Customer relationship management (CRM)

Customer relationship management is a broadly recognized, widely-implemented str

ategy for managing and nurturing a company’s interactions with customers, clients
and sales prospects. It involves using technology to organize, automate, and syn
chronize business processes—principally sales activities, but also those for marke
ting, customer service, and technical support. The overall goals are to find, at
tract, and win new clients, nurture and retain those the company already has, en
tice former clients back into the fold, and reduce the costs of marketing and cl
ient service. Customer relationship management denotes a company-wide business s
trategy embracing all client-facing departments and even beyond. When an impleme
ntation is effective, people, processes, and technology work in synergy to incre
ase profitability, and reduce operational costs.
Many CRM vendors offer Web-based tools (cloud computing) and software as a servi
ce (SaaS), which are accessed via a secure Internet connection and displayed in
a Web browser. These applications are sold as subscriptions, with customers not
needing to invest in the acquisition and maintenance of IT hardware, and subscri
ption fees are a fraction of the cost of purchasing software outright.
Phases of CRM
The three phases in which CRM can help to support the relationship between a bus
iness and its customers are, to:
• Acquire: a CRM can help a business in acquiring new customers through excellent
contact management, direct marketing, selling and fulfillment.
• Enhance: a web-enabled CRM combined with customer service tools offers customers
excellent service from a team of trained and skilled sales and service speciali
sts, which offers customers the convenience of one-stop shopping.
• Retain: CRM software and databases enable a business to identify and reward its
loyal customers and further develop its targeted marketing and relationship mark
eting initiatives.
Benefits of CRM
These tools have been shown to help companies attain these objectives:
• Streamlined sales and marketing processes
• Higher sales productivity
• Added cross-selling and up-selling
• Improved service, loyalty, and retention
• Increased call center efficiency
• Higher close rates
• Better profiling and targeting
• Reduced expenses
• Increased market share
• Higher overall profitability
• Marginal costing.
Challenges for CRM
Despite the benefits, many companies are still not fully leveraging these tools
and services to align marketing, sales, and service to best serve the enterprise
.
Tools and workflows can be complex to implement, especially for large enterprise
s. Previously these tools were generally limited to contact management: monitori
ng and recording interactions and communications. Software solutions then expand
ed to embrace deal tracking, territories, opportunities, and at the sales pipeli
ne itself. Next came the advent of tools for other client-facing business functi
ons, as described below. These technologies have been, and still are, offered as
on-premises software that companies purchase and run on their own IT infrastruc
ture.
Often, implementations are fragmented; isolated initiatives by individual depart
ments to address their own needs. Systems that start disunited usually stay that
way: siloed thinking and decision processes frequently lead to separate and inc
ompatible systems, and dysfunctional processes.
Enterprise Resource Planning (ERP)
Enterprise Resource Planning is an integrated computer-based system used to mana
ge internal and external resources, including tangible assets, financial resourc
es, materials, and human resources. Its purpose is to facilitate the flow of inf
ormation between all business functions inside the boundaries of the organizatio
n and manage the connections to outside stakeholders. Built on a centralized dat
abase and normally utilizing a common computing platform, ERP systems consolidat
e all business operations into a uniform and enterprise-wide system environment.
An ERP system can either reside on a centralized server or be distributed across
modular hardware and software units that provide "services" and communicate on
a local area network. The distributed design allows a business to assemble modul
es from different vendors without the need for the placement of multiple copies
of complex and expensive computer systems in areas which will not use their full
capacity.
Components of ERP
• Transactional Backbone
o Financials
o Distribution
o Human Resources
o Product lifecycle management
• Advanced Applications
o Customer Relationship Management (CRM)
o Supply chain management software
Purchasing
Manufacturing
Distribution (business)Distribution
o Warehouse Management System
• Management Portal/Dashboard
o Decision Support System
These modules can exist in a system or utilized in an ad-hoc fashion.

Advantages of ERP
In the absence of an ERP system, a large manufacturer may find itself with many
software applications that cannot communicate or interface effectively with one
another. Tasks that need to interface with one another may involve:
• ERP systems connect the necessary software in order for accurate forecasting to
be done. This allows inventory levels to be kept at maximum efficiency and the c
ompany to be more profitable.
• Integration among different functional areas to ensure proper communication, pro
ductivity and efficiency
• Design engineering (how to best make the product)
• Order tracking, from acceptance through fulfillment
• The revenue cycle, from invoice through cash receipt
• Managing inter-dependencies of complex processes bill of materials
• Tracking the three-way match between purchase orders (what was ordered), invento
ry receipts (what arrived), and costing (what the vendor invoiced)
• The accounting for all of these tasks: tracking the revenue, cost and profit at
a granular level.

Disadvantages of ERP
• Customization of the ERP software is limited...
• Re-engineering of business processes to fit the "industry standard" prescribed b
y the ERP system may lead to a loss of competitive advantage.
• ERP systems can be very expensive (This has led to a new category of "ERP light"
solutions)
• ERPs are often seen as too rigid and too difficult to adapt to the specific work
flow and business process of some companies—this is cited as one of the main cause
s of their failure.
• Many of the integrated links need high accuracy in other applications to work ef
fectively. A company can achieve minimum standards, then over time "dirty data"
will reduce the reliability of some applications.
• Once a system is established, switching costs are very high for any one of the p
artners (reducing flexibility and strategic control at the corporate level).
• The blurring of company boundaries can cause problems in accountability, lines o
f responsibility, and employee morale.
• Resistance in sharing sensitive internal information between departments can red
uce the effectiveness of the software.