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The Truth About On-Demand CRM

The Truth About On-Demand CRM

Despite the hype, the truth is that hosted solutions aren't going to take over the CRM world anytime soon.

At SunGard, a smaller and more narrowly defined roll-out of Salesforce.com took a full year. "We had to do a fair amount of work lining up what we wanted to accomplish with what [Salesforce.com] could provide," Slusar explains. SunGard also had to bring in consultants to assist with the roll-out and accompanying change-management issues. Some of that effort was devoted to standardizing data definitions in order to preserve data integrity. Because the company had so customized the software's template to meet the needs of its global sales force, there was no way Salesforce.com's online training would work. Slusar rolled out the system in phases until 90 percent of her user base was on it by the spring of 2004. "We still could do more to drive standardized behaviour and usage that we haven't," Slusar says.

Looking forward, Slusar has created a team to oversee the Salesforce.com product over the long term. They will work to increase user adoption and also keep track of new offerings from the vendor as well as from "the mushrooming number of partners that have popped up all over claiming they have something that works well with Salesforce.com", says Slusar. (Applications offered by companies partnering with Salesforce range from Web-based HR recruiting and screening tools to call-centre scripting and software that helps doctors take notes on wireless handhelds.)

"The good news is there are a lot of things you can do with this system," Slusar says. "The bad news is you need people to do it. And I already have a full-time job."

Different Delivery Model, Same Risks

Marxer is sticking with the hosted solution, even though RightNow had a clause in its contract that ResortCom could buy a licence and take the software on-site if Marxer wasn't pleased with the results. Although he's had to hold off on upgrades to date, he's hoping they won't pose a problem when RightNow adapts a true Web-services integration platform.

In the meantime, the on-demand system has yielded some solid ROI. The self-service function has reduced customer e-mails by 40 percent, and workflow has improved between back-office and front-office functions, resulting in a 40 percent improvement in productivity. And ResortCom has been able to introduce some automated marketing functionality that Marxer predicts will boost its bottom line this year.

Marxer credits the progress he's made with his on-demand CRM solution not to the technology itself, but to the two years he spent preparing the organization for the changes that would be required - preparation that would have been the same regardless of which delivery model he chose. "Back then, we didn't have the money or maturity to do a full-blown implementation. [As a result], I was able to do all the prep work necessary on a cultural level way before we even put out the RFP," Marxer says.

It remains to be seen whether more complex on-demand CRM implementations ultimately succeed or suffer the same fate as many large-scale on-premise CRM projects have. "Because most of these are monthly investments and in the past were smaller deployments, we haven't heard about the big disasters yet," says Bois. "The larger implementations will be the ones to watch," he says.

"On-demand CRM may be a less-expensive risk, but it's just as big a risk," says Greenberg from The 56 Group. "If you haven't planned everything out, customers will get lost. People will get fired. You will fail."

Weigh In

SIDEBAR: Is CRM Dead?

By Allen Bonde

Alive or dead, CRM is vastly changed from the acronym we once thought we knew

With the acquisition of Siebel by Oracle, many of us are pondering the question: Does this mean that CRM as we know it is dead? As a long-time industry watcher and former analyst, I actually do look at this deal as a potential endpoint in the evolution of a model that has developed over the past 15 years or so. But I also see it as further evidence of the sea change taking place in the overall enterprise applications market, which despite challenges and the potential changing of the "old guard", is in fact undergoing a bit of a renaissance - especially when it comes to bringing powerful new capabilities to the masses of business users and empowering customers to better serve themselves.

Customer relationship management or CRM as a model has its roots in three primary areas: call centre systems, help desk applications and sales-force automation, or what some have called the "front-office functions". In the mid-1990s several platform providers like Siebel and Clarify (now Amdocs) emerged, driven primarily by acquisitions, to offer consolidated functionality across the entire front office, while the "back-office" providers like SAP and Oracle generally remained focused on areas like finance, supply chain management and as it emerged, e-business.

In a way, the consolidation of front-office and back-office functionality under one umbrella - like we see with the Oracle-Siebel deal and saw before that with the PeopleSoft-Vantive deal - has been a long time coming. The benefit of having one database and common set of end-user tools is attractive. Plus, the return on traditional, stand-alone CRM investments has been mixed at best, especially when it comes to large-scale deployments. I know of several global organizations that have spent more than $100 million on CRM projects and are still uncertain what real value they have received!

It's (Still) About the Customer

Despite its name, one can argue that the greatest shortcoming of CRM is that it never really was about directly helping customers. Solutions were sold to executives running call centres or sales organizations as a way to wring out inefficiency, force standardized processes and gain better insight into the state of the business. In particular, what most CRM and CTI systems provided was a way to track customers, route and facilitate inbound communications and report on the progress of various marketing, sales or support activities.

But what these solutions generally did not address was the need to help organizations resolve customer problems, answer their questions faster or help customers solve their own problems. For this reason, we have seen a slow but steady shift in focus and investment from automating core internal front-office functions to streamlining edge processes like online customer support, product returns or account management.

In parallel, there has been a recent wave of innovation powered by Internet standards, open source software and on-demand delivery models, as well as a renewed interest in areas like knowledge management and what some are calling service resolution management or SRM. As defined by leaders in this sector like Knova Software, SRM aims to improve access to corporate knowledge by breaking down silos, simplify the authoring and capture of new content and provide more consistent answers across all sales and service channels.

Other innovators who are filling the gaps inherent in "old-school CRM" include e-commerce and personalization pioneer ATG; RightNow with its innovative on-demand customer support and self-service offerings; e-billing and online account management specialist Netonomy; Genesys and Talisma with their customer interaction management solution platforms; and content optimization specialist SafeHarbor. At the same time, several vertical solution providers like Astute Solutions and Chordiant have created next-generation applications which fill industry-specific requirements.

A New Model for CRM v.2

What is the future of CRM - or CRM v.2 if we decide that CRM v.1 is, in fact, dead? First, there must be a core driven by business rules and even knowledge management, rather than just a database. Second, solutions must address all modes of interaction, whether with an agent or salesperson, on the Web via self-service, or peer-to-peer via user forums and other collaboration techniques. Third, solutions must be adaptive, by applying analytics and personalization approaches, so that organizations can anticipate customer needs, proactively push out solutions, recommendations or offers based on who the user is, their skill level, what their preferences are, and so on.

More generally, the on-demand delivery model appears to be here to stay, although we feel that all deployment options should ideally be supported. The use of open source and developer source-based components such as those from Jive Software are also gaining momentum, especially for multi-channel "edge" functions like customer forums or enterprise instant messaging.

For the design centre, we look for CRM v.2 to be simpler to use, more open and more adaptive. It also must be inherently multi-channel, as Gartner's customer interaction hub model suggests. The customer adaptive solutions theme announced at Siebel CustomerWorld also seems on the right track. And there is the argument being made by Greg Gianforte at RightNow that on-demand delivery coupled with open source infrastructure may be the most efficient way to bring these types of applications to market, a view that has a lot of merit.

So, while CRM as a model is continuing to evolve, as a market it is definitely entering a phase where "big-bang" deployments are likely to be the exception, and ways to more efficiently reach underserved users and improve responsiveness via add-ons like user forums, a self-service knowledge base or customer analytics become the focus. Solutions will also need to be integrated, if not as part of one platform, at least in terms of common standards, and a common focus on the customer rather than only customer processes. The future of CRM as a viable approach and market depends on it!

Allen Bonde is the senior vice president of strategy & marketing at eVergance, a management consulting and systems integration company focused on CRM optimization and Web self-service

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