surveying and building your crm future:

Surveying and Building Your CRM Future:Achieving High Performance with a New CRM Software Decision-Making Model

3 Surveying and building your CRM future

Overview

There was a time, not long ago, when choosing customer relationship management (CRM) software was, if not simple, then at least straightforward: one company, Siebel Systems, dominated the market with its comprehensive “best-of-breed” solution. Even after alternative solutions appeared, organizations could still simply issue a request for proposal specifying their functional requirements, score different software providers according to how well their products satisfied these requirements, and then make their selection.

Today, organizations trying to build or refresh their CRM capabilities using this classic approach to software selection have made a disturbing discovery: the decision-making model that worked in yesterday’s simpler technology landscape is unequal to the demands of today’s CRM market, which

now includes, in addition to traditional best-of-breed options, enterprise platform vendors, numerous niche vendors and software-as-a-service (SaaS) offerings. This technology landscape is more complex, subject to rapid change and harder to predict. Service-oriented architectures (SOAs), in particular, are bringing the organizations trying to exploit this technology for CRM into uncharted territory.

Accenture research has shown that one of the chief characteristics of organizations that have mastered customer relationship management is their ability to harness technology effectively. We can help organizations explore the expanded range of software options now available, and understand the business and technology implications of each option. Using the expertise acquired through two decades of helping hundreds of organizations select and implement CRM software solutions that enable

high performance, we can help choose the model—or models—best-suited to business and technology requirements. Our approach will help establish or refresh a CRM solution architecture and development plan, and build a strong, lasting foundation for high performance—what we call the CRM Software Cornerstone.

This paper describes Accenture’s approach to CRM software selection and the key issues that organizations should consider when evaluating their software options. Subsequent papers will describe how organizations can build a high-performance CRM capability based on the strategic foundation they put in place using our approach.

Surveying and Building Your CRM Future: Achieving High Performance with a New CRM Software Decision-Making Model

Surveying and Building Your CRM Future 4

CRM Software Today: A Complex and Changing Landscape

The CRM software landscape has changed dramatically in recent years. Once dominated by Siebel Systems—the company that defined CRM best-of-breed solutions—the CRM market now offers many more choices. (See Figure 1, “Milestones in the evolution of the CRM ecosystem.”) These include enterprise-platform vendors such as SAP, Microsoft and Oracle, which recently acquired Siebel Systems and PeopleSoft. In addition, SaaS solutions such as Salesforce.com and Siebel OnDemand are increasingly seen as enterprise-worthy, not simply solutions for small and medium companies. Filling the gaps in this landscape: a growing number of vendors offering specialized, niche solutions—for example, Unica, offering marketing automation; Callidus, offering incentive

compensation management; and Vendavo for pricing management.

Many organizations use a combination of these solutions. The challenge faced by the CIO of one large electronics company is becoming more common: his company is implementing a leading SaaS solution on the front end while working with an enterprise solution on the back end. Both parts of the organization are supporting legacy systems and developing custom capabilities, while exploring the need to move toward service-oriented architectures. CIOs like this one can be forgiven for not sleeping very well at night.

Together, these developments have sent tremors through the CRM industry and users are genuinely perplexed by what to do next. Are SaaS solutions viable long-term solutions or merely a temporary stop-gap? Given ongoing vendor consolidation, which enterprise platform is the right choice? This uncertainty is

exacerbated by the software vendors, all competing for share of voice and each loudly proclaiming that its own solution will set the trend going forward. Under these circumstances, the safest move may appear to be making no move at all.

Yet simply waiting for these issues to resolve themselves entails enormous risk. Organizations must have a strategy that takes into account current trends and the potential impact of these trends on the longevity of their end-state CRM solutions and the total cost of ownership for these solutions. Organizations that have already invested heavily in CRM may in fact be on the wrong path.

Current business pressures also demand a long-term strategy for dealing with the changing CRM landscape. Particularly in industries such as telecommunications, where commoditization is accelerating and competitors multiplying, companies are compelled to focus

Organizations that have already invested in CRM may be on the wrong path.

5 Surveying and Building Your CRM Future

on their front-office functionality. To protect the customer franchise and accelerate growth, they must revitalize sales, marketing and customer service capabilities and re-establish what differentiates them. For these organizations, there is no time to waste.

Accenture research has shown that high-performance organizations have mastered a range of factors in multiple disciplines—strategic, analytic and operational—in addition to technology. They use this combined mastery to deliver a more consistently satisfying customer experience that creates loyalty and, in turn, supports profitable growth and high performance. Accenture believes, therefore, that organizations will build a stronger foundation for success by making technology decisions that take into account their overall business strategy and performance objectives, and the marketing, sales and service capabilities they need to achieve these goals.

Founding a New Future: Decision Factors That Really Matter

In the new CRM landscape, the traditional approach to selecting software is no longer adequate, and a new decision-making model must take its place. The function-and-feature comparison that long formed the major part of traditional software assessment is now a decision factor far lower down the list of priorities. Relative parity now exists among vendors across many of the core requirements for marketing, sales and customer service capabilities. Where gaps do exist, organizations can fill them very quickly—possibly, by using SaaS or SOA options.

So what, then, is important in making the CRM software decisions that lead to improved business performance?

Upfront, the CRM business strategy needs to be defined: “How is our

strategy for the back office interlocked (or not) with that of our front office?" “How do we intend to achieve our business objectives for customer growth and retention?” “What business capabilities will we need in the future?”

In parallel, a company sets its CRM technology strategy: “What new IT development skills and competencies should we develop in-house, and which will we source elsewhere?” “Can we leverage secure and reliable external hosted environments?”

The business and IT strategies can then be used to establish a CRM end-state architecture vision and roadmap. Companies will ask themselves questions, such as: “How broad and holistic does our end state need to be?” “Does the end state need to cover marketing, sales and customer service all at once, or can the end-to-end architecture be developed incrementally?”

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

1993 Siebel Systems founded.

1999Salesforce.com founded.

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

2002• Oracle releases its “Global CRM in 90 Days” package. • SAP America introduces mySAP, a “middleware” hub that links employees, process and technologies.

• Application service providers such as UpShot, NetSuite and SalesNet begin to affect the CRM market. • Siebel Systems and Microsoft announce a $250 million joint development and marketing investment.

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

2004• SAP overtakes Siebel Systems as the CRM sales leader. • Oracle acquires PeopleSoft. • Siebel Systems records its 3 millionth live user and announces vertical offerings for its hosted software.

• Salesforce.com goes public. • SugarCRM debuts, offering an open source CRM product.

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

2006• Oracle acquires Siebel Systems. • SAP releases its CRM On-Demand solution. • Microsoft CRM Dynamics becomes a service.• Salesforce.com reaches 500,000 subscribers.

Figure 1: Milestones in the evolution of the CRM ecosystem

CRM Milestones


The people side of the equation is also vitally important and needs to be a decision factor: “How does our organization view new capabilities?” “Do we strive for perfection or do we adopt a ‘good enough’ perspective?” “What is the ability of our organization to accept transformational change: at pace or at speed?”

Yet, even once these issues are addressed, CIOs may still be in a quandary. Having considered both the business and IT strategy, they may feel no closer to making an effective decision regarding their CRM software. We recommend analyzing their situation from a fresh perspective.

Accenture analytic and diagnostic tools can help organizations create the cornerstone for their long-term CRM software strategy with confidence that their decisions are the right fit for them—now and into the future. At

the heart of Accenture’s approach are two key questions, to be considered for each area of sales, marketing and customer service:1. What level of company-specific flexibility and uniqueness is desirable in the business process?2. What level of enterprise data density is needed?

The first question considers the degree of company-specific tailoring needed to differentiate business processes from the competition, versus the degree of standardization (industry-specific or cross-industry) that is desirable for businesses processes.

For example, chemicals companies are shifting their recent focus on back-office and supply-chain operations to the front office: sales, marketing and customer service. They see highly standardized business processes as the key to help them make this transition

� Surveying and Building Your CRM Future

Accenture helps organizations create the cornerstone for a lasting CRM software strategy.

Figure 2: The CRM Software Cornerstone matrix


Calculating Data Density

Expressed as a conceptual mathematical relationship, enterprise data density is the product of these variables:

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Types of Data x Volumes & Frequency

Tolerance for Latency

=

with minimal disruption. By contrast, companies in the telecommunications and financial services industries, which are becoming increasingly commoditized, benefit from having unique marketing, sales and service processes that differentiate their business.

The second factor, enterprise data density, considers the specific enterprise-level data required to support decision-making in customer-facing business processes. Data density is a factor of: • The types of enterprise-level data required (e.g., invoice data, pricing information, order history, etc.). • How much and how frequently the data is used. • The tolerance for latency—that is, how timely does it need to be? Is it acceptable to use data from last month, or is more recent or even real-time data required?

To understand data density, consider two contrasting examples. In a typical business-to-consumer environment, sales agents need prescriptive, real-time insights, derived from enterprise data, which help them identify appropriate opportunities to cross-sell or up-sell during a customer interaction. This kind of enterprise has high data density. In a business-to-business environment, on the other hand, giving sales people this kind of prescriptive insight is typically not an option, because the products are more complex and customer needs are more difficult to analyze in real-time using an automated capability.

Accenture’s approach gives organizations a solid, lasting foundation for building a better CRM capability, relative to their business strategy and the highly dynamic CRM software landscape. Each functional area within their CRM environment—marketing, sales and customer service—is scored for business process uniqueness and enterprise data density, using

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proprietary Accenture CRM business process maps and solution architecture models. The results are then plotted on a matrix to identify what we call the CRM Software Cornerstone. (See Figure 2, “The CRM Software Cornerstone matrix.”)

Each quadrant on this matrix identifies a type of CRM software solution which may be appropriate, based on the process uniqueness and enterprise data density that the company requires. These quadrants are: • Software as a service (SaaS)• Niche (best-of-breed)• Enterprise packages• Composite CRM

Laying the Cornerstone

As part of its CRM software strategy, a company should consider the implications of each quadrant of the CRM Software Cornerstone matrix. This approach helps ensure software choices that are best-suited to business strategy and performance goals.

1. Software as a Service (SaaS)

Although SaaS solutions may not cover the full breadth of CRM functions that large enterprises require, these solutions have proven effective at supporting many core functions.

Accenture’s view is that CRM SaaS solutions are best-suited to processes that require less business process uniqueness and involve lower data density. By definition, SaaS solutions provide commodity services; multi-tenant SaaS models like Salesforce.com provide highly cost-effective services because they can leverage a single model across multiple organizations and multiple industries. Such SaaS services can still be configured to individual customer needs. Indeed, much of the success

SaaS solutions have enjoyed comes from the way they have been tailored for each implementation, to increase user adoption. However, the business processes supported (e.g., opportunity management) are more generic.

SaaS solutions are also a good fit for processes with lower enterprise data density. Because data is hosted externally in the SaaS model, data integration is a critical concern for many organizations considering this option. A common fallacy here is that data integration is neither possible nor practical with SaaS; on the contrary: because Web services are now standard, integrating legacy systems with SaaS solutions is usually no more complex than integrating with in-house systems. The key aspect of lower enterprise data density is that the breadth of data, volume/frequency and the level of data latency are kept to manageable levels, to avoid spiraling integration complexity (and cost).

2. Niche

Niche offerings are the best fit for areas that require higher business process uniqueness but lower enterprise data density. Niche offerings are typically classified as “best-of-breed” in specific process areas. They support a high 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.”

As in the SaaS example, the breadth of data, volumes/frequency and the level of data latency are kept within manageable levels to avoid spiraling complexity (and cost) of integration.

3. Enterprise Packages

As enterprise data density increases, enterprise packages become more relevant to a company’s needs. Implicitly, the level of enterprise data is more readily available as part of these solutions—e.g., for ERP data used across the organization by the finance, supply chain and HR functions. Interestingly, at present, most enterprise package solutions still hold CRM and ERP data in separate databases—a legacy of creating different modules under an application suite (i.e., SAP and Oracle).

However, pre-defined “connectors” do exist, as well as common data structures and types to simplify the exchange of data. The key aspect of enterprise packages is how business process uniqueness is managed. The golden rule in implementing such packages: try to stick within the basic application as much as possible to minimize customization.


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However, following this rule has presented challenges for many organizations attempting 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 pre-defined integration connectors less useful, increasing overall integration complexity.

4. Composite CRM

For situations where business process uniqueness and enterprise data density are both high, composite CRM solutions are emerging as the best fit. Essentially, a composite CRM solution is a solution that enables organizations to move toward SOAs. Accenture defines a SOA as a business architecture where separate business functions on autonomous systems inter-operate 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 uniqueness for individual business processes, by 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

By definition, an ecosystem is a living thing, always evolving. Although ecosystems may evolve in unexpected ways, Accenture believes that a dominant feature in the evolution of the CRM ecosystem will be the increasing popularity of SaaS solutions and composite CRM solutions. (Refer to the sidebar on page 12 for examples of two companies that used these solutions to their advantage.)

Enterprises are likely to continue expanding their offerings to support composite CRM. Niche vendors will likely expand into the SaaS space—either on their own or, more likely, by partnering with other established players—for example, using Salesforce.com’s AppExchange or perhaps leveraging new SaaS platform providers. (See Figure 3, “The evolving CRM ecosystem.”)

Figure 3: The evolving CRM ecosystem

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One implication of these trends is that organizations must approach their CRM software decision as if they were boarding a moving vehicle. Organizations that today would buy enterprise or niche software may soon find that a SaaS solution or a composite CRM solution may be a better fit.

Some early SaaS adopters have been surprised to find the implementation more challenging than they expected. In those cases, they may have customized their business processes to an extent that makes an easy implementation impossible. Other organizations in this situation may need to re-engineer their business processes before trying to implement a SaaS solution.

When it comes to SOAs, 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 a 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 can help. We believe that by focusing on what matters most, organizations can establish a strong foundation for building CRM capabilities that help them achieve high performance. Our experience and diagnostic models will provide insight into these issues, and help prevent or mitigate future problems.


A Composite CRM Solution for a Financial Services Company

This large North American bank has been one of Siebel System’s largest North American customers. Over time, the bank’s Siebel solution came to play a critical role in supporting core business functions, such as call center customer service and branch account management, including opportunity management. Supporting these mission-critical, complex business processes required the integration of multiple legacy and online systems. The application also needed to support a growing number of users and business functions. Together, the integration complexity and the need to support more business functionality were driving higher total cost of ownership, and degrading system performance.

Siebel Systems proposed a solution involving a new product set called Siebel Component Assembly (SCA). SCA is a custom development framework, as well as a set of next-generation front-office applications built natively on standard technologies leveraging a service-oriented architecture (SOA).

Siebel Systems asked Accenture to participate in the early stages of the SCA development and piloting efforts. Because of this experience, the bank asked Accenture to team with Siebel Systems to integrate the SCA solution with the bank’s overall architecture.

Based on this evolution, and on more recent events involving Oracle’s acquisition of Siebel Systems, the bank is in the process of designing a new system infrastructure for its applications, aimed at leveraging SOA capabilities within a composite CRM model. By leveraging a service-oriented architecture (SCA and SOA solutions such as Oracle Fusion Applications), the bank expects to address requirements for high levels of enterprise data density and meet its integration challenge head-on. In a process-centric, composite application, heterogeneous systems act in concert, accessing data and business logic where they reside to support a unified, differentiated business process.

A SaaS CRM Solution for a Healthcare Company

A major North American healthcare company is enjoying enormous success in applying a SaaS CRM model, based upon Salesforce.com, to enable a strategic sales transformation. The challenge for the company was how to operationalize its sales strategy at speed across seven autonomous regions over five different lines of business, while driving down overall total cost of ownership. The company engaged Accenture to help, given Accenture’s proven SaaS implementation experience.

Accenture and the company worked to define a common standardized business process for sales and account management which was progressively

adapted across each line of business and across multiple regions. An accelerated approach enabled gap-fit analysis of Salesforce.com capabilities to the business process. Standardizing business process to industry and cross-industry leading practices was enabled through a highly empowered governance structure across the regions. In this way, process variation (business process uniqueness) was minimized, with agreed differences handled through specific Salesforce.com profiles. Enterprise data density was tightly managed alongside the business process. System integration requirements are restricted to basic membership/subscriber counts by key entities.

To date, more than 500 sales and account management users have been successfully deployed as part of the phased regional implementation. Performance metrics are tracking behavioral change within the sales force to shift to a more proactive mode of operation and to create a greater number of trusted advisor relationships with customers.

The best fit for the SaaS model is being truly exploited by managing down business process uniqueness and enterprise data density. In parallel with the Salesforce.com implementation, the company is also applying niche solutions for pricing, using Oracle PeopleSoft for enterprise-level requirements and piloting a SOA program.

By focusing on what matters most, organizations establish a strong, lasting CRM foundation.


Accenture can help you understand the changing CRM landscape and build a strong, lasting foundation for high performance.


About the Authors

Saj Usman is a senior executive with the CRM service line at Accenture, where he is responsible for the company's CRM capabilities in North America. He is also responsible for Accenture's CRM alliances worldwide, including the company's 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 with the CRM service line at Accenture, where he is responsible for developing service-oriented architecture solutions that help companies transform sales performance. Mr. Raj created the Accenture methodology for implementing software-as-a-service solutions, and he 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 from University College London.

Would You Like to Learn More?

Accenture wants to help your organization survey and understand what the shifting CRM software landscape means to you. We are the trusted CRM advisor to hundreds of leading organizations around the world, and a consulting partner to the CRM industry's leading technology vendors. For more information about how Accenture can help you achieve high performance, contact [email protected].

Copyright © 2006 Accenture All rights reserved.

Accenture, its logo, and High Performance Delivered are trademarks of Accenture.

About AccentureAccenture is widely regarded as the leading provider of consulting solutions and managed services designed to deliver high performance to your business. The company infuses marketing, sales and customer service operations with strategic insight, sophisticated data analysis, advanced technology and operational excellence. Combining experience, innovation and a global delivery network, our Customer Relationship Management professionals team with clients across virtually all industries to design and implement strategies for creating customer experiences that enable growth, increased profitability and high performance.

Accenture is a global management consulting, technology services and outsourcing company. Committed to delivering innovation, Accenture collaborates with its clients to help them become high-performance businesses and governments. With deep industry and business process expertise, broad global resources and a proven track record, Accenture can mobilize the right people, skills and technologies to help clients improve their performance. With more than 133,000 people in 48 countries, the company generated net revenues of US$15.55 billion for the fiscal year ended August 31, 2005. Its home page is www.accenture.com.

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