Special Report: CRM Software: Customer Service for a Song
Customer relationship management software doesn't have to cost hundreds of thousands of dollars.Michael Desmond
When Mike Gillespie arrived in January 2000 at SecureLogix, a firewall and security management firm in San Antonio, he knew that he had a big job ahead of him. In September 1999, the 90-employee company had begun deploying a powerful customer relationship management software package to help the company keep up with a growing customer base. Four months later, that effort had stalled badly. An experienced manager of CRM systems, Gillespie had been hired to help pick up the pieces.
"When I got here, I looked at the cost benefit of moving forward with the [existing] software [versus] scrapping it and putting in another system," Gillespie explains. "It was a lot more economical to deploy another system."
The company chose SalesLogix (no relation to SecureLogix), an affordable CRM package tailored for small and medium-size businesses. CRM software like SalesLogix allows companies to gather, analyze, and act on information about current and prospective customers. These packages unify access to this data, ensuring that sales, marketing, customer service, and even product development teams all work from a common set of contacts, customer histories, and other information. The result: more-focused interaction, fewer embarrassing gaffes, and--hopefully--increased sales and profits.
Gillespie and his team evaluated a number of CRM packages; of these, they opted for SalesLogix because of its substantially lower cost and faster deployment time. Six months after Gillespie arrived, the company had the new CRM system fully deployed and operational.
"I didn't have time to mess around. We were a start-up, we had guys in the field, and we needed to get it done," he says.
CRM Writ Small
Gillespie's experience is hardly unique. Customer relationship management systems have been hailed as a way for companies to find, influence, and retain customers. Packages from companies like Onyx, Pivotal, and Siebel go far beyond simple contact and sales management--they link sales, marketing, and customer support operations into a single, cohesive chain.
But the complexity of CRM systems can turn deployments into expensive, time-consuming mistakes. SecureLogix, for example, had poured nearly $200,000 into its aborted CRM project. Many companies need low-cost, easy-to-implement CRM software. Fortunately, affordable packages have finally matured.
"Anecdotally there's a fairly high failure rate attributed to CRM implementations," says Jocelyn Young, program manager for CRM services for IDC.
Industry experts cite failure rates for CRM rollouts of up to 70 percent. That's a disastrously high figure for initiatives that typically cost hundreds of thousands--or even millions--of dollars. For smaller businesses or for departments within large companies, even successful implementation at that cost is out of the question.
Jerry Norman, president of Market Answers, a CRM consultancy in Austin, Texas, says the broad definition of CRM is part of the problem. "If you ask 100 people on the street what CRM is, you are going to get 100 answers. The executives know that they need CRM, but they don't know what they are getting."
One way to sidestep the issue, says Norman, is to narrow the focus of the CRM effort. Lower-cost CRM products such as Microsoft BCentral Customer Manager, SalesForce.com, and SalesLogix provide common CRM features like lead generation and management, deal tracking, and customer support management. These packages can be installed on a company's servers or hosted by an application service provider. But while a Siebel deployment can cost several hundred thousand dollars, a package like SalesLogix can be had for less than $50,000 for 20 users--a relative pittance by CRM standards.
"If you've got a sales force of 20 people, there is no reason to be spending more than $40,000 to $60,000 on sales force implementation," says Norman.
Bob Thompson, founder and president of Front Line Solutions, a consultancy focusing on CRM issues, urges smaller firms to consider shrink-wrapped sales tools as well. "[Interact Commerce] ACT and [FrontRange] GoldMine have been around a long time," says Thompson. "The reality is that they have five times more functionality than most sales reps need anyway. And you can buy it at a store for a couple hundred bucks."
Both ACT and GoldMine fall under the rubric of sales force automation software. These packages help sales reps maintain contact lists, manage schedules, and close leads. While not technically CRM software, SFA products help companies find, capture, and keep the most profitable customers. These products typically integrate with desktop productivity software like e-mail and office applications to streamline interactions and provide improved account tracking. The result: improved customer satisfaction and lower turnover.
Small Names, Big Companies
Lower-cost CRM solutions don't appeal solely to small and medium-size businesses. Departments in large companies often turn to economical CRM packages as a stopgap measure while they wait for completion of enterprise-wide initiatives.
"You'd be shocked at how many [corporations] buy Siebel and then still have to buy and implement our package," says Clark Dircz, the CEO and founder of Worldtrak, a provider of CRM products that integrate with Microsoft Outlook. "We have clients that have been told that they won't see their part of a Siebel implementation for two and a half years. What are these people going to do? Two and a half years is an eternity in most of these businesses. So a lot of these people will come to us, and we'll do a departmental or divisional solution." (For many companies, however, enterprise CRM products like Siebel are still the best choice. See "Setting Up Siebel: When It Makes Sense to Go Big.")
One way to speed things up is to avoid deploying servers and software at all. That's the tack taken by offerings like Microsoft BCentral Customer Manager, Oracle Small Business Suite CRM, and SalesForce.com--which are all Web-based services. These browser-based applications store CRM data on remote servers, making it easy for users to access the data anywhere that they can get an Internet connection.
Online customer relationship management seems to be gaining appeal. Leading technology companies Autodesk and Broadvision have both standardized their CRM on SalesForce.com.
CRM in the House
Not all companies are ready to take their CRM business online. The prolonged outage of Microsoft's MSN Messenger service in July offered a cautionary lesson for IT managers who considered hosting business processes on remote vendor servers. For companies that prefer to keep their CRM efforts in-house, packages like Optima ExSellence and SalesLogix can cost less than half as much as software from IBM or Siebel.
Dick Lee, principal of High Yield Marketing and author of four books about CRM, warns that no package can cover the broad range of CRM tasks. "When Siebel says 'we do it all,' forget it. Nothing does it all. Not at a best-of-breed level. As you downscale the packages, they get more specialized."
The secret, says Lee, is to find a package that dovetails with your organization's priorities. Lee singles out SalesLogix as a good sales force automation package, and he feels that Clarify excels in customer service. The best all-around alternative, however, may be Optima ExSellence, which Lee says offers enterprise-class functionality at a reasonable cost.
Companies looking to bulk up contact management while preserving ease of use might consider packages that integrate with Microsoft Outlook. By serving up information in the familiar Outlook interface, CRM products from companies such as Worldtrak piggyback CRM onto the popular e-mail client and interact with Microsoft Exchange Server to provide users access to CRM data.
Walk the Path
Deciding between using a Web-based CRM package and hosting an application in-house should be the last thing to worry about, contends Lee, who speaks frequently about CRM. He says CRM adoption must start from a well-defined strategy that focuses squarely on the customer.
"The single most important thing is for the business to step back and take the time to develop customer-centric business strategies," urges Lee. "If you don't, it doesn't matter what kind of technology you put in--it's not going to work."
Market Answers' Norman agrees, but warns companies not to overanalyze. "I think it is a huge mistake for midmarket companies to analyze their sales process and get [it] down to a gnat's whisker. It's going to just stall them."
Ultimately, says Thompson, CRM is about people and customers. "Good businesses understand intuitively that good CRM is about taking care of your customers," Thompson says. "If customers don't like what you are doing, you're toast."
Michael Desmond is president of Content Foundry, which provides editorial content and services to high-tech companies.
Photographs: James McGoon, Andy Snow, Robert Holmgren, and Marc Simon
Make Sure You Get Off on the Right Foot
Choosing and deploying a customer relationship management package involves more than just selecting the most appealing software. Here are a few things to keep in mind as you start your CRM odyssey.
Make it easy to use: Look for a package that won't confuse users and burden administrative staff. Remember, says Jerry Norman, president of Market Answers, a CRM consultancy in Austin, Texas, "You are asking your salespeople to do things in a way they weren't doing it before."
Get executive buy-in: It seems obvious for a project that could change many of your business practices, but don't overlook the need for an executive champion. Your CIO or CTO would be a good ally, but your CEO would be better.
Take charge of the rollout: Make sure you assign someone below the VP level to oversee the day-to-day supervision of CRM operations. This person can monitor staff compliance with the new software and help manage troubleshooting, while the executive concentrates on the big picture.
Don't delegate to IT: Your IT folks may know technology, but they don't have expertise in the processes that drive sales, marketing, and customer services. Dick Lee, principal of High Yield Marketing and a frequent speaker on CRM, is blunt: "I've been in this business since the beginning and while IT is critical, I have never seen a successful IT-led implementation. Never."
Be quick: No company can afford a two-year CRM rollout. Regard anything that may take more than 120 days with caution. Divide long projects into blocks that can yield success independently.
Work with your employees: Ultimately, your people will help determine the success or failure of your CRM efforts. Fail to train your staff and your CRM system could end up stuffed with bad information that does more harm than good. Also consider establishing staff incentives or perhaps tying commissions to CRM use.
Form a partnership: Find a value-added reseller or consultant who is experienced in CRM and who knows the ins and outs of the packages. All software has quirks, and all business processes pose challenges. After the rollout, make sure to keep up your relationship with the consultants--you'll benefit from their insight down the road.
Case Study: Setting Up Siebel--When It Makes Sense to Go Big
Everyone likes to save a buck, but large deployments that go beyond the abilities of more-affordable packages are often still the best solution. That was the case at Standard Register, a Dayton, Ohio, document and information management company that sought to tie together sales and customer service across four business units, using enterprise-level Siebel software.
"With more than one business unit, we had more than one view of the customer, and that was a major reason we decided to implement a CRM program," says Jim Sides, director of CRM for Standard Register. "Our primary reason was to have one view of the customer and to allow the customer to have one view of us."
Sides's team assessed a number of packages for rollout to more than 2000 employees, both in-house and on the road. Among the requirements: The software had to support both networked and unconnected environments, and it had to be able to tap into the company's massive Teradata back-end data warehouse. With so much at stake, Sides took a methodical approach to the challenge.
"All the major magazines in the industry were screaming about how 65 to 70 percent of CRM implementations were failing," Sides explains. "The way we started was to evaluate all our processes, from the original contact all the way through delivering and invoicing for the product."
Industrial-strength CRM doesn't come cheap, however--Sides found per-seat license costs ranging from $1750 to $2500--but the real money is spent in consultations, integration, and development. "By the time you do all those things, [license fees] represent only about 25 percent of the cost of the project. I think that's one of the reasons these projects fail. People tend to look at the licensing cost per user."
The Packages
Web-Based:
Leading sales force automation software that allows companies to better target and service customers.
Another leading sales force automation package that helps companies get the most from their sales reps.
Microsoft BCentral Customer Manager
Part of Microsoft's broader BCentral business-oriented Web offerings.
Oracle Small Business Suite CRM
Formerly known as NetLedger System 1, the CRM tools sit beside other services.
Top-rated online CRM package takes aim at enterprise-class CRM products.
Shrink-Wrapped:
Full CRM suite at a midmarket price.
Strong in customer service operations.
Best at sales force automation, particularly for the business-to-business crowd.
Integrates directly into Exchange and Outlook, using SQL Server on the back end.
Case Study: Quick-and-Dirty CRM
As president and founder of Front Line Solutions, Bob Thompson has been consulting on CRM issues for three years. The Web site run by his company, CRMGuru.com, boasts more than 70,000 members. But Thompson's start in CRM was more modest. As the sales manager of a computer reseller, he used Visual Basic and a simple Excel product database to create a customer-quote template for a 20-person sales force.
The Visual Basic application provided a user interface to a spreadsheet that contained all the company's product information, including pricing, descriptions, and ID numbers. Sales reps would type in a part number, and the template displayed all the data about the product, including profit margins based on proposed customer pricing. The app's immediate result: an end to price misquotes that sometimes had representatives selling products below cost.
"We were having errors on 80 or 90 percent of our orders," Thompson says. "That went down to just 5 or 10 percent, and the severity of the problems changed from almost life-threatening to minor. We just stopped losing money on these deals."
Thompson says that his Excel experience offers a valuable lesson for managers tempted to apply large-scale CRM solutions to fairly simple problems. Thompson urges companies to examine existing processes and reveal areas of failure.
"It wasn't our problem to solve inbound call center response rates. It wasn't our problem to automate the selling process. It wasn't our problem to have a self-service application," Thompson explains. "You have to think about what are your points of pain and what are you trying to accomplish. This is the really hard work of CRM."
Intel Attempts to Eclipse Sun
You could say that Intel has been developing a powerful Sun block for almost a decade. As Intel has dominated the PC processor market, Sun Microsystems has ruled the world of workstations and servers with its 64-bit CPUs, most recently the UltraSPARC III. But this May, when Intel shipped its long-awaited 64-bit Itanium processor, it signaled its intention to rewrite the rules of server buying.
Intel wants to lure IT managers away from their dependence on one server company by driving down costs and steadily increasing processor speed. The company used the same tactics to help sell the world on Wintel desktop PCs--and end the glory days of mainframe computing. But the Intel-Sun rivalry won't be settled quickly: Many IT groups are taking a wait-and-see approach toward the Itanium this year.
The Itanium Difference
Compared with Intel's 32-bit Pentium and Xeon chips, Itanium processors support much more memory and use an Explicitly Parallel Instruction Computing design, which handles larger amounts of data quickly and rushes it to waiting applications. With large on-board caches of 2MB or 4MB and clock speeds of 733 MHz or 800 MHz, Itanium CPUs can power formidable multiprocessor servers.
Ever since the Itanium's development began in 1994 with help from Hewlett-Packard, Intel has had plenty of time to woo hardware makers. In June, Compaq announced it would gradually end development of 64-bit Alpha server processors and join in selling and promoting Itanium-based servers. Once that happens, Sun and IBM will be Intel's only competition in the server CPU market. (Look for IBM to launch the Power 4 in late fall with a clock speed of at least 1 GHz.) For its part, IBM has also pledged to sell Itanium-powered servers in addition to servers using its own chips. Sun has not.
Software In Waiting
However, a basic issue looms large for IT managers considering the Itanium: The software that will best capitalize on the chip's power has yet to arrive. The Itanium is designed to work with several operating systems, including versions of Linux and Unix. A 64-bit version of Microsoft's Windows XP has silently slipped into the market (see Top of the News, August 2001), but none of the major enterprise-software vendors, such as Oracle or SAP, has optimized its code yet. Today's 32-bit apps will run on the Itanium, but they must be recompiled for top speed.
People running applications that deal with large data sets (such as design programs or scientific applications) may see some immediate improvement. "You get the most advantage with those types of applications, or with database programs where the increased memory addressing benefits you," says Steve Josselyn, IDC research director.
The Itanium's memory prowess helped persuade Los Angeles-based Popcast to choose the architecture, says Josh Taurek, Popcast's chief technical officer. The firm licenses turnkey video services solutions (such as Webcasting and video e-mail) to service providers. Popcast will begin pilot testing of its services on Compaq Itanium servers in the fourth quarter.
The firm hopes the Itanium will let it support more users with fewer servers, says Taurek. The Itanium's 4MB cache will also be important because with it Popcast applications will be able to work with large amounts of customer data (from passwords to video clips on file) without constantly accessing a database.
What's Next
This year, Sun's 900-MHz UltraSPARC III will likely retain a performance edge over the Itanium. But that won't be the biggest factor in Sun's favor, says MicroDesign Resources senior analyst Kevin Krewell. "Sun's key strength is its solid OS, Solaris, and the backward compatibility with earlier versions of the UltraSPARC architecture."
Intel's second-generation Itanium, code-named McKinley, will be a more formidable competitor for Sun's chips, says Krewell. The McKinley will have a clock speed of at least 1 GHz, a faster frontside bus than the first Itanium, and a good chunk of recompiled software at its disposal, Krewell predicts. When McKinley systems ship in mid-2002, everyone will see the real strength of Intel's Sun block.
--Laurianne McLaughlin
Tale of the Tape
Intel Itanium
- Intel's first 64-bit processor.
- Gives server buyers more choice.
- Microsoft Windows XP OS and enterprise apps are yet to be recompiled for it.
- Should drive hardware prices down.
Sun UltraSPARC III
- No newcomer to 64-bit computing.
- Used in proprietary Sun machines.
- Solaris OS and enterprise apps already fine-tuned for it.
- Faces competition from Intel and IBM.
What Do You Know?
Not one to give up on knowledge management software, which has struggled for years with a reputation for ineffectiveness, Lotus is pushing a new application platform that helps enterprises organize, search for, and retrieve everything from important documents to the names of people with specific areas of expertise. Could your company benefit? Yes. Will your company benefit? That depends.
Lotus Discovery Server is an impressive product that spiders databases to learn where a company's valuable information is located. But like knowledge management products of years past, Discovery Server is only as good as the data it has access to.
Not surprisingly, companies that currently use Lotus Notes and Domino will have the easiest time incorporating Discovery Server and its companion product, Lotus K-station. K-station is a Web-based portal that allows workers to set up areas in which to collaborate. Discovery Server can search those areas to organize content and learn about people's expertise.
Discovery Server's ability to spider e-mail messages and attachments is a plus because employees often share information via e-mail rather than publishing it in a central database. And the software can access any LDAP directory, including Microsoft Active Directory, to obtain employee information.
But if your company uses Microsoft Exchange Server for collaboration and messaging, Discovery Server won't do you any good--the current version does not include a spider for Exchange Server. Lotus says it will release a spider SDK later this year so that Discovery Server users can create their own spiders.
Deploying Discovery Server is no small task. Faced with so many moving parts, including the spidering and indexing functions, you will want to run Discovery Server in a distributed environment of at least two servers--but probably more--in order to maintain good performance. Pricing for Discovery Server starts at $395 per user. K-station starts at $120 per user.
-- Brad Grimes
Talk Back to Your E-Mail
Anywhere, anytime. It's the mantra of mobile communications. But too often, anywhere, anytime access to information means buying a new mobile device--with a new modem, and a new wireless service. Etrieve hopes you'll be happier managing your e-mail, contacts, and appointments using the same phones--wireless or wired--that you use today.
The Etrieve Mobile Office Solution gives you easy access to your important information by syncing your Microsoft Exchange data with an Etrieve gateway. After you call a toll-free Etrieve number and enter a password and a mailbox number, you can manage messages, contact lists, and calendars. Information on Etrieve's servers is always encrypted.
A text-to-speech engine will read your e-mail aloud, after which you can respond to the message by simply speaking. The reply is captured as a.wav file and then sent as an attachment.
Using a WAP-enabled wireless phone, you can read your e-mail on screen and then reply with your voice. In addition, you can use voice commands to send a copy of an attachment to a fax machine, schedule meetings with colleagues, and search your contact database. And if you're near a PC, you can manage all your information from any Web browser by logging on to the Etrieve site.
How well does it work? Fairly well. When the company showed us an early beta version, the Etrieve voice recognition engine sometimes misunderstood or missed commands, but the company says it is constantly honing the software. Even in its beta form, the Etrieve service was easy to use and worked as advertised.
Currently, the service works only with Microsoft Exchange Server, although a version that will sync with Lotus Notes is in the works. The company underscores its security measures, but IT managers will probably still be wary of a service that replicates corporate information on servers outside the firewall. In a future release, administrators will be able to control what e-mail is replicated with Etrieve and what remains inside the firewall.
The Etrieve service is reasonably priced at between $25 and $50 per month per user. Just beware of those wireless phone bills--managing e-mail over the phone will eat away at your monthly minutes.
--Brad Grimes