Few technologies have captured the fancy of corporate executives as much as CRM. Unlike back-office enterprise resource planning (ERP) applications that might reduce costs if you ever get them implemented, front-office CRM can start generating new revenue right away.This moves IT professionals out of the tactical boiler room and into the strategic hot seat. CEOs now regard building CRM as the biggest contribution IT can make, according to an IT strategy survey conducted by the London School of Business.

In other words, CRM is your baby. You have to pick CRM technologies that meet your company's business requirements and integrate with back-office systems but don't kill the network. Then you have to make CRM generate new business.

"This year's survey confirms what we have seen among our clients over the past year: E-commerce and CRM have moved IT from the expense side of business to the revenue side," says Ted Williams, a manager at Compass America, the Reston, Va., consulting firm that commissioned the study.
Ed Fotheringham

"Before, CEOs knew IT was important but couldn't put their fingers on what was being delivered. Now, they are saying IT is important because they need CRM to meet business objectives, and IT is going to deliver CRM."

Scott Klimke, vice president of IT for Network Appliance, a storage vendor in Sunnyvale, Calif., agrees. His company turned to CRM to exploit customer data it was accumulating. "The responsibility for e-business sits in my IT organization," Klimke says. Network Appliance has even reorganized so that its CRM IT people report to business executives in charge of customer service.

Although CRM is hardly a slam-dunk success, when it wins, it wins big. Last year, Collectibles.com, the e-commerce venture of broadcaster Shop At Home, was generating about $125,000 per month in revenue. Then, it built a CRM application based on BroadVision's One-to-One products and HighTouch Technologies' HighTouch Consumer Commerce. The application pulls customer and product information from a back-office Oracle database and then presents the shopper with a personalized view that includes purchase recommendations.

"We did more than $2 million in June with gross profit margins in excess of 30%," says Tim Engle, president of the Nashville division of Shop At Home.

But the risk of failure is huge, too. So before venturing into a CRM project, you must sift through the hype and figure out what the real CRM technologies are. With this industry rocketing at a growth rate estimated as high as 50% annually, almost every business tool vendor is trying to catch the CRM train. "Even the guys who make phone headsets are calling themselves CRM companies," says Lawrence Catchpole, chief technology officer of WebTone Technologies, an Atlanta CRM outsourcer.

Categorizing CRM

The original CRM products evolved out of sales force automation (SFA) and call-center applications in the mid-1990s. About two years later, a group of "analytic" CRM products evolved from data warehousing and online analytical processing. Today brings eCRM, a mutation that can personalize Web pages. While the first two types are consolidating, eCRM is multiplying.

"If you pulled the Internet away, we would have a small CRM industry. Because of the Internet, CRM is a 50%-plus growth industry," says Barton Goldenberg, president of ISM, a Bethesda, Md., firm that publishes the annual "Guide to CRM Implementation."

Other analysts are bullish, too. Aberdeen Group in Boston projects the CRM market to grow at a 37% compound annual growth rate through 2002. Aberdeen breaks the field into five groups:

SFA, which automates sales tasks (and accounts for 44% of the total CRM market).

Customer support and service, which automates trouble tickets (27.1%).

Help desk, which supports extranet customers (19.6%).

Field service management, which tracks activity by field technicians (5.8%).

Marketing automation, which automates marketing campaigns (3.4%).

The latter is growing four times faster than any other segment. In all but one category, the market leader is SFA-pioneer Siebel Systems, in San Mateo, Calif.

Interestingly, network hardware vendors have caused some market consolidation. Nortel Networks recently bought Clarify, a customer support and service vendor. Add this to Lucent Technologies' Avaya venture and recent acquisitions by Cisco, and you'll see a trend of tighter integration between CRM logic and network hardware. The goal is real-time CRM, in which customer data is gathered from all sources, analyzed and sent to the agent during a phone call or session for better problem resolution.

Network slam

If your business folks are clamoring for marketing automation - especially through eCRM systems - then beware. Data mining for real-time recommendations creates lots of traffic.

"Data volumes are in the gigabytes range and moving to terabytes," says Phillip Fernandez, an executive vice president with E.piphany, a CRM vendor in San Mateo. "It's potentially the most data-intensive application in the enterprise. We recommend a gigabit backbone. And for real-time CRM, you need more than a T-3 between the collocation sites and the customer-service centers."

Another eCRM whammy is that Web customers can increase traffic behind the firewall. For example, an E.piphany personalization module sits outside the firewall but interacts with an application server behind the firewall and an E.piphany-maintained data mart populated from Web-site events and other back-office databases. When customers pound on the Web site, traffic increases behind the firewall and sucks up bandwidth.

"We find that companies plan for every contingency but success," says David Fowler, vice president of marketing for Kana, an eCRM vendor in Manchester, N.H.

Let's say you're ready with your gigabit backbone and T-3 uplink. You're not safe yet. You need to make sure servers hosting CRM applications are stateless so that you can replicate them to increase capacity. Also make sure your firewall and CRM applications can get along. Ask CRM vendors for references of customers who use your firewall. Systems integrators and consultants might also help you match CRM applications with your firewall.

In addition, be sure to factor in your ERP system's capacity. "A system like SAP is probably going to max out at about 2,000 concurrent users, and a big retail outfit might get 10,000 customers online simultaneously," says David Andrews, a marketing director at BroadVision, in Redwood City, Calif. "So your CRM application can't be going back and hitting SAP in real time. You need to figure out what really requires real-time interaction and what can be handled in batch mode."

Beyond eCRM, every category of CRM will impact your network somehow. With SFA, CRM users are often mobile or remote, making bandwidth and synchronization the sticky points, as well as the size of the application's client. Obviously, if these workers rarely dialed into the network prior to CRM, you'll add thousands of remote users at rollout. Prepare your infrastructure by determining upfront how many people will be hitting which servers at once, and how much data will be uploaded and downloaded for each session.

Keeping local databases in synch with those on the network is also a challenge with SFA, because of skinny dial-up connections. If the synchronization sessions take too long, the field agents won't call in as often as they should, which defeats the real-time goal. If you can't do much about the pipe, make sure your product only uploads changes, not a full database. Then train workers to dial in regularly.

However, don't get mired in the mud that New Age eCRM vendors sling at more established competitors. While some products may be client/server engines with browser interfaces slapped on the front, most of those have been redesigned to support the Web just fine. So a vendor's history isn't a good indicator of IP performance. Testing and customer references are better guides.

Integration issues

Ideally, CRM applications will tap ERP and other customer information databases. Integration can be tough, though, because no standard exists for CRM interfaces. Some XML-based interface standards are on the horizon, but workflow standards are much further off. Meanwhile, CRM vendors have been developing adapters to connect their products to popular ERP systems and databases. Still, plan for heavy customization.

"CRM vendors argue that they have interfaces that let their software integrate with platforms like SAP," says Cassandra Millhouse, lead analyst for Ovum, a market research firm in London. "The degree of truth varies by vendor."

You can, of course, rely on middleware, as did Network Appliance. It wanted to use its existing data stores to predict customer behavior. The company selected E.piphany to analyze customer behavior, and uses Tibco middleware to let E.piphany tap its J.D. Edwards ERP system, as well as other databases. Because the applications have different security requirements, Network Appliance is looking at implementing Lightweight Directory Access Protocol to give users a single logon.

ISM's Goldenberg points out that people often fail to realize the complexity and time frames associated with CRM integration. And, they sometimes overestimate integration, he says, recounting the tale of a CRM project in which the company wanted to include 54 databases.

"The owners of the databases had a lot of ego invested in their kingdoms and were sure their own data had to be included," he says. However, by re-examining what it really needed in a customer profile, the company realized it needed only three databases. When the database owners were asked to pay for the integration out of their budgets, they agreed to be cut.

Staff Leasing, a provider of payroll and human resources services in Bradenton, Fla., found that using a vendor suite reduces integration headaches. A year ago, the company chose to automate its paper customer files. Because Staff Leasing was using Oracle's ERP and payroll applications, it chose Oracle's E-Business Suite for CRM.

Experts further recommend that you introduce CRM applications incrementally, advice that was taken by Staff Leasing.

"We phased in components of Oracle's E-Business Suite in four stages, learning as we went," says Lisa Harris, chief information officer at Staff Leasing. First it gave CRM to its core customer contact department, a 20-person team. It then introduced it to all customer-service people at the main office, and after that, at branch offices. Lastly, it added workflow for call escalation.

More than ever, you have to think about technology from its business impact. CRM gives you ample chance.

"As a network professional, you need to keep your head out of your cubicle and walk around and talk to business managers," advises Christopher Fletcher, a managing director at Aberdeen Group. "Be proactive, and make sure you are involved in the planning stages of any CRM pilots."