Conventional wisdom dictates that, as much as possible, companies should try to focus on providing products and services that flow naturally from their core competencies.
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For all other activities, the competitive organisation should try to find a partner or supplier that specialises in the area and can probably do the job better.
Such arrangements, in which a third party provides supporting services to the value chain, require a degree of trust. But you usually don’t have to get too cuddly with the partner, because the services are only supporting services, which rarely make or break an enterprise.
When it comes to IT, this piece of conventional wisdom needs fine-tuning, because even if technology is not your core competency, it’s an area where you need to innovate just to keep up with the competition.
But let’s be honest, you want to do more than just keep up – you want to leap ahead of the competition.
Regardless of your core business area, you need a solid e-business strategy. So when it comes to outsourcing your company’s technology activities, you need more than just a degree of trust: you need to be whispering in each other’s ears.
Read more on customer relationship management
- IT can learn a lot from the car industry, which has transformed customer relationship management.
- Chief information officers should become chief integration officers if they want to stay relevant in 2015.
- Service providers are ill-equipped to support the growing demand from businesses for digital transformation projects.
Most companies therefore face this dilemma: how can they trust their suppliers to innovate in ways that are specific to their industry, all the way down to the enterprise and its unique ways of differentiating within the industry?
CRM is tailor-made
Customer relationship management (CRM) illustrates this phenomenon perfectly. CRM is not a turnkey solution; it needs to be adapted to specific industries – and even to specific enterprises.
It needs to be integrated with legacy enterprise applications, which are also highly tailored to each company’s environment and way of doing business. It needs to reach out to the mobile worker, and to integrate with social media.
Most large enterprises have been using CRM for more than a decade. But because traditional CRM implementations are rarely cheap, small- and medium-sized businesses are further behind on the adoption curve. But with wide availability of pay-as-you-go cloud-based solutions, more and more smaller organisations are jumping on the bandwagon.
David Beard, CRM principal at Sage CRM, says the market for CRM is growing more quickly than before. “All the best things have been done with back-office systems,” he says. “So people are now focusing on the disconnected front office, and they are looking at their spreadsheets and disconnected Outlooks and the tiny copy of some bespoke database they built three years ago. You can join these things together – and that’s driving a lot of change.”
Cloud-based CRM can lead companies to believe it has become a turnkey solution, but this is not the case. CRM still differs from one industry to another, and from one company to another, and it still needs to integrate with legacy applications. Not surprisingly, integration costs account for as much as 40% of the total cost of ownership of a CRM solution, whether on-premise or cloud.
We want partners in the marketplace who understand what small businesses need. That is where the smart stuff is: how to innovate, how to use the product to provide what a business needs
David Beard, Sage CRM
Beard says: “A lot of the businesses we deal with are small and medium enterprises trying to drive cost down. They are telling us, ‘I can’t afford to have three more people. I don’t want to have to pull spreadsheets together any more. It has to be more efficient than this.’ All that requires integration.”
What is more, integration is an ongoing process, requiring frank discussion between at least two parties – the customer and the supplier. More often than not, a third party gets involved, because the software supplier will partner with a reseller or integrator.
Beard adds: “Realistically, there is a scale to go to market directly. But we also want partners in the marketplace who understand what small businesses need. That is where the smart stuff is: how to innovate, how to use the product to provide what a business needs.”
In such a ménage à trois, each company needs to bring a key ingredient to the table. Your company understands your customers and your unique niche in the market. The CRM supplier understands its particular version of CRM. The integrator understands how to integrate CRM with other systems, and the integrator also knows how to use CRM to modify and optimise business processes.
Remember that the stakes are high – we’re talking about changing the way your company works with customers. So pick a supplier and integrator with whom you have developed enough trust to brainstorm openly and find the optimal solution together.
“First and foremost, customers want to link up their financials,” says Beard. “But then, after a bit of analysis and discovery work, the customer is open to discussions about the business of getting products out of the warehouse and shipping to a customer – in other words, order fulfillment.
“When customers start thinking more about what that process is all about, they start to think of ways of pulling information out of paperwork, or out of Outlook files, to make the process run more smoothly.”
Customers should not be stuck doing what is imposed by technology solutions. A good integrator will change the process to fit the customer
David Beard, Sage CRM
Figuring out which systems to integrate requires collaboration among the threesome. Your company needs to reveal how you use existing technology and where the weaknesses lie; the CRM supplier needs to reveal some of the inner workings of the CRM software; and the integrator needs to be honest about its capabilities. So if you carefully select a supplier and integrator you can trust, you will be ahead of the game.
But that’s not the only reason you need trust. Implementing CRM is more than just linking up different enterprise applications. The biggest part of the project is optimising business processes, and this also requires a high degree of confidence between the three parties.
“It’s a bit of the proverbial chicken and egg,” says Beard. “Sometimes, during discovery, the customer describes a number of processes. Through questioning, you can easily find out that the customer uses those processes simply because they are imposed by the system it had in place to start with.
“The innovative reseller will tell the customer that if they put in CRM, they can get rid of steps B and F. Customers should not be stuck doing what is imposed by technology solutions. A good integrator will change the process to fit the customer.
“Back to my chicken and egg point. Sometimes the process flexes the customer, and sometimes the customer flexes the product. The smart, innovative integrator will figure out the best way to make people and processes work together – hopefully, the cheapest way too.”
Stepping up the pace
One final reason why companies need to trust their software supplier and integrator is that CRM is a moving target. Mary Wardley, programme vice-president, CRM and enterprise applications at IDC, says: “The concept of what is a CRM application has shifted dramatically in the past five years.
The concept of what is a CRM application has shifted dramatically in the past five years
Mary Wardley, IDC
“The idea of consulting a system of record for customer information is being replaced with interaction-driven technology that is always available – mobile first, in many situations – and reflects real-time customer conversations, enhanced by social.”
Beard sees the same trend. “An increasing number of people are working at home, working on the road, or any other place,” he says. “They need to have data with them any time, anywhere. They can’t get their existing system out of the door because of privacy issues, so they turn to CRM to make their data available very quickly – any time, anywhere.”
Mobile and social provide one more reason for companies to seek suppliers with whom they can develop a trusting relationship. Each partner brings a unique set of key ingredients to the table, but the really essential ingredient to making the threesome work is trust.
If the three parties can openly discuss problems and explore a range of solutions, your company can leap ahead of the competition with an innovative way of dealing with customers.