Building CRM 2.

0: A New Model for IT Decision Making

www.CRMproject.com/15701
A new approach to choosing CRM software helps organizations design and build a lasting foundation for high performance.
Saj Usman and Saideep Raj

Accenture

Saj Usman is a senior executive with

the Accenture CRM service line where he is responsible for the companys CRM capabilities in North America. He is also responsible for Accentures CRM alliances worldwide, including the companys CRM relationships with Oracle, SAP, Salesforce.com, Microsoft and Callidus, among other companies. Mr. Usman has extensive experience with CRM packaged software, custom applications and service-oriented architectures, including solution planning, architecture design and program management. He has worked with organizations in many different industries, with a focus on financial services providers. He received a Bachelor of Arts in computer science from Boston College.
Saideep Raj is a senior executive

ot long ago, choosing customer relationship management (CRM) software was relatively simple, with one company, Siebel Systems, dominating the market. Even when competing vendors appeared, organizations were able to select their software by simply comparing product features to their checklist requirements. Nowadays, most organizations that try to follow the classic checklist approach soon find that a decision-making model suited for yesterdays landscape is insufficient for todays far more complex marketplace. Today CRM software means not only best-of-breed solutions, but also enterprise platform vendors, numerous niche players and an emerging array of software-as-a-service (SaaS) offerings. With so much variety not to mention volatility making good software choices is a lot harder. Organizations need a new model for evaluating the CRM software options now available and choosing the

model or models best suited to their business and technology requirements. Accenture has developed just such an approach one we call the Accenture CRM Software Cornerstone. The Current CRM Landscape Long dominated by Siebel Systems the company that defined CRM best of breed the CRM market now offers many more choices: enterprise platforms such as SAP, Microsoft and Oracle; SaaS solutions like Salesforce.com and Siebel CRM OnDemand increasingly seen as enterprise-worthy; and a growing number of specialized, niche providers such as Unica and Callidus. Understandably, CRM buyers are often perplexed by the range of options not only by what makes them different but also by how they may evolve. Their uncertainty is intensified by the software vendors themselves, all competing for share of voice and each

1990
Oracle introduces a CRM solution for the small and medium business marketplace

2003
Siebel Systems launches CRM On Demand Microsoft releases Microsoft CRM NetSuite debuts v. 9.0 of its hosted platform and expands to CRM applications

1993
Siebel Systems founded

1999
Salesforce.com founded

2004
SAP overtakes Siebel Systems as the CRM sales leader Oracle acquires PeopleSoft Siebel Systems records its 3 millionth live user, announces vertical offerings for its hosted software Salesforce.com goes public SugarCRM debuts, offering an open-source CRM product

with the Accenture CRM service line, where he is responsible for developing service-oriented architecture solutions that help companies transform sales performance. Mr. Raj created the Accenture methodology for implementing SaaS solutions, and has led major CRM on-demand implementations for large enterprises. He has worked with clients in multiple geographies and industries, including high tech, healthcare, chemicals, telecommunications and utilities. He received a Bachelor of Engineering degree from University College London.

2001
SAP enters CRM marketplace Siebel Systems revenues reach $2.1 billion

2002
Oracle releases its Global CRM in 90 Days package SAP Americas mySAP introduces a middleware hub capable of connecting SAP systems to externals and front- and back-office systems for a unified operation that links partners, employees, process and technologies in a closed-loop function ASPs (application service providers) such as UpShot, NetSuite and SalesNet begin to have an impact on the CRM marketplace Siebel Systems and Microsoft announce a $250 million joint development and marketing investment

2005
Oracle acquires Siebel Systems Microsoft releases Microsoft CRM 3.0 Salesforce.com signs Merrill Lynch as a new customer, with more than 5,000 users

2006
SAP releases its CRM On-Demand solution Microsoft CRM Dynamics becomes a service

Figure 1: Milestones in the Evolution of the CRM Ecosystem

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loudly proclaiming that its own solution will set The business and IT strategies will help The second factor (see Figure 2), enterprise the trend going forward. establish the target end-state architecture and a data density, considers the specific enterpriseUnder the circumstances, waiting for another road map for getting there. Consider issues such level data required to support decision making in clear leader to emerge might look like a safe bet as How broad and holistic does our end state customer-facing business processes. Data density yet it actually entails great risk. Current business need to be? Does the end state need to cover is a factor of: pressures also demand a long-term strategy for marketing, sales and customer service all at once, The types of enterprise-level data required dealing with the changing CRM landscape; or can the end-to-end architecture be developed (e.g., invoice data, pricing information, order particularly in an industry like telecommunications, incrementally? history, etc.); where commoditization is accelerating and People factors are also vitally important: How How much and how frequently the data is competitors multiplying, organizations are does our organization view new capabilities? Do used; and compelled to focus on their front-office functionwe strive for perfection or do we adopt a good The tolerance for latency that is, how timely ality. To protect the customer franchise and enough perspective? What is the ability of our does it need to be? Is it acceptable to use data accelerate growth, they must revitalize sales, organization to accept transformational change: at from last month, or is more recent or even marketing and customer service capabilities and pace or at speed? real-time data required? re-establish what differentiates them. For these With a firm grasp on these issues, the organiorganizations, there is no time to waste. zation is now ready to ask what we believe to be To understand data density, consider two Accenture research has shown that highthe key questions, which need to be considered contrasting examples. In a typical businessperformance organizations have mastered a range separately for the sales, marketing and customer to-consumer environment, sales agents need of factors in multiple disciplines strategic, analytic service functions: prescriptive, real-time insights, derived from and operational in addition to technology mastery. 1. What level of company-specific flexibility and enterprise data, that help them identify appropriate We use this combined mastery to deliver a more uniqueness is desired in the business process? opportunities to cross-sell or upsell during a consistently satisfying customer experience that 2. What level of enterprise data density is needed? customer interaction. This kind of enterprise creates loyalty and, in turn, supports profitable has high data density. In a business-to-business growth and high performance. environment, on the other Accenture believes, therefore, hand, giving sales people this Expressed as a mathematical relationship, enterprise data density is that organizations will build a kind of prescriptive insight is the product of these variables: stronger foundation for success typically not an option because Enterprise Data Density = Types of Data x Volumes & Frequency by making technology decisions the products are more complex that take into account their and customer needs are more Tolerance for Latency overall business strategy and difficult to analyze in real time Figure 2: Enterprise Data Density performance objectives, as well as using an automated capability. the marketing, sales and service By following this decisioncapabilities they need to achieve these goals. The first question considers the degree of commaking method, organizations will create a pany-specific tailoring needed to differentiate foundation for building the new CRM capabilities Which Factors Matter Most? business processes from the competition, versus needed, relative to their business strategy and So what are the key factors to consider when the degree of standardization (industry-specific or to the dynamic software landscape. Once each choosing CRM software today? First, the CRM cross-industry) desirable for business processes. functional area within their CRM environment business strategy: How does our back-office For example, chemical companies are shifting marketing, sales and customer service is strategy relate (or not) with our front-office their recent focus on back-office and supply chain scored for business process uniqueness and strategy? How will we achieve our customer operations to the front office sales, marketing enterprise data density, the results can be then growth and retention goals? What business and customer service. They see highly standardplotted on a matrix to identify the ideal software capabilities will we need in the future? ized business processes as key to helping them cornerstone for their long-term CRM strategy. In parallel, the CRM technology strategy make this transition with minimal disruption. Each quadrant on the matrix in Figure 3 should be defined: What new IT development By contrast, companies in the telecommunicamaps to a different type of CRM software skills and competencies should we develop tions and financial services industries, which are solution: software as a service, niche (best in-house and which will we source elsewhere? becoming increasingly commoditized, benefit of breed), enterprise packages and what we Can we leverage secure and reliable externally from having unique marketing, sales and service term composite CRM. Organizations should hosted environments? processes that differentiate their business. consider the implications of each quadrant to

CRM Transformation

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Building CRM 2.0: A New Model for IT Decision Making

ensure the software choices best suited to their business strategy and performance goals.

Software as a Service Although SaaS solutions may not cover the full breadth of CRM functions that large enterprises require, they have been proven effective at supporting many core functions. They appear to be best suited to processes that require less business process uniqueness and involve lower data density. By definition, SaaS solutions provide commodity services; multitenant SaaS models like Salesforce.com provide highly costeffective services because they can leverage a single model across multiple enterprises and industries. Such SaaS services can still be configured to individual customer Composite Enterprise needs. Indeed, much of the success High CRM Packages SaaS solutions have enjoyed comes from the way they have been tailored Enterprise Data for each implementation, to increase Density user adoption. However, the business Software processes supported (e.g., opportunity Niche as a Low management) are more generic. Service SaaS solutions are also a good fit for processes with lower enterprise data Low High density. Because data is hosted externally Uniqueness of in the SaaS model, data integration is a Business Processes critical concern for many organizations considering this option. A common Figure 3: The CRM Software Cornerstone Matrix fallacy here is that data integration is neither possible nor practical with SaaS. On the contrary, because Web services are now data latency remain within manageable levels standard, integrating legacy systems with SaaS to avoid spiraling complexity (and cost) of solutions is usually no more complex than integration. integrating with in-house systems. The key aspect of lower enterprise data density is that Enterprise Packages the breadth of data, volume/frequency and the As enterprise data density increases, enterprise level of data latency are kept to manageable packages become more relevant to a companys levels to avoid spiraling integration complexity needs. Implicitly the level of enterprise data is (and cost). more readily available as part of these solutions (e.g., for ERP data used across the organization Niche by the finance, supply chain and HR functions). Niche offerings are the best fit for areas that At present, most enterprise package solutions require higher business process uniqueness but still hold CRM and ERP data in separate lower enterprise data density. Niche offerings databases a legacy of creating different are typically classified as best of breed in modules under an application suite (e.g., SAP specific process areas. They support a high and Oracle).

degree of configuration and customization for creating uniqueness in a business process. Such solutions are often characterized as engines that accept multiple user-defined, company-specific variables to adapt and tune a business process. Examples include pricing, quoting and analytics. One of their key features is the way they can be integrated with custom code. Historically each vendor has created proprietary tools and methods to address this issue; however, greater consistency is now possible with solutions standardizing on common protocols either J2EE or .NET-based bolt-ons. The breadth of data, volume/frequency and the level of

However, predefined connectors do exist, as well as common data structures and types to simplify data exchange. The key aspect of enterprise packages is the way business process uniqueness is managed. The golden rule: Stick within the basic application as much as possible to minimize customization. However, following this rule presents challenges to organizations trying to create greater uniqueness in their business processes. Customization has a large impact on maintenance and increases the complexity and cost of upgrades. Higher levels of customization also make the predefined integration connectors less useful, increasing overall integration complexity. Composite CRM For situations where business process uniqueness and enterprise data density are both high, composite CRM solutions appear to be the best fit. A composite CRM solution is a solution that enables organizations to move toward service-oriented architectures (SOA). Accenture defines SOA as a business architecture where separate business functions on autonomous systems interoperate to execute a business process. This business architecture is orchestrated by a separate mechanism rather than hardwired into applications. This means that highly adapted company-specific services can be created to drive a high level of business process uniqueness for individual business processes, tapping into new custom functions, existing legacy systems or external services. The SOA end state also enables a high level of enterprise data density, with a shift toward increased master data management across a single logical and even physical data repository. The Evolving CRM Software Ecosystem An ecosystem is a living thing, always evolving possibly in unexpected ways. We believe that a key aspect of the evolution of the CRM ecosystem will be the increasing popularity of SaaS offerings and composite CRM solutions. Enterprise organizations are likely to continue expanding their offerings to support composite CRM. Niche vendors will likely expand into

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the SaaS space perhaps on their own or, more re-engineer their business processes before trying likely, by partnering with other established to implement an SaaS solution. players (e.g., using Salesforce.coms AppExchange or perhaps leveraging new SaaS platform providers) (see Figure 4). One implication organizations Composite Enterprise must approach their CRM software High CRM Packages decision as if they were boarding a moving vehicle. Organizations that Enterprise Data today would buy enterprise or niche Density software may soon find that an SaaS Software solution or a composite CRM solution Niche as a Low may one day be a better fit. Service Some early SaaS adopters have been surprised to find the implementation more Low High challenging than they expected. In those Uniqueness of cases, they may have customized their Business Processes business processes to an extent that makes an easy implementation impossible. Other Figure 4: The Evolving CRM Ecosystem organizations in this situation may need to

When it comes to service-oriented architectures, few organizations have completed a successful end-to-end implementation; users may prefer to wait before heading down this path. However, CRM enterprise platform providers are moving their customers in this direction whether they feel prepared or not. Accenture can help these organizations understand the technology, identify which areas of their business will benefit from an SOA and develop a plan for implementing it. One thing is clear: CIOs and other IT decision makers are moving through a more complex, dynamic and unpredictable landscape when it comes to CRM. The principles and strategies they relied on in the past when making software decisions will no longer serve them well. Accenture believes that by focusing on the factors that matter most, organizations can establish a strong foundation for building CRM capabilities that help them achieve high performance. n

More information and additional material can be found online at

www.CRMproject.com/15701

CRM Transformation

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