By Lee Pender, PC Week Online
From IT managers to vendors to partners, everybody wants a piece of CRM systems.
The latest is IBM, which last week entered into a deal with Siebel Systems Inc. to jointly develop and market Siebel's market-leading customer relationship management applications. Siebel also will tune its applications for IBM platforms.
The move is the latest in a series of deals bringing CRM to the forefront of the enterprise applications market and grabbing the attention of e-commerce decision makers.
Not long ago, CRM was almost an afterthought, a front-office bolt-on to ERP (enterprise resource planning) applications. But as companies battle for customers in an age when the Web has made customer loyalty a fleeting concept, CRM has moved near the top of IT managers' wish lists.
The reason is economics: While ERP applications generally focus on cutting costs and automating internal processes, CRM is a revenue driver aimed at giving sales forces the tools they need to win and retain customers. Some CRM users said the competitive environment created in part by the Internet has made CRM a prior ity—in effect, becoming the tail wagging the ERP dog.
"It's becoming [a necessity]," said Jamie Wells, director of IT at Comdial Corp., a telecommunications company in Charlottesville, Va. "The demand for being able to manage sales cycles effectively is becoming more and more important."
Wells chose J.D. Edwards & Co. as an ERP provider based largely on the company's offering of Siebel's CRM system. J.D. Edwards became a Siebel reseller this year and offers Siebel's CRM applications integrated into the J.D. Edwards back end. Comdial passed on PeopleSoft Inc., SAP AG and others because of a lack of CRM offerings, Wells said. PeopleSoft has since bought No. 2 player Vantive Corp., and SAP is building its own CRM components.
"[CRM] was very much a part of the decision," Wells said. "We believe that by giving [salespeople] the tools they need to be successful, we can drive more revenue through our sales channel."
Despite CRM's promise, implementations can be risky. While generally not as massive as ERP, CRM still requires major time and financial investments by customers.
"If you install a product like this, you're betting your company on it," said Al Kruzel, controller at the Dwyer Group, a Waco, Texas, franchise management company that uses Pivotal Corp.'s CRM offering, eRelationship 2.
In addition, because they're unfamiliar with CRM, some companies are implementing the technology in a way that doesn't take full advantage of its capabilities.
"The technology can be squandered," said Howard Berg, president of Berkeley Enterprise Partners Inc., a Boston CRM implementer. "If it's properly set up under a business architecture, it can be a demand-generation vehicle. It definitely can be a customer retention vehicle."
Another challenge IT departments face is finding a CRM system flexible enough to map to a company's current business processes. In that sense, CRM differs from ERP.
"The classic ERP thing is to change your business to fit the [ERP] system's processes," said Vantive user Bill Carney, CIO of Genicom Corp., a Chantilly, Va., printer manufacturer. "You can adapt [CRM]."
ERP vendors have not been the only software players to recognize customers' desire for CRM. Smaller vendors are scaling up to join in. Next week, GoldMine Software Corp., of Pacific Palisades, Calif., will introduce GoldMine Front Office 2000, which will feature integrated customer service and support.
Redi-Direct Marketing Inc., the parent company of Windsoft Inc., a Denville, N.J., CRM vendor, recently bulked up its CRM offering by purchasing SalesBook Systems, of Westbrook, Maine. SalesBook specializes in creating CRM for handheld devices at small businesses.
Within CRM, categories such as partner relationship management have emerged. Last week, San Francisco-based Allegis Corp. released Sales Partner 2.0, an application aimed at allowing companies to communicate with channel partners via the Web.
Even with all the hype surrounding CRM, some users remain skeptical. Mark Skeie, a PeopleSoft user and IT manager for pharmaceuticals at 3M Corp., in St. Paul, Minn., said his company would follow the CRM market carefully and proceed with caution.
"I'm not aware of anybody who can wave the flag and say, 'Here's what I've done for the company because we have the software installed,'" Skeie said.
