquisitions never working. The response? PeopleSoft and JD Edwards customers are much happier post-merger (both were picked up by Oracle) than they were before, and the Siebel acquisition should be smooth as well. Of course, I was told there is always room for improvement and the facts will speak for themselves.

My take on all of this is extremely positive. For a start, Siebel is saying all the right things and the CRM market should still have its number-one champion going forward. It will soon be apparent how serious Oracle is about the future of Siebel and CRM, but so far there is more excitement coming out of Siebel now than there has been since 2000. If there is a challenge, it is the level of complexity needed to make all of this happen and the difficulty in explaining it to customers. The CRM space has never had to deal with such complexities before, and even though the concepts are simple, I get the feeling there will be lots of confusion in the market for a number of years as organizations change their business cultures in such a way that they are able to integrate these leading-edge ideas. After all, the corporate culture has to be in sync with these sorts of technology implementations. One of the pitfalls of CRM implementations was blind installs of technology without the core infrastructure in the enterprise to support the technology and the buy-in from employees and executives. I can see Customer Adaptive Solutions as a market that will become even bigger than CRM, but as with any technology, the learning and implementation curve will be longer than we thought, and this idea will likely become commonplace when we least expect it. One day I expect companies that deploy CAS will be considered the cheetahs of the business world.

It is perhaps fitting that my article this month in Internet Telephony magazine (November 2005) centers around Web 2.0 and VoIP 2.0. I seriously believe that Customer Adaptive Solutions will be the cornerstone of CRM 2.0 and will join its Web 2.0 and VoIP 2.0 brethren to make business more productive and customers happier. CIS

Sincerely yours,

Rich Tehrani
Group Publisher, Group Editor-in-Chief
[email protected]

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