How can you tell when a new product market has hit critical mass? Count the number of acronyms used to describe it. If there are at least three, you might want to start paying attention.
If the above rule holds true, then have we got a market for you: CRM, CIM, ERM, CIS and ECM are all used to describe a growing space. These acronyms stand for customer relationship management, customer interaction management, enterprise relationship management, customer interaction systems and enterprise customer management, respectively. They all mean approximately the same thing, though: outward-facing, front-office, enterprise-level applications.
Vendors that previously sold packages that focused on sales forces, marketing, call centres, and support services have begun to cross into each other's areas.
Now customers are presented with large front-office suites that purport to take care of all aspects of customer contact.
Midmarket customers are driving this latest push. And, considering the fact that most of them work with integrators, the channel has become a crucial avenue for this new market.
Estimates of how fast the overall space will grow over the next few years range from 35 to 55 per cent. Researchers at the analyst Aberdeen Group claim that the sales-force-automation portion of the CRM space grew more than 70 per cent last year to just over $US975 million.
Add to that the call-centre, marketing, and support packages, and you're looking at what is probably the fastest-growing IT market, aside from Y2K-related software.
The solutions integrators working in this area come in all flavours. But most, from the mum-and-dad shops to the Big Five, talk about two types of integration firms that inhabit this market.
"There are resellers that focus on making technology do things, such as send a fax. They allow you to have people who are somewhat less trained, because all they need to do is push buttons," says Kevin Turner, vice president at Boss Systems in Chicago. Boss is one of the top five integrators in sales volume of GoldMine Software's sales-force-automation package.
According to Turner, the other type of integrator helps companies get to a higher level of business effectiveness - to sell more effectively, improve the relationships they have with customers, use their marketing dollars more effectively, and create a more productive environment for their employees.
Bill Okun, director of Massachusetts-based Sapient's CRM practice, agrees with Turner's assessment, but he also says that the smart play is bridging the two methodologies. "That's where really good solutions integrators will add tremendous value for their customers."
During the past year, Okun and Sapient have been working with a midmarket customer - the credit division of a major office-systems manufacturer. The com-pany had numerous call centres and dozens of different applications, some homegrown and some early-stage implementations of packages. Sapient agreed to help pick a single call-centre application and implement it.
As Sapient got further into the project, the customer began to realise all of the possibilities inherent in the CRM technology. When the customer began to rethink its priorities, Sapient took on a role that was more focused on business-process consulting.
"By the time we were done, we had put together a high-level business design - across all of the customer's business units - of how the customer is going to interact with its customers," Okun remembers.
Sapient also designed processes to allow the call centres to be used for marketing, sales, and customer service. "It was a classic case in which the customer thought it wanted to buy a technology solution, and I believe that ultimately it will, but the conversation led to what the business drivers are and what that means from an end-customer perspective."
Aberdeen Group predicts that the market share for such midmarket CRM solutions will grow from 21 per cent of the total front-office market in 1997 to 33 per cent in 2001.
Aberdeen claims that as pricing and product quality equalise in many fields, companies must compete based on superior customer service. This need is felt acutely in the middle market, where competition from the rapidly consolidating top-tier companies is fierce.
Technology also makes it much easier for midrange companies to turn to CRM solutions. Robust Intel-based server architectures, combined with the boom in Microsoft NT and BackOffice and inexpensive wide-area networking over the Internet, have all rapidly pushed this technology space forward.
Software vendors have also set their sights on this market - midmarket solutions are popping up faster than crocuses in the spring. Enterprise-resource-planning (ERP) vendors, with their deep penetration into the Fortune 1000 and increasing inroads into the back-office operations of smaller companies, are rattling their collective sabres at this middle market as well.
This trend has led to a decision paralysis for many midsize companies that have already undergone the pain of an ERP implementation. According to integrators like Okun, these companies face the difficult decision of whether to wait until their ERP vendors actually have a serviceable solution in the front-office space or to pick an existing vendor and then go through the hassle of integrating the two systems.
At the same time, contact-management vendors are increasingly integrating their offerings with the leading groupware tools and upwardly migrating for the midmarket's green pastures.
Jon Ferrara, executive vice president at GoldMine Software, claims that many companies overbuy CRM solutions and end up with much more than they'll ever need. He says that buying customer-relationship software is a lot like buying a VCR: you go to the store and meet a slick salesperson who dazzles you with dozens of sexy features, and you end up buying a completely decked-out unit.
"You bring it home, though, and all you ever use is play, rewind and eject," says Ferrara.
Some of the larger integrators don't see it that way. In fact, Rob Lang, who is in charge of Mastech's new CRM practice, isn't taking notice of companies like GoldMine. "They are not on our radar at all," says Lang. "We believe that the competition will come from SAP and Oracle."
He believes that the power players in the enterprise front-office space, such as Siebel Systems, Clarify and Vantive, will eventually release stripped-down, "lite" versions. Notes Lang, "Everybody is entitled to an opinion, so here is mine: GoldMine and [Symantec's] Act! will eventually just go away."
But until that happens, GoldMine's legion of more than 2000 resellers will continue to sell the software in droves. In fact, in 1998 the privately held GoldMine more than doubled its revenue.
GoldMine reseller Larry Twersky, president of Los Angeles-based Corporate Computer Center, is in the midst of a 450-seat SAP implementation for a high-tech company. Because the customer wouldn't be ready to roll with an SAP front-office solution for another 24 months, Twersky installed GoldMine. The company uses an Oracle database to power the SAP back-end. Because GoldMine can also use the Oracle database, the integration has been relatively painless. "All of their data flows right into the SAP back-end," Twersky reports.
Although the company has yet to decide whether the GoldMine solution will simply be a stop-gap measure until the SAP system is revved up, Twersky points to two facts in GoldMine's favour. First, it is already in the account, and the salespeople are trained and comfortable with the software.
Second, the price of the GoldMine product is probably going to be a fraction of the cost of the SAP solution.
That the SI may end up selling two solutions to the same problem - first GoldMine's and then, possibly later, SAP's - illustrates just how strong demand has grown for front-office automation.
Solutions study: customer-service makeoverMajor American department store chain Montgomery Ward wanted to consolidate its call-centre operations, take on new service contracts and improve customer care. A new CRM solution helped the retailer reach its goals.
The company marketed service contracts on the appliances and electronics it sold in its more than 290 stores. To handle this high-margin business, a service subsidiary of the company did the actual repair work.
About a year ago that subsidiary sought to reinvent itself with two major goals in mind: to dramatically cut costs and greatly improve customer-service quality. During that process, the subsidiary was reborn as A&E Signature Service. It built an entirely new business model with the help of Chicago-based integrator Technology Solutions Co (TSC) and customer-relationship-management (CRM) software from Vantive. TSC's experienced team was the decisive factor in edging out other SIs that had bid for the A&E job.
When the re-engineering began, A&E had 130 physical locations, all operating as small, autonomous kingdoms: each one handled its own call taking, administration, payroll, and parts tracking. To radically cut costs, A&E and TSC hatched a plan to consolidate the disparate locations into three call centres.
The plan was designed so that all calls would be load-balanced between the three centres, turning them into one virtual location.
"What most companies take 10 years to do we are doing in 12 months," says Jim Livesay, A&E's director of product service. "We will typically manage around 6 million phone calls on an annual basis, and we are going to interface with approximately 2 million customers. Roughly 2000 of our people will use this system."
As part of A&E's quest to increase its business, the company has branched out; it is no longer restricted to servicing only Montgomery Ward's products. Through deals it has struck with major appliance manufacturers, A&E has become the recommended service company for numerous products, regardless of where those products have been purchased. The goal, according to Livesay, is to raise the level of non-Montgomery Ward customers in the mix to 50 per cent.
Sunil George, a vice president at TSC, says that A&E plans to take advantage of all the information that a system like Vantive can provide. Field technicians will be issued handheld devices, and as part of their regular service they will identify other products the customer owns that A&E could service.
All of that information will be passed back into the Vantive system.
"That way, you're building a more robust customer-relationship repository, and you can truly start expanding the scope and volume of work that you do to provide support to your customers," George says.
TSC also worked hard to make the system more efficient. To handle the routine status enquiries that don't require an actual human being on the line, TSC built an interactive voice-response system to work as a gateway into the call centres. The software also tracks customer preferences, so that if Mrs Walsh in Tulsa likes to talk to a certain customer-service representative, she will be connected to that rep. "This way you are able to tailor the service provided to the customer's expectation," George says.
Prior to this initiative, A&E had no real way to measure how well it was doing as a company. "As we push forward with this, we are going to be able to measure everything, from incoming-call volume to the level of customer complaints," says Livesay. "We will then be able to focus our resources, to improve what needs to be improved and cut our costs. We've gone from operating 130 autonomous businesses to having a truly global enterprise."
Smoothing a sales-automation project
Getting salespeople to buy into a new sales-automation solution isn't easy. Here are some ways to defeat the resistance:
Make sales and marketing direct the project. Ninety per cent of a sales-automation project's success involves business-process and sales/marketing effectiveness, not hardware and software.
Organise a cross-functional task force. Include a representative from each of the areas that will be using the software. You will accomplish two goals: getting valuable input from the groups that will use the new system and helping to get buy-in on the end result.
Establish goals and milestones. A good plan provides a road map with which you can make decisions and evaluate results. Segment goals into prioritised phases for actual implementation.
Pay attention to "change-management" issues. Any sales-automation solution will inevitably change the way employees currently work. Most employees will need help making transitions.
Use a carrot and stick approach to sell the new system. The stick is management requiring that employees use the new system. The carrot is the time savings, information sharing, easier access to information, account tracking, and task delegation that the solution can provide.
Automate good business processes and re-engineer the bad. You can only automate business processes that have already been formalised. And they're only worth formalising if they're effective. If they aren't effective, then re-engineer them so that they are.
Train, train, train and support. Without proper training, it is nearly impossible for new users to understand how to use the system to benefit the company and themselves.
Implement in phases. Sales automation can best be defined as a journey, rather than an event. A successful implementation advances the system's functionality over time and in phases.
Customer relationship software needs maturityby Martin LaMonicaFront-office software for automating sales and support is one of the fastest-growing fields in software, but it shows some immaturity.
With the market expected to swell from $US1 billion to $7.5 billion in the next five years, top enterprise resource planning (ERP) vendors have jumped in through internal development, acquisitions, or partnerships. A number of smaller customer relationship management (CRM) vendors with specialised offerings, ranging from sales-force automation to help desk, fill out the landscape.
"[Vendors] are focused on components. Some do sales-force automation, some configurators, others call centre systems. It's a little cumbersome to work with, especially compared to the ERP model of the holistic suite," says Kevin McManus, a partner in the strategic services group of KPMG Peat Marwick, in Pennsylvania.
Front-office vendors are "scurrying to offer the broadest possible suite", but links to key back-office functions such as order management are missing, says Peggy Menconi, research director of CRM at AMR Research, in Boston.
As a result, partnerships that offer integrated suites are proliferating. Trilogy Software, for example, recently penned a deal with several mid-market ERP vendors, including JBA International, to offer a single front- and back-office bundle. Consolidation among vendors is also likely, analysts say.
One drawback of current offerings, according to Menconi, is that most front-office applications are focused on gathering data rather than managing the customer relationship.
"In a lot of ways, CRM software is telling you about customer touches and recording customer touches, but they're not telling you much about [customers] or your relationship with them," Menconi says.