The Truth About CRM

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CRM consultants stress the importance of educating yourself before meeting with CRM vendors. "The vendors are trying to make a sale, and they’ll do whatever it takes," says Renee Sommer, managing partner at Semeron, a Seattle consultancy. Blockbuster, which built an Oracle data warehouse four years ago, is still in the process of fact finding technologies that will help it deepen its knowledge of its customers. And Barclays Global Investors, after testing different packages with its sales force, decided to go with an application called Worldtrak, from the Minneapolis-based software company of the same name, which sits on top of the Microsoft Outlook platform, already familiar to salespeople at the fund company.

Sommer notes that many of her clients want to go with the big name vendors because they perceive it as less risky. In fact, she says, companies are better off analyzing their business needs and then looking at whether several vendors may be better than one.

Fingerhut, the Minnetonka, Minn., catalogue company, has spent the past five years looking for ways to best use its data warehouse containing more than 7 million active customers. Eventually, IBM helped the company devise a system that includes using Cambridge, Mass.-based Torrent Systems’ Orchestrate software to quickly troll through the database to determine which customers will receive which catalogues. The company tested the system on 10 percent of its customer list for a year before the full-scale implementation. "We designed our solution and looked for the pieces instead of trying to fit our problem into some prepackaged software," says Randy Erdahl, Fingerhut’s director of business intelligence.

Siebel and Oracle both claim to offer complete CRM solutions. However, Gartner’s Close argues that no vendor covers all of the areas a typical Fortune 500 company would need in a full-scale CRM initiative. In a recent Gartner rating of top CRM application suites for large enterprises, Siebel scored the highest, but only delivered 51 percent of the sales lead management, call center and marketing components necessary to get a complete view of the customer, Close says.

Small Is Beautiful

The question, when choosing a CRM system, is whether to go big or start small. Siebel Systems says that Fortune 500 companies should focus on large-scale rollouts instead of smaller-scale pilot projects in order to get the maximum benefit from CRM software. According to Schmaier, a "phased approach," in which companies commit to a large rollout and proceed in stages, allows Siebel customers to get "maximum benefits quickly," instead of getting involved in cumbersome RFPs and pilots. For example, IBM is deploying Siebel’s software to 55,000 employees, Schmaier notes, and other large businesses are getting benefits from similar companywide implementations. Oracle also stresses the benefits of large CRM projects and promises to reduce failures by providing integration into legacy systems and making such installations easier to use.

But while vendors may encourage large CRM investments, experts advise companies to instead consider pilot projects. Behind the scenes, many consultants say that starting out small with pilot projects may be the best alternative right now given the problems that some companies have had with massive rollouts.

Chastened by past brushes with failure or stories of CRM struggles, some companies approaching CRM are taking a more measured approach. At RadioShack, Follit is in the midst of developing a "CRM road map" that will include several pilot projects. "We don’t do anything unless there is a pilot project," she says, noting that the company’s ERP project was completed in "bite-size pieces." And at Barclays, Drobny says the company initially rolled out the software to just 20 people and plans to add sales forces gradually.

Those who have botched ambitious CRM initiatives shouldn’t throw in the towel, however. The fight for customer loyalty is on, and a well thought out CRM strategy can boost a company’s stature and revenues. At Monster.com, the 1998 failure pushed the company to assemble a team of experts who work continuously on updating the company’s CRM strategy. Liddell warns that companies need to do their own careful due diligence when choosing both a CRM package and the people who will install it. Monster.com fired its initial developer and went on to successfully install Siebel for a second time in 1999, spending another $1.5 million with a new team of internal and external experts. While Liddell calls the CRM initiative worthwhile, he warns that others in his place should do careful research and build a strong internal team before going with a CRM package. Without good information shared between sales forces, Monster.com couldn’t have grown, says Liddell, whose team has since worked with Siebel developers as well as with Akibia, a Boston-based consultancy focused on CRM.

And having learned from experience, Liddell and his colleagues will be listening more to each other and their carefully chosen consultants, rather than just to vendors trying to make a sale. "The more complex these solutions are, the greater the risk," Liddell says. "The main thing we have learned is ’buyer beware.’ Don’t just accept sales and marketing pitches. It means hard work. It may mean putting pieces together rather than buying one complete solution."

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Copyright © 2001 IDG Communications, Inc.

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