E-CRM: the new ERP

Customer relationship management for the online business era - or eCRM - is the next significant multiyear IT initiative. It's a mix of data mining, call centre management, customer profiling software, sales force automation, "clickstream" analysis, marketing process automation, Web site personalisation, e-mail auto response, segmentation algorithms and other exotic software species. It's by far the biggest and most complex venture in the history of IT, even bigger than ERP (enterprise resource planning).

Here's a formula to remember: P = ERP2. The P stands for "payoff" or "problem". The payoffs and problems of eCRM will be exponentially greater than those of ERP. On the surface, eCRM looks like just another software and database management environment. So did ERP. Many companies evaluated the features offered by leading package providers like SAP, JD Edwards & Co, Baan and PeopleSoft and went through the standard systems development planning and project management procedures.

For most, ERP turned out to be anything but standard. The work required to clean up processes and interfaces, and to rationalise procedures and infrastructures, dwarfed the effort needed for software installation and customisation. My rule of thumb: a major SAP project costs about three and a half times its original budget and takes three and a half times the original schedule to complete.

That's obviously a problem, but in many instances, a payoff awaited. I was a deep pessimist about Y2K; but in looking back at why I was so wrong, I've concluded that I misjudged the impact of ERP on transforming the entire operating infrastructures of IT and on cleaning up a legacy of software and data mishmash.

Now comes eCRM. Processes, interfaces, data, networking, software - the scale and complexity are vast. For example, eCRM demands that companies provide consistent and up-to-date customer, catalogue, order and inventory data across all their sales channels - Web, call centre and physical points of presence.

How do you even conceptualise the infrastructure, processes and IT bases for achieving this? Electronic CRM makes ERP look small and easy by comparison.

But sadly, most companies I deal with clearly underestimate the scale and complexity of eCRM, even more so than they did for ERP. They're also repeating the most basic mistake of the ERP era: looking for the software package that, for them, embodies what eCRM is all about. For ERP, that package was SAP. For eCRM, it's Siebel Systems. Those vendors have many strengths, but software doesn't substitute for clarity of business model, quality of business process base, IT infrastructure design and operation, integration costs or effective use of the software tools and data.

What should IT organisations do? First, go back and review what happened in your ERP ventures. What went wrong or right with ERP will almost surely happen with eCRM. Whatever was unanticipated or underestimated then will likely be the same today. These are commonsense defensive measures to protect against the old adage that those who ignore history are condemned to repeat it.

More positively, I recommend that IT organisations leave the software installation until last. They may end up choosing Siebel, BroadVision, Oracle or any of the other elite providers, but that should be the end point. Before that, address the following, in order:

1. Design the customer experience; it's customer relationship management.

2. Focus on the use of eCRM: customer segmentation, pricing, personalisation and service.

3. Ensure from the start a plan for multichannel eCRM integration.

4. Think process, not system: marketing, selling, service.

5. Then and only then, think software.

In other words, learn from ERP so you can reduce the "problem" quotient of my formula and leverage the "payoff" quotient. Electronic CRM marks a shift of IT from largely focusing its resources and skills on the enterprise's operations to what really matters most - the customer relationship. Get it right and there's no bigger contribution IT could make to "business payoff". Get it wrong and you've made as big a contribution to the "business problem".

* Peter Keen (peter@peterkeen.com) is chairman of Keen Education. His new book, The eProcess Edge (written with Mark McDonald), is co-published by US Computerworld

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