FRAMINGHAM (03/24/2000) - Osram Sylvania Inc., a lighting manufacturer in Danvers, Mass., plans to be one of the first users to install pieces of SAP AG's new customer relationship management (CRM) software this spring.
The prospect of rolling out the applications and getting them to work properly doesn't faze Mehrdad Laghaiean, vice president of information technology at Osram Sylvania. "From a software point of view, we're ready for whatever SAP throws at us," he said.
But the business impact is a different matter, Laghaeian said. Like several other users, Osram Sylvania is finding that dealing with the business issues created by the deployment of CRM systems can be as big a challenge - or a bigger one - than installing the software is.
SAP's applications will let lighting buyers place orders directly with Osram Sylvania, instead of having to negotiate prices with multiple distributors in different parts of the country. But the company still wants its network of distributors to deliver and service the products.
"A lot of people have to understand how to (use) this," Laghaeian said. "It's not a simple supply chain, and we're adamant that we don't want to do something to harm our relationship with the distributors." In the end, he added, business managers will have to make the call on how the new system will actually be implemented.
Moore Corp., a Toronto-based maker of business forms, has installed CRM software in its sales and service operations in both Canada and the U.S. Each project only took a matter of months, but Tom Doerner, design director for sales solutions at Moore Corp., said he has had to labor long and hard to sell executives and end users on the system's merits.
The CRM system, based on software from StayinFront Inc. in Fairfield, N.J., went into use in Canada first. But Doerner said the chief financial officer there was skeptical about its value because of past sales initiatives that hadn't paid off.
"There was a constant struggle for funding to improve the (system)," Doerner said. Eventually, he developed a set of measurements that showed heavy users of the software bring in 25% more new business than other salespeople.
But even that hasn't convinced all of the 1,400 salespeople who have the software to actually use it. Doerner said about 30% still don't log onto the system on a daily basis. So now, he's developing new measurements in an effort to show that the heavy users make more money.
Enterprise resource planning systems prod most users to adopt standard business procedures that are built into the software for back-office tasks such as accounting and inventory management.
But front-office sales and marketing activities aren't nearly as codified as back-office jobs are, said Joshua Greenbaum, an analyst at Enterprise Applications Consulting in Berkeley, Calif.
As a result, CRM systems need to be more flexible or they could become "shelfware" that workers try their best not to use, Greenbaum said.
Texas Instruments Inc. is another early user of SAP's CRM software for both its internal sales force and the distributors that sell the Dallas-based company's semiconductors to manufacturers.
Phil Coup, a vice president at TI, said connecting distributors to the company's systems via the Internet was a technical challenge. But users also had to deal with big changes on the business side, he said.
For example, most of the 2,000 external users who tap into the system had never used the Web for business-to-business purposes before. TI also had to standardize the way its sales operations quote prices and handle claims from distributors looking for rebates, which meant big changes for workers in regions such as Southeast Asia.
"It hasn't been easy," Coup said. "Any time you go through changes like this, it isn't easy."