CRM: know the dangers

In this in-depth interview, uk.internet.com, vnunet.com's sister website, cuts through the customer relationship management (CRM) hype with the help of industry expert Clive Longbottom.

The former Meta Group analyst, currently CRM and foundational technologies specialist at Strategy Partners, warns customers to tread carefully when navigating the CRM minefield.

What are the main dangers when selecting a CRM system?
Beware of consultants. They go in, promise the moon and then deliver a fistful of earth. They say: 'We can give you CRM in three months.' Now, CRM projects have a beginning, but they have no end.

We feel that the way consultants and systems integrators should go in, is to say upfront: 'This is a long-term project - we'll spend two months scoping out the problem. We'll spend the first three months thereafter solving 80 per cent of it, and then the next three months solving the next 80 per cent of what remains, and so on. At the end of each period, you can dismiss us.'

And that's how we say that users should engage with systems integrators. Eventually, solving the next 80 per cent won't be worth the cost and you'll have what you need for CRM from the integrator.

What would be your main message about CRM?
That the technology is the last thing - it's just a facilitator. And don't fall for 'eCRM'. For one thing, if you do it in a UK context, you miss out on the 75 per cent of the population that is not on the internet.

CRM is about rationalising your customer base. For example, getting rid of customers who are costing you money, better servicing the customers you want to keep, and getting more customers of that ilk on board. And you can't do all of that over the web - you still need paper, the telephone and face-to-face contact.

What are the business problems that demand a CRM system?
The problems that we see at the moment are multi-channel in nature. The web has added another layer of complexity as a distribution channel and that's put CRM more firmly on the corporate agenda.

When did the term CRM come into currency?
It was about four years ago that it first raised its head, but it's been known under all sorts of labels: customer service, customer interactive service and so on. Moreover, some vendors have been using it as a banner of convenience for their own way forward. So we've got into the same situation that we have with knowledge management where Joe Bloggs and his dog, with a pad of paper and a pencil, are suddenly selling CRM.

What should you be thinking about if you want to buy in CRM consultancy and software?
It depends where you start from. If your managing director has just come off a plane having read that everyone is using Siebel and bursts through the door demanding 'why aren't we?', then the first question you should ask is why am I working for this company?

If you have a proper understanding of CRM, you'll look at business process consultancy, which will get you to a full multi-channel solution. You need to look at what business processes have to be changed, re-engineered and optimised before you start looking at any technology.

So are you saying that, as with knowledge management, CRM has a range of aspects to it, and that it is only partly technological?
That's right. If you think the answer is, say, Siebel, then you're going to throw a lot of money away unless you start with the business. You have to ask: 'What are our core activities? What are we in business to do?' Then you have to ask what your competition within that core is up to, and you need to look at who your audience is. Most people look at what they need to do for the existing audience and forget the competition.

What can Siebel or PeopleSoft do for an ebusiness manager?
You should never ask: 'What can a technology vendor do for me?' Rather you must ask: 'What technology do I need to fulfil my business requirements?' The way that we work is that we just don't get into the technology argument. By the time we've finished advising a company, a lot of leap-frogging has gone on and we're in a position to say: 'Don't go for a technology vendor, go for a systems integrator.'

But don't all the vendors have their favourites - KPMG with Siebel and PricewaterhouseCoopers with PeopleSoft, to name two examples?
Yes, but they are also pragmatically agnostic. So, if a company comes to them with a preference for say Clarify, they'll work with that. So they are flexible, and the vendors are flexible too. Siebel, for example, is now repositioning itself, saying that it is no longer a CRM company but is instead an ebusiness applications foundation company. It's decided that too many people are on the CRM bandwagon.

If you look at BroadVision and ask whether it's a CRM or ebusiness company, it's clearly both. It's always been more on the ebusiness side, with web content management, configuration management and so on. Now, if you look at Siebel 2000, there is a new level of ebusiness capability akin to BroadVision's. So Siebel too is re-marketing itself.

What is the main trend among the CRM technology vendors?
The main thing is vendor creep. A few years ago, we were in best-of-breed land: you'd go to Siebel for an advanced sales force automation system; Remedy for a helpdesk system; Davox for a call centre system; eGain to sort emails coming in over the web; and BroadVision for a front end. Now, all of a sudden, eGain has taken over Inference and is doing knowledge management. It also has a front-end system that needs to be embedded into the web and this brings it into competition with BroadVision.

Meanwhile, BroadVison is trying to go backwards into the back office, promising that it can deal with enterprise resource planning systems. Siebel says it can do everything. Davox says it's in customer contact management dealing with email, which brings it into conflict with eGain. So, they are all competing against each other and this adds another layer of complexity when you are trying to work out what is best for the business.

Strategy Partners says that CRM is a 'business ethic, not a technology issue', and KPMG and others talk of the 'CRM ethos' of attaining a market of one. Isn't this just empty rhetoric?
Well, compare it with total quality management, where you were supposed to have zero defects. Now obviously that was nonsense, but what it really meant was that if you aim for zero defects, you stand a chance of reaching that target.

It's a similar story with the 'market of one' approach. It's absolutely impossible that every single person that comes to your site gets treated as an individual, and yet Dell, for example, manages to pass off what it does as achieving just that. It presents its offering in such a way that you feel as if you are getting exactly what you want.

Similarly, everybody thinks that when they use MyYahoo, they are getting their own personalised front page, but they're not really. Even so, as a long-term vision, the market of one is compelling and useful, even if we never reach Nirvana.

What's the business imperative driving this quest for the market of one solution?
I think it comes down to the phenomenon of conflicting loyalty on the internet. People are fickle and want to save on mouse clicks. So the more you can profile and move from a market of a few to a market of one, the more you can tie people in.

Strategy Partners' report - A Business Guide to CRM - is available free of charge at www.strategypartners.com.