CRM’s Odd Couple
By Louis Columbus
Home-grown ERP systems are the Oscar Madisons of the IT world. Grizzled by years of service yet reluctant to change, set in their ways, and unwilling to embark on even a modest upgrade path, home-grown ERP systems are seldom changed by the revolving door of CIOs that look to attach their own legacies to these massive home-grown systems. More often than not, the home-grown ERP system changes the CIO. All the complexity and lack of clarity makes some CIOs yearn for hosted applications to increase responsiveness to prospects, channels, customers, and the precious installed base manufacturers are striving to capitalize on. CIOs in search of closure are driving the adoption of hosted applications.
Hosted channel, CRM, analytics and OnDemand initiatives from Siebel and IBM are showing usability improvements, alignment of workflows to how companies work, decent analytics that actually tell you how your strategies are doing, and best of all, can be turned on and off like a utility. Several of these applications have streamlined, efficient interfaces, forsaking the “more is better” mantra of previous CRM applications. The extreme make-over hosted CRM applications are getting would satisfy Felix Unger on even his most perfectionistic of days.
Hosted CRM and Legacy ERP: A Partnership Of Necessity
Legacy ERP systems change gradually over time, reflecting shifts in priorities at only the strategic level. There’s no sudden and dramatic changes here; only a gradual shift, over time, as the company’s business model requires extensions to support mergers & acquisitions, re-vamped production strategies, and getting back in touch with what is many times the forgotten installed base of customers. In fact, so many people like to point out the war for ERP revenue raging between Oracle and SAP – but the alternative to do nothing at all and tweak the home-grown ERP system one more time is the most potent competitor of all. Systems that have code structures that resemble the perfectly random and chaotic nature of the character Oscar Madison in The Odd Couple are all too commonplace. Spaghetti code with no comments saved more jobs from outsourcing in the last five years that any presidential candidate could ever promise to.
Countering this false sense of complacency brought on by “let’s tweak the old system one more time” strategy is the fact that CIOs are now called upon to be part of revenue producing strategies. It’s becoming a higher priority than ever for CIOs to manage their organizations to goals that contribute to top-line revenue growth. The urgency to deliver results, over and above adding in new features to legacy ERP systems, pervades many industries today, manufacturing being the most prevalent.
IT Is Creating More Oscar Madisons
Given increasing pressure CIOs are under to deliver results, a major ephinany is emerging: many customer-facing systems including CRM, quoting, pricing, and even call centers that are critical for top-line revenue growth are not integrated enough to deliver value – and worse yet, some are not working at all. It’s too strong of a trend to ignore. Systems installed in the 1995 – 2000 timeframe to streamline and strengthen being customer driven have outlived their usefulness – already. It’s because these customer-facing systems have slowly turned into Oscar Madisons.
Sure, the vendor promised integration and best practices – but many companies were so quick to solve the pain they stopped short of the vision. The result: more Oscar Madisons to take care of, which is job security for IT but crippling to top line revenue growth as executive management, sales, marketing, channel management and even operations scramble to overcome these weaknesses.
Hosted CRM Cleans Up
Too many CEOs and CIOs who just five years ago or less bought into a customer-facing sales and service applications have already seen their vendor of choice go bankrupt, be acquired, or both while at the same time discovering the systems that promised so much delivered too little. These customer-facing system failures are making for a very fertile market for all types of customer-facing hosted applications, CRM included.
Hosted CRM is now getting used as a “clean up” strategy to get companies to the competitive position with customer-facing applications they had previously thought they had.
Summary
Companies using legacy home-grown ERP systems continue to resist the most radical alternative of all, rip-and-replace to a vendor-based strategy. Instead the costs of a periodic rejuvenation – a mild makeover of their ERP systems – are most cost effective and easiest to manage.
It’s the customer-facing systems that are in need of the biggest makeover of all. Hosted CRM, quoting, pricing and services applications have proven that delivery method is incidental to value – and their predecessors are in many cases not delivering on the committed performance from even five years ago or less paving the way for hosted CRM applications to flourish as CIOs are asked to deliver support for top-line revenue growth now.
Posted by LOUISCOLUMBUS on August 2, 2005 at 12:06 PM in Business Infrastructure | Permalink
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