Given tight IT budgets, customer relationship management (CRM) project teams ready to acquire technology often do not have the luxury of buying a new best-of-breed solution. Instead of putting these CRM projects on hold, teams should examine their organization’s present software inventories for technology components (perhaps) not obviously related to CRM that can be recycled to meet new CRM needs. Not only does this save money in purchasing and installing new solutions, but also it serves as a means to test new customer processes without having to make substantial initial technology investments.
META Trend: In 2003, continued economic pressures will force organizations to refocus CRM programs on “tactical” strategy. Through 2004/05, enterprise CRM will re-emerge as a non-discretionary initiative, focused on business transformation and revenue attainment. By 2006/07, leading enterprises will approach best-practice CRM by rearchitecting CRM business processes and the CRM technology ecosystem to achieve value-based customer life-cycle patterns.
Investments in CRM technology have yielded questionable ROI results, though demands for those results have not abated. CRM professionals are being asked to “eat less (technology) and exercise more (use what is already in inventory).” Indeed, technology professionals must become creative by reusing existing technologies already in the IT portfolio – and not only those that are CRM-specific – to meet the need. Although the notion of reuse and leverage is fairly common in many IT disciplines (e.g., infrastructure), the idea of reusing relationship management processes and technology components has the potential for exceptional ROI.
During 2003/04, organizations will continue to acquire CRM technologies from multiple vendors and integrate components by leveraging EAI technologies, middleware, and emerging Web services standards. Global 2000 organizations with mature architecture processes will also begin reusing course-grained technology components (e.g., application components) for CRM purposes. Through 2005/06, fine-grained CRM application services will be fully decoupled from underlying application infrastructure and available for consumption by internal and external technology-enabled business processes. These services will be available for reuse by both CRM and non-CRM processes. By 2007/08, heterogeneous components consisting of data, process, and integration services will be commercially available for assembly within enterprise business frameworks.
What Is CRM Reuse?
Organizations are no longer willing to justify new, big-budget application software for every project, largely due to economic constraints but also because of bloated inventories of existing (and often underutilized) software. Although it is obvious that reuse increases the ROI of existing application components, consideration must be given to what it will take in terms of technology and support to force-fit technology with a less-than-perfect fit. Organizations must be cautious that the adaptation costs of partial-fit solutions (including extension/customization) as well as the addition of licenses and maintenance costs to vendors will indeed be more cost-effective than buying a solution outright that is closer in terms of business fit. The general rule of thumb is that an application purchase should meet 60%-80% of the stated requirements out of the box. In the case of a reusable component, similar (though perhaps less stringent) rules should be applied. It is fair to assume that a component already in inventory requiring no additional licenses or maintenances (meaning that licenses are shelfware) should minimally meet 50% of the business requirements, or else the requirements must be adapted. Indeed, the reused applications may be replaced with a better-fit solution when budgets free up longer term, so perfect fit is less important than in a purchase-to-specification situation. Therefore, recycling should be a core part of the pragmatic CRM approach (see ADS Delta 1183), in which developers focus on specific projects with short time boxes and a clear ROI, regardless of whether implementing massive packaged enterprise software or reusing something already in production.
Implementing a Reuse Strategy
When seeking recycling candidates, CRM teams should first look to other relationship management (i.e., extended relationship management [XRM]) solutions already in place, where XRM consists of the technologies and business processes to support the relationship network of channel partners, employees, customers, and suppliers. Thus, components of existing employee or channel partner relationship management solutions may be used to meet new customer relationship management needs. However, developers should also be willing to look further afield. For instance, portals often include functionality (e.g., personalization) that can be reapplied to CRM (or, indeed, XRM). General data warehouses should be adapted to contribute analytical CRM data analysis and infrastructure.
Obviously, this approach requires a knowledge of what is available, so recycling must start with a strong resource inventory that goes beyond simply listing pieces of software and indicating their component functionality and modules. Recyclers need an understanding of what existing solutions do in terms of specific business processes and functions. Thus, it is often helpful if they can have someone from the data warehouse and portal teams, for instance, give them a simple presentation of what those solutions do. This should be on a simplistic level, because recyclers need to focus on what business functions they may draw on and not become lost in the technologies. To support this recycling effort, users should maintain a detailed asset inventory that reaches beyond existing CRM suites and includes other potential sources of recyclable functionality. This can be built on the overall enterprise IT asset inventory, but it should be expanded to indicate the major functions and modules of each existing software asset – and, in the case of pragmatic CRM development, focused on those functions that may be recycled for XRM.
Another key usage for component reuse is to test the efficacy of a new process in advance of, and as input to, a purchase justification. For example, before investing in an expensive lead management technology, the process itself can be tested using a few resources to qualify leads using existing outbound calling capabilities, then record the feedback and lead quality in an Excel spreadsheet, then assign the leads to the correct salespeople manually, and then e-mail the leads to the correct salesperson. The salesperson would keep track of the lead’s evolution in the sales pipeline on the spreadsheet, then report close rates using e-mail. Although not perfectly automated, the business changes (e.g., qualifying the lead before sending it out to the salespeople) can be tested and returns assessed without making a substantial initial investment. Indeed, a META Group client experienced a more than 100% close rate improvement by testing just such a process. This return made justifying the technology expenditure that much easier.
IT organizations must realize that although component reuse may sound appealing, the cost of reusing a component (in terms of adaptation) will far outweigh the benefits in some cases. So, there must be architectural standards and processes whereby the specific fit is assessed and a detailed gap analysis performed. Organizations must avoid being “penny wise and pound foolish,” which is good, pragmatic advice reaching far beyond just CRM.
Business Impact: Organizations can save time and money by implementing a component reuse strategy.
Bottom Line: Customer relationship management teams must think creatively about reusing in-inventory components for CRM (and, indeed, for extended relationship management) implementations.