Executive Briefings

CRM Integration Is Key to Moving Entire Enterprise To Customer-centric Business Model

As the Customer Relationship Software market matures, it increasingly is being viewed as an enterprise-wide solution that must integrate with other systems at numerous customer touch points. Vendors are developing ways to make that crucial integration easier.

Customer relationship management was developed as a way to help companies keep track of their customers, improve customer interactions and engender customer loyalty and revenue through specifically targeted services and promotions. It typically encompasses such applications as sales and field-service automation, call centers and help desks, and customer-database management.

As the CRM software market matures, however, it increasingly is being viewed as an enterprise-wide solution - one whose applications and processes need to integrate with other systems at all customer touch points. The purpose is to create a single profile and understanding of the customer throughout the company, and a consistent and satisfying experience for the customer, whether he is dealing with a sales representative, questioning an invoice or arranging a product shipment.

"CRM typically has been implemented at the departmental level, but as we look forward to the next level of value, it is about shifting that focus from a departmental one to one that spans the business," says Robb Eklund, vice president of CRM marketing at PeopleSoft, Pleasanton, Calif. "With CRM solutions, the endgame is to close the sale and that certainly is important, but it is really only the first step in the customer continuum. You then need to fulfill the order, bill it and support it, so the point today is not to lose that transaction or have a dysfunction when the transaction crosses the chasm between different departments."

Tying CRM to back-office applications, specifically enterprise resource management (ERP) and supply- or demand-chain management, has many benefits other than meeting or managing the customer's fulfillment expectations - though that goal is far from insignificant. Forrester Research reports that 85 percent of all call-center queries can be characterized as WISMOs: What is the Status of My Order?

Other business-enhancing benefits from such integration include improved order promising, tailored up-selling and cross-selling to match available inventory, and manufacturing that is more quickly aligned with actual demand.

A recent Deloitte Consulting survey of nearly 250 major consumer businesses in 28 countries concludes that "consumer businesses that effectively integrate their customer management and supply-chain operations are twice as profitable as competitors that do not. They are two to five times more likely to achieve superior performance in sales, market share, customer service, and other key measures, and much more likely to generate higher shareholder value."

One of the key strategic capabilities that enable these businesses to outperform their competitors is their ability to identify their most valuable customers and adjust their service based on customer requirements, lifetime potential and an intimate understanding of total supply-chain cost on a customer-by-customer basis, says the study. "This enables supply-chain managers to know which orders should get preferential treatment based on real-time knowledge about the customers that really count and which products, services and supply-chain capabilities are most important to these customers."

Eklund notes that sales people similarly benefit by knowing whether a particular customer demands extraordinary service levels or frequently cancels orders or returns products. "If a sales rep is looking across the business to all different data points, he might have a very different picture of a customer's profitability than what he would get through a sales automation tool."

Despite the inarguable benefits of building what Deloitte calls integrated "digital loyalty networks," the consulting firm reports that "only a distinct minority of surveyed companies has effectively linked their supply-chain and customer operations," and the ones that have begun this process are "just scratching the surface."

The consumer businesses surveyed by Deloitte are far from alone in this assessment, according to other experts. "The fact that CRM has been separate from SCM is a big problem for many companies because whatever the front-end commits somebody has to deliver," says Chris Gopal, head of the supply-chain practice at Unisys, Blue Bell, Pa. "This is an integration and a process issue."

The Missing Piece
Mary Haigis, director of marketing at Clarkston Consulting, Durham, N.C., says Clarkston sees many companies where this integration is the major missing piece in an otherwise strong IT portfolio. "What we see is that a lot of companies already have done CRM and ERP and supply-chain," she says. "Now they need to integrate these pieces together to get the visibility and to accelerate the business value they are getting out of their systems. If they do, then they can accelerate the power of their whole value network."

Clarkston has developed a methodology called Business Value Acceleration, which gives companies a roadmap of sorts for achieving this goal. "We're in a period where everyone knows they have to get there, but they are a little confused about the steps to take," says Haigis. "We use this process to talk them through it."

 

 

 

 

 

An average of 22 parties are involved in the fulfillment of a typical order.

 


 

 

 


Oracle, Redwood Shores, Calif., takes a similar approach with its customers and integration partners. "Making integration a reality involves more than just having our own suite tightly integrated, which Oracle does," says Kevin Rickson, senior director of Oracle CRM. "We help companies visualize their information flows, showing how business processes are linked and where integration has to happen. This really helps organizations figure out how to get their supply-chain linked with their customer chain in a way that creates one big value chain, which is the ultimate goal."

Process and technological issues are only part of the equation, however. There also are cultural and organizational barriers to overcome, says Thomas Meike, vice president and CRM leader for Cap Gemini Ernst & Young. Implementing a CRM strategy can quickly raise governance issues around who owns the customer, he says, since truly understanding the customer has implications for both revenue generation and cost of service. Marketers and supply-chain people often have conflicting views and conflicting incentives in this area. "You need someone fairly high up in the organization who has influence over customer processes as well as operational processes to be a champion for integration if it is to succeed," says Meike. "But it's certain that you can't have an independent CRM solution and an independent SCM solution and expect to reap the benefits of understanding the true value of your customer."

CRM users realize this and are starting to push for much simpler and pre-packaged integration, says Bob Ferrari, director of global supply-chain product marketing at SAP, and Mark Pyatt, who holds the same position at SAP's CRM group. "Our customers see that if they can tie their CRM into the supply-chain they can improve things like available-to-promise and order fulfillment, which have a lot to do with customer satisfaction," Pyatt says.

Both groups within SAP are working on this issue and presented a demonstration of integrated functions at Sapphire, SAP's recent user conference. The demonstration involved creation of a marketing campaign within CRM. Once created, the campaign information is sent to SAP's Advance Planner and Optimizer (APO), specifically the demand planner, so that it has visibility to the campaign and the products involved. "Then in the traditional way, APO manages that information and flows it down to our supply network planner, which checks supply," Ferrari says. "Supply planners evaluate that information and determine how to meet the demand. If they foresee a problem, alerts are sent back up to the CRM system and the marketing planners."

Currently SAP is working on integrating its own CRM and SCM packages, but its longer-term goal is to enable integration between SAP CRM and other legacy or packaged solutions. "We understand that our customers need to leverage the investments they have made and so we need to be able to interface with those systems and get the information we need," says Pyatt, "but our first priority is to get that functionality working within our own system."

PeopleSoft has built more than 80 "enterprise integration points" into its year-old, web-based CRM system and plans to increase that number by 30 percent in its next release. Eklund described EIPs as "pre-defined touch points for other departmental solutions that are commonly required by most businesses - a lot of them are inventory and financial integrations and all are built on open standards like XML messaging. So, by design, these EIPs are as extensible to other vendor solutions as they are to a PeopleSoft application."

Beyond Connecting
The resulting integration goes beyond mere "connecting," he says. It integrates on three levels: on the presentation level, by bringing all the pieces of information needed about a customer together in one view, whether that information comes from CRM, SCM or financials; on the business process level, by enabling such activities as reserving inventory for particular orders; and on the access level, by allowing information to be shared with customers, suppliers, partners, or others.

Siebel Systems, San Mateo, Calif., by far the largest CRM provider, recently introduced a vendor-neutral application integration solution called Universal Application Network. Integration server vendors, including IBM, SeeBeyond, TIBCO Software, Vitria and webMethods, all have committed technology and expertise to deliver the standards-based UAN solution. "This takes integration off the table as an issue," says Curt Lockton, senior director of product marketing.

He explains that UAN, which marks the culmination of a 15-year development effort, is comprised of three major components: a comprehensive business process library with pre-packaged, end-to-end industry-specific business processes, such as Customer Creation or Quote to Order; a business process design tool; and an integration server from one of Siebel's partners.

The server acts as a hub. Information from Siebel CRM travels through the hub and is translated into a language that various integrated, back-office systems can understand. The same thing happens when information is sent back to Siebel. "That way you are actually just dealing with making sure the applications speak to the hub effectively, rather than integrating at every touch point," says Lockton.

Onyx of Bellevue, Wash., a CRM provider that targets companies with revenue between $100m and $2bn, limits the integration complexity of its web-based system by using a multi-tiered, federated data model. Bill Bunker, vice president of market strategy, explains that the system's primary data tier contains the core customer data that drives most customer decisions. A second tier of data is available by reference but is not consolidated. "I don't think you need to actually make sure that every single shipment transaction ends up in the core CRM package," he says. "We think the secret is to bring a certain set of key data into a consolidated system and then allow access from that system to other solutions where there is a need to drill down into more detail."

For companies with fulfillment operations (unlike financial services or insurance companies that were early CRM adopters), CRM and SCM naturally come together around demand forecasting and order promising, says Joel Reed, director of product marketing for J.D. Edwards, Denver. "When we talk to fulfillment-chain companies they rarely define their issues as being about CRM," he says. "They typically talk about their issues as being about visibility." Manufacturing wants visibility to the sales forecast and sales wants visibility to inventory or capacity. "So the goal is to extend the information that typically resided within the fulfillment chain out to that demand chain and all the way out into those people who are contacting the customers."

CRM for CPG
JDE has specifically addressed these two issues. "We have a tool called demand consensus that takes forecast input from multiple stakeholders, such as field salesman, as well as results obtained from algorithms, and enables parties to collaboratively reach a consensus," says Reed. The forecast is then passed back into the fulfillment chain via CRM. To improve order-promising JDE also is integrating to CRM the available-to-promise solution in its supply-chain applications. This will allow its users that deal with customers to check available inventory and also to determine when products not yet manufactured can be promised. It addresses "profitable to promise" as well by looking at how various service options and price points impact margin.

 

 

 

 

 

"We understand that our customers need to leverage the investments they have made and so we need to be able to interface with those systems."
- Mark Pyatt of SAP

 


 

 

 

Industri-Matematik International, Mount Laurel, N.J., has found a similar emphasis on fulfillment among its consumer-packaged goods customers. "CRM to them is much more around how they manage that fulfillment process, how they serve the retailer on an ongoing basis," says Henry Bruce, chief marketing officer.

"CRM for CPG" is how Bruce describes IMI's new product, IMI Consumer Goods. "What we have done is bring together CRM capabilities around capturing the order and generating demand with supply-chain capabilities around fulfilling the order, then added event management to monitor exceptions and analytics to measure performance. It is what amounts to a complete customer service solution encompassing all points of customer contact from marketing and sales through fulfillment and after-sales service."

Order capture, order management and demand generation also are focal points for i2 Technologies, Dallas, which last year briefly marketed its demand solutions under a CRM umbrella. Its broad footprint of customer-facing capabilities includes the ability to capture orders from multiple channels, perform credit checks, enable product configuration and provide accurate available-to-promise information. Then, using existing links to its supply-chain solutions, i2 can distribute the order to the appropriate sources for fulfillment and provide visibility to the entire process.

"The point is to have a single system or process for monitoring and managing that order, which may be broken down into lots of different activities, different fulfillment points, different products and requirements," says Jay Mitchell of i2's Demand-chain Management Group. He notes an average of 22 parties are involved in the fulfillment of a typical order, so pieces of information about that order actually exist across 22 different systems. Without a single application bringing information from those 22 systems together into one record, in real time, it would be impossible for customer service representatives to provide accurate answers to order queries, he says.

An integrated package also is vital to being able to "shape" demand through promotions and dynamic pricing. "You don't want to go run a marketing campaign through your CRM, whether it is an e-mail offer or a Web advertisement or something else, unless you have the inventory to fulfill that created demand," says Mitchell. On the other hand, if an inaccurate forecast results in surplus inventory, promotions focused on those products can help move them out, or the inventory can be shifted to the source of greater demand.

Full Value Chain
At a recent AMR Research conference, i2 gave a dramatic example of how an integrated demand/supply system can provide superior customer service. TaylorMade Golf, an i2 customer for both production scheduling and demand management, drew a name to determine which conference attendee would receive a set of custom-fitted golf clubs. The recipient was selected and measured the first morning of the conference and on the second morning he received his clubs onstage from a UPS delivery person.

TaylorMade leads the industry in its turnaround time on custom orders, Mitchell says, noting that its next-day turnaround time compares with an industry standard of five to 14 days. "This is a significant competitive advantage for them," he says. "Think about that. It can take longer in some cities to get a tee time than it does to have custom clubs delivered. That's a full value-chain solution."

Customer relationship management was developed as a way to help companies keep track of their customers, improve customer interactions and engender customer loyalty and revenue through specifically targeted services and promotions. It typically encompasses such applications as sales and field-service automation, call centers and help desks, and customer-database management.

As the CRM software market matures, however, it increasingly is being viewed as an enterprise-wide solution - one whose applications and processes need to integrate with other systems at all customer touch points. The purpose is to create a single profile and understanding of the customer throughout the company, and a consistent and satisfying experience for the customer, whether he is dealing with a sales representative, questioning an invoice or arranging a product shipment.

"CRM typically has been implemented at the departmental level, but as we look forward to the next level of value, it is about shifting that focus from a departmental one to one that spans the business," says Robb Eklund, vice president of CRM marketing at PeopleSoft, Pleasanton, Calif. "With CRM solutions, the endgame is to close the sale and that certainly is important, but it is really only the first step in the customer continuum. You then need to fulfill the order, bill it and support it, so the point today is not to lose that transaction or have a dysfunction when the transaction crosses the chasm between different departments."

Tying CRM to back-office applications, specifically enterprise resource management (ERP) and supply- or demand-chain management, has many benefits other than meeting or managing the customer's fulfillment expectations - though that goal is far from insignificant. Forrester Research reports that 85 percent of all call-center queries can be characterized as WISMOs: What is the Status of My Order?

Other business-enhancing benefits from such integration include improved order promising, tailored up-selling and cross-selling to match available inventory, and manufacturing that is more quickly aligned with actual demand.

A recent Deloitte Consulting survey of nearly 250 major consumer businesses in 28 countries concludes that "consumer businesses that effectively integrate their customer management and supply-chain operations are twice as profitable as competitors that do not. They are two to five times more likely to achieve superior performance in sales, market share, customer service, and other key measures, and much more likely to generate higher shareholder value."

One of the key strategic capabilities that enable these businesses to outperform their competitors is their ability to identify their most valuable customers and adjust their service based on customer requirements, lifetime potential and an intimate understanding of total supply-chain cost on a customer-by-customer basis, says the study. "This enables supply-chain managers to know which orders should get preferential treatment based on real-time knowledge about the customers that really count and which products, services and supply-chain capabilities are most important to these customers."

Eklund notes that sales people similarly benefit by knowing whether a particular customer demands extraordinary service levels or frequently cancels orders or returns products. "If a sales rep is looking across the business to all different data points, he might have a very different picture of a customer's profitability than what he would get through a sales automation tool."

Despite the inarguable benefits of building what Deloitte calls integrated "digital loyalty networks," the consulting firm reports that "only a distinct minority of surveyed companies has effectively linked their supply-chain and customer operations," and the ones that have begun this process are "just scratching the surface."

The consumer businesses surveyed by Deloitte are far from alone in this assessment, according to other experts. "The fact that CRM has been separate from SCM is a big problem for many companies because whatever the front-end commits somebody has to deliver," says Chris Gopal, head of the supply-chain practice at Unisys, Blue Bell, Pa. "This is an integration and a process issue."

The Missing Piece
Mary Haigis, director of marketing at Clarkston Consulting, Durham, N.C., says Clarkston sees many companies where this integration is the major missing piece in an otherwise strong IT portfolio. "What we see is that a lot of companies already have done CRM and ERP and supply-chain," she says. "Now they need to integrate these pieces together to get the visibility and to accelerate the business value they are getting out of their systems. If they do, then they can accelerate the power of their whole value network."

Clarkston has developed a methodology called Business Value Acceleration, which gives companies a roadmap of sorts for achieving this goal. "We're in a period where everyone knows they have to get there, but they are a little confused about the steps to take," says Haigis. "We use this process to talk them through it."

 

 

 

 

 

An average of 22 parties are involved in the fulfillment of a typical order.

 


 

 

 


Oracle, Redwood Shores, Calif., takes a similar approach with its customers and integration partners. "Making integration a reality involves more than just having our own suite tightly integrated, which Oracle does," says Kevin Rickson, senior director of Oracle CRM. "We help companies visualize their information flows, showing how business processes are linked and where integration has to happen. This really helps organizations figure out how to get their supply-chain linked with their customer chain in a way that creates one big value chain, which is the ultimate goal."

Process and technological issues are only part of the equation, however. There also are cultural and organizational barriers to overcome, says Thomas Meike, vice president and CRM leader for Cap Gemini Ernst & Young. Implementing a CRM strategy can quickly raise governance issues around who owns the customer, he says, since truly understanding the customer has implications for both revenue generation and cost of service. Marketers and supply-chain people often have conflicting views and conflicting incentives in this area. "You need someone fairly high up in the organization who has influence over customer processes as well as operational processes to be a champion for integration if it is to succeed," says Meike. "But it's certain that you can't have an independent CRM solution and an independent SCM solution and expect to reap the benefits of understanding the true value of your customer."

CRM users realize this and are starting to push for much simpler and pre-packaged integration, says Bob Ferrari, director of global supply-chain product marketing at SAP, and Mark Pyatt, who holds the same position at SAP's CRM group. "Our customers see that if they can tie their CRM into the supply-chain they can improve things like available-to-promise and order fulfillment, which have a lot to do with customer satisfaction," Pyatt says.

Both groups within SAP are working on this issue and presented a demonstration of integrated functions at Sapphire, SAP's recent user conference. The demonstration involved creation of a marketing campaign within CRM. Once created, the campaign information is sent to SAP's Advance Planner and Optimizer (APO), specifically the demand planner, so that it has visibility to the campaign and the products involved. "Then in the traditional way, APO manages that information and flows it down to our supply network planner, which checks supply," Ferrari says. "Supply planners evaluate that information and determine how to meet the demand. If they foresee a problem, alerts are sent back up to the CRM system and the marketing planners."

Currently SAP is working on integrating its own CRM and SCM packages, but its longer-term goal is to enable integration between SAP CRM and other legacy or packaged solutions. "We understand that our customers need to leverage the investments they have made and so we need to be able to interface with those systems and get the information we need," says Pyatt, "but our first priority is to get that functionality working within our own system."

PeopleSoft has built more than 80 "enterprise integration points" into its year-old, web-based CRM system and plans to increase that number by 30 percent in its next release. Eklund described EIPs as "pre-defined touch points for other departmental solutions that are commonly required by most businesses - a lot of them are inventory and financial integrations and all are built on open standards like XML messaging. So, by design, these EIPs are as extensible to other vendor solutions as they are to a PeopleSoft application."

Beyond Connecting
The resulting integration goes beyond mere "connecting," he says. It integrates on three levels: on the presentation level, by bringing all the pieces of information needed about a customer together in one view, whether that information comes from CRM, SCM or financials; on the business process level, by enabling such activities as reserving inventory for particular orders; and on the access level, by allowing information to be shared with customers, suppliers, partners, or others.

Siebel Systems, San Mateo, Calif., by far the largest CRM provider, recently introduced a vendor-neutral application integration solution called Universal Application Network. Integration server vendors, including IBM, SeeBeyond, TIBCO Software, Vitria and webMethods, all have committed technology and expertise to deliver the standards-based UAN solution. "This takes integration off the table as an issue," says Curt Lockton, senior director of product marketing.

He explains that UAN, which marks the culmination of a 15-year development effort, is comprised of three major components: a comprehensive business process library with pre-packaged, end-to-end industry-specific business processes, such as Customer Creation or Quote to Order; a business process design tool; and an integration server from one of Siebel's partners.

The server acts as a hub. Information from Siebel CRM travels through the hub and is translated into a language that various integrated, back-office systems can understand. The same thing happens when information is sent back to Siebel. "That way you are actually just dealing with making sure the applications speak to the hub effectively, rather than integrating at every touch point," says Lockton.

Onyx of Bellevue, Wash., a CRM provider that targets companies with revenue between $100m and $2bn, limits the integration complexity of its web-based system by using a multi-tiered, federated data model. Bill Bunker, vice president of market strategy, explains that the system's primary data tier contains the core customer data that drives most customer decisions. A second tier of data is available by reference but is not consolidated. "I don't think you need to actually make sure that every single shipment transaction ends up in the core CRM package," he says. "We think the secret is to bring a certain set of key data into a consolidated system and then allow access from that system to other solutions where there is a need to drill down into more detail."

For companies with fulfillment operations (unlike financial services or insurance companies that were early CRM adopters), CRM and SCM naturally come together around demand forecasting and order promising, says Joel Reed, director of product marketing for J.D. Edwards, Denver. "When we talk to fulfillment-chain companies they rarely define their issues as being about CRM," he says. "They typically talk about their issues as being about visibility." Manufacturing wants visibility to the sales forecast and sales wants visibility to inventory or capacity. "So the goal is to extend the information that typically resided within the fulfillment chain out to that demand chain and all the way out into those people who are contacting the customers."

CRM for CPG
JDE has specifically addressed these two issues. "We have a tool called demand consensus that takes forecast input from multiple stakeholders, such as field salesman, as well as results obtained from algorithms, and enables parties to collaboratively reach a consensus," says Reed. The forecast is then passed back into the fulfillment chain via CRM. To improve order-promising JDE also is integrating to CRM the available-to-promise solution in its supply-chain applications. This will allow its users that deal with customers to check available inventory and also to determine when products not yet manufactured can be promised. It addresses "profitable to promise" as well by looking at how various service options and price points impact margin.

 

 

 

 

 

"We understand that our customers need to leverage the investments they have made and so we need to be able to interface with those systems."
- Mark Pyatt of SAP

 


 

 

 

Industri-Matematik International, Mount Laurel, N.J., has found a similar emphasis on fulfillment among its consumer-packaged goods customers. "CRM to them is much more around how they manage that fulfillment process, how they serve the retailer on an ongoing basis," says Henry Bruce, chief marketing officer.

"CRM for CPG" is how Bruce describes IMI's new product, IMI Consumer Goods. "What we have done is bring together CRM capabilities around capturing the order and generating demand with supply-chain capabilities around fulfilling the order, then added event management to monitor exceptions and analytics to measure performance. It is what amounts to a complete customer service solution encompassing all points of customer contact from marketing and sales through fulfillment and after-sales service."

Order capture, order management and demand generation also are focal points for i2 Technologies, Dallas, which last year briefly marketed its demand solutions under a CRM umbrella. Its broad footprint of customer-facing capabilities includes the ability to capture orders from multiple channels, perform credit checks, enable product configuration and provide accurate available-to-promise information. Then, using existing links to its supply-chain solutions, i2 can distribute the order to the appropriate sources for fulfillment and provide visibility to the entire process.

"The point is to have a single system or process for monitoring and managing that order, which may be broken down into lots of different activities, different fulfillment points, different products and requirements," says Jay Mitchell of i2's Demand-chain Management Group. He notes an average of 22 parties are involved in the fulfillment of a typical order, so pieces of information about that order actually exist across 22 different systems. Without a single application bringing information from those 22 systems together into one record, in real time, it would be impossible for customer service representatives to provide accurate answers to order queries, he says.

An integrated package also is vital to being able to "shape" demand through promotions and dynamic pricing. "You don't want to go run a marketing campaign through your CRM, whether it is an e-mail offer or a Web advertisement or something else, unless you have the inventory to fulfill that created demand," says Mitchell. On the other hand, if an inaccurate forecast results in surplus inventory, promotions focused on those products can help move them out, or the inventory can be shifted to the source of greater demand.

Full Value Chain
At a recent AMR Research conference, i2 gave a dramatic example of how an integrated demand/supply system can provide superior customer service. TaylorMade Golf, an i2 customer for both production scheduling and demand management, drew a name to determine which conference attendee would receive a set of custom-fitted golf clubs. The recipient was selected and measured the first morning of the conference and on the second morning he received his clubs onstage from a UPS delivery person.

TaylorMade leads the industry in its turnaround time on custom orders, Mitchell says, noting that its next-day turnaround time compares with an industry standard of five to 14 days. "This is a significant competitive advantage for them," he says. "Think about that. It can take longer in some cities to get a tee time than it does to have custom clubs delivered. That's a full value-chain solution."