A Success Model for CRM Integration –Part II
There are times when tightly integrating applications together makes sense. These tend to be the most complex and costly projects, but for certain companies, can deliver great benefit. The good news, however, is that all companies can gain great benefit from more loosely coupled and simpler integration approaches.
As I look across the CRM integration projects who have completed it successfully, I have been able to identify three distinct levels of integration that companies implement; data replication, data synchronization, and process integration. Each of these categories has its own characteristics, implementation requirements, benefits, risks, and costs.
Data Replication – The Value of Information to Knowledge Workers
Data replication is by far the simplest and least interdependent type of integration. With replication, a copy of certain customer data that resides in one system is added to the customer records in the CRM application, with data moving in only one direction. Typically the replicated data is “view only” in CRM; that is it cannot be modified by the user, but provides more complete customer data to increase the effectiveness of CRM.
Bear in mind that implementing a replication scenario may involve extending the data model of a packaged CRM application if the key data elements you wish to share do not exist in the base configuration of CRM. By providing this additional information about customers within the CRM system, sales users can improve the quality of customer interactions and more effectively target customer opportunities.
Replication has another benefit that is not so obvious; it dramatically improves the adoption of CRM by users. CRM is one of those odd business applications where adoption by its “users” is difficult to mandate in most cases. It is rare to find a case where a sales rep that was 200% of quota lost his or her job because they didn’t put their sales activities in a CRM system. So how do you get these individuals to adopt the CRM system? You provide them information in CRM that will help them sell more…information they couldn’t otherwise get. This type of quid pro quo in many cases has formed the basis for successful CRM implementations.
Data Synchronization – The Value of Efficient Consistency
The objective of synchronization is to maintain the same set of customer information in multiple systems, reflecting changes made in one system across the others. Synchronization typically focuses on the more basic demographic customer information that is common to multiple systems such as company contacts, addresses, phone numbers, etc. The following diagram depicts a typical customer synchronization scenario between a company’s ERP and CRM system: Only certain subsets of data within each system are being synchronized. Given the varying structures of these systems, it is not uncommon to see multiple integration “touch points” between systems to support a synchronization scenario.
By reflecting changes made in one customer database across all customer databases, data entry effort is dramatically reduced, errors are eliminated, and your entire organization is working from the same
Process Integration – The Value of the Well-Oiled Machine
With process integration, data is shared from one system to the next based on each systems role in an integrated customer process. The most commonly discussed customer process relating to CRM systems is the quote to order process. The following chart outlines the integration steps required to support quote to order activities between a CRM system and a back office system:
One thing to consider in process integration is that the order of the steps is extremely important. In the above example, if the quote is created from an invalid or out-of-date item from the product catalogue, then the ERP system will not be able to support later steps of providing product availability dates or processing the order. Additionally, in most cases, data replication and data synchronization are pre-requisite integration requirements for implementing process integration. Typically process integration centers around those activities in the sales cycle that involve an event or transaction, such as a sales quote, an order, an invoice, a credit verification, a contract renewal, a product return, etc. By coordinating these activities more efficiently across the users and systems involved in these processes, companies can accelerate revenue and cash flow, eliminate redundant effort, and provide a better experience to their customers.
CRM Integration – What are the Costs?
CRM integration projects can have varying levels of costs, both during the initial project and on an ongoing basis. As a general rule, the complexity and resulting costs associated with an integration project will be exponentially greater for two-way or multi-directional integration projects versus one-way integrations. Complexity also rises dramatically as more and more dependencies between applications (and their respective user bases) are expanded. When we look at costs, they tend to break down into two major categories;
(1) The technical implementation and support costs and
(2) The organizational disruption costs, with the latter in many cases greatly underestimated. The following is a summary of the costs to be considered when embarking on a CRM integration project:
· Technical implementation and support:
- Integration requirements analysis and design
- Integration software (including maintenance, support, training, and upgrades) whether
- Purchased from a vendor or developed internally
- Application “Adapters” particularly when applications are targets in the integration(Another reason why one-way integrations can be simpler and less costly)
- The cost of ensuring data integrity across systems (especially costly with synchronization and process integration due to the need to maintain updateable data in multiple systems) Organization disruption costs:
- User training and orientation around the use of the newly integrated systems
- Sometimes referred to as “reengineering”
- Risks and costs of creating dependence between mission critical transaction systems and CRM
- The political barriers of data ownership and coordinating activities across functional
areas of the business one of the most common being CFOs that don’t want
Salespeople messing with their back office data.
Type 1 – These are companies that have intensive, relationship-focused sales processes. They generally need to educate their buyers about their products, have longer sales cycles, and have direct and indirect sales teams skilled in the “art” of relationship, value-based selling. Industries that tend to fall in this category include financial services, professional services, healthcare, capital goods manufacturing, and much of high technology. These types of companies generally benefit the most when you provide their knowledge workers with information that enables them to target customers better and more effectively manage customer relationships. Given that the transaction side of the customer relationship is generally an occasional event in the sales process that does not dominate the lion share of the sales team’s efforts; they tend to gain diminishing value from additional levels of integration. This is particularly true for process integration.
Type 2 – These are companies where the majority of the sales process is centered around
transactions. Their customers generally require less information about the features and benefits of products and are more concerned about things like quantity on hand, price, and availability. Industries that fall in this category include consumer goods, distribution, process manufacturing, and commoditized high technology. These types of companies generally benefit the most from integrated, coordinated, and efficient management of customer transactions.
Type 2 companies still benefit from data replication and data synchronization, but ultimately realize the greatest strategic advantage through process integration.
Plan Strategically, Implement Tactically
So where does all this information lead us? How do we use it to drive successful CRM projects? In my experience, those companies that plan strategically yet implement tactically are the most successful. Thinking strategically means developing a long-term integration plan that is flexible to the changing needs of your business. Utilize the value versus cost/disruption model to establish your long-term priorities. It is also best to implement on a technology platform for CRM integration that can grow with you as you implement this long-term strategic plan. The best implementations of integrated CRM adhere to the following simple, three-step success model:
Step 1 – Accelerate your CRM project with early success
It is always best to start with something of high value that you can implement simply, in a matter of days or a few weeks. In this phase, seek those integration capabilities that will be of high value to your CRM user, given the adoption challenges we face. In all Type 1 companies and most
Type 2 companies, data replication of critical customer data into your CRM system (leads, orders, product purchase detail, contracts, service tickets, etc.) is the best first step. Give your users the data that will help them sell, and they will gravitate to your CRM system.
Step 2 – Build momentum with success
By achieving immediate ROI and user adoption in the first phase, you can establish the momentum to support lasting success with CRM. Document your successes and you will have the credibility and
Political capital with both executives and users to deliver greater value through additional CRM functionality and integration. Remember, exceeding expectations early is critical to establishing lasting project success.
Step 3 – Leverage that momentum to expand CRM integration
You can now expand your implementation to additional high value integration capabilities, whether through additional data replication, adding data synchronization, or for Type 2 companies, expanding to include process integration. With the right long-term plan implemented on a technology platform that can expand with your changing business, your CRM investment will be well positioned to deliver meaningful and sustainable competitive advantage.View my previous posting for more details.
1. Peter R. Chase, Executive Vice President, Scribe Software Corporationeweek