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The Customer Software Shakeout

The Customer Software Shakeout

It's a little hard to understand, but for the first several decades of the Age of Whopping Expensive Calculators we generally ignored customers. OK, after we had automated payroll and accounting we realised we'd need to bill customers to collect money, so we started including customer files in financial systems. And our products had to be shipped somewhere, so we added the customer's name and address (often different from the one in the financial system, sometimes for good reason and sometimes not) to our manufacturing systems. Despite the lurking presence of customer transactional data in many back-office systems, for years organisations never did much with it. Now a kaleidoscope of offeringsPerhaps -- and I'm not kidding -- we lacked consultants to point out how valuable the analysis of customer information could be. Maybe we needed slogans like "customer relationship management", "one-to-one marketing" and "customer intimacy" (sorry, but my thoughts always turn elsewhere when I hear that one) to urge us on.

The shortage of tools to manage customer information has become but a distant memory. Now we have such a surfeit of customer-oriented software that we have too many places to put those useful little facts about customers and how we've dealt with them. Today's challenge is to accurately predict tomorrow's customer information architecture and to lay the groundwork so that the pieces will eventually fit togetherThere are four basic types of customer information software. (I'm not counting software for customer knowledge, such as groupware and Web-based tools that allow construction of textual repositories, threaded discussions, and search and retrieval. Three of the types correspond to customer-facing business functions; the fourth is enterprise resource planning (ERP) software, which, as its vendors like to claim, corresponds to everything.

Sales-Force Automation Software

Roughly 15 years ago, companies began to realise that they could improve management of sales information. Early sales-force automation (SFA) applications focused mainly on basic data "transactions" such as order-status checking, call reporting, and time and expense reporting. But most SFA systems also included tools to store or at least access customer data. This market was nearly killed by the $99 contact manager, though some high-end sales-force systems, such as those from Siebel Systems and Trilogy Development Group, survived. These systems store information about customer contact and sales processes -- customer preferences, customised product configurations, order history and so forth. However, they are not broad enough in functionality to act as the primary repository of customer information.

Customer Service Software

The second type of customer software involves customer service and support and the selling activities that occur in call centres. Leading vendors in this category include Vantive, Scopus Technology, Clarify and Onyx Software. This type of software -- often called customer asset management or customer information management -- also initially focused on transactions, in this case automating service trouble tickets at help desks and other support tasks. These systems are now also used to capture customer comments and to create repositories of solutions to customer problems, but such high-level functionality usually takes a back seat to organising transaction chaos.

Because call centres also do sales, this category and the SFA category are beginning to overlap; vendors in each area offer functionality typically found in the other. The customer asset management category is also starting to overlap with Web-based self-service software for customers and employees.

Market Research Software

The customer software behind Door Number 3 serves the marketing function. It might be called customer analytics because the primary focus is to understand which customers are buying what and to identify the customers we should concentrate on serving, or serving well. Major vendors in this category include Oracle and IBM (both of which acquired analytics technology companies) as well as Donnelly Marketing Information Services, Harte-Hanks Data Technologies and Exchange Partners. Although companies have used customer analytics since the early 1980s, this category has never really taken off, perhaps because it's not focused on transactional data. You need to appreciate higher-order thinking to buy this stuff in the first place, and to make it work you need people who got A's in both computer science and statistics classes. Although we should, in fact, segment, prioritise and value our customer relationships, dire need doesn't force customer analytics on a company. This software perches at the top of Maslow's hierarchy of needs; self-actualisation and learning don't take place until after transactional data -- the food and shelter of customer information -- has been taken care of.

Enterprise Software

The fourth category of customer software is ERP, which can't seem to control its girth. It keeps oozing into all of the other categories, usually because its vendors keep acquiring other vendors that can provide extra functionality.

ERP's strength in the customer information arena is that it's the transaction system of record for customer interactions throughout the organisation -- from accounts payable to warranty management. ERP systems can record almost anything one wants to know about customer relationships. ERP also forces organisations to achieve companywide consensus on the meaning of the term customer and associated entities. This is generally a good thing, although it's not easy to do and it requires some functions to employ definitions that don't exactly meet their needs.

You can't yet use an ERP system to turn customer information into customer insights, but that's changing. The ERP vendors are also rapidly developing new customer-oriented capabilities. One pretty good set of integrated systems for collecting, manipulating and analysing customer information will likely materialise within the next few years. Of course, your customer may get tired of waiting and abandon you before customer software nirvana arrives.

What to Do?

Given the proliferation of customer software options, organisations need to decide where the different pieces of customer information will reside and how to integrate them into a coherent whole. Most companies should: Ensure that at least the most important customer information is uniform companywide now and stays uniform over time.

Identify which system will hold and maintain the basic customer information from which other systems will draw.

Designate which systems and business functions will address sales, service and analytics issues that relate to customer information.

Define how the different customer-oriented systems will communicate.

Ignore this advice and you may find that the customer who seems peachy from a sales standpoint costs you more than your profits in service calls or that much of your attention goes to customers who aren't worthy of it in the long term.

And getting customer information straight can yield many business benefits. For example, GE Capital, which collects customer data in several different systems, credits its standardised approach to customer information across its many business units as a key factor in its ability to monitor lending risk for all customers, no matter how far-flung.

Although integrating your customer software is critical, it's just as important to have an integrated organisational approach to customer information. With all the diverse functions that touch the customer, someone needs to ensure the commonality, consistency and quality of customer information. At Hewlett-Packard, for example, a customer information "czar" ensures that at least basic customer information, such as company name and address, is accurate and uniform across multiple systems and business units. It's less important to specify whether sales, customer service, marketing or operations "owns" the various types of customer information -- senior executives in almost every company should declare that it belongs to the entire organisation -- than to make clear the roles and responsibilities of customer information stewardship.

Finally, with better management of customer information comes more risk. It's important to ensure that a salesperson leaving the company, for example, can't take the customer information with him on a Zip disk.

If information is an asset, customer information should be among the most prized assets. It's likely that software vendors will make customer information easier to manipulate. The management and organisational issues, of course, are up to us.

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