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Defining The Business Value Of Technology
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July 31, 2000 |
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Act Globally, Serve Locally
Companies try to balance centralized CRM and local needs
By Drew Robb
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o localize or not to localize: That is the question surrounding customer-relationship management. It's a dilemma made worse by global business relationships.On one hand, only centrally managed CRM systems can coordinate and serve a worldwide customer base and provide efficient database management and economies of scale. Yet Internet users demand personalized local service consistent with cultures, languages, time zones, laws, currencies, and business practices. The trouble is that multinational companies that want to cater to local needs may have to face massive translation projects, soaring marketing and customer-support costs, and the prospect of handing over the reins to regional managers.
What to do? Companies have to find a balance between highly centralized CRM systems and niche products designed to deal with specific pieces of the customer-relationship puzzle--it's usually not an either-or decision.
In some cases, customization of CRM applications may provide the best of both worlds. According to Steve Wood, an analyst at research and consulting company Ovum, the difficulties inherent in localizing traditional CRM tools aren't insurmountable. Since "CRM systems are essentially databases with a user interface on top, you can usually find a way to customize the interfaces to override cultural and language challenges," he says.
A hybrid approach was taken at Osram GmbH, one of the world's largest manufacturers of lighting products with a presence in 78 countries and annual revenue of $3.5 billion. The Munich, Germany, company's U.S. operation, Osram Sylvania in Danvers, Mass., is piloting mySAP.com in North America during the next few months before it's rolled out globally. MySAP.com manages relationships among Osram business partners, resellers, distributors, and end users. The pilot is designed to better integrate Osram units around the world while giving them a platform to accommodate regional needs. It's the latest stage in the company's E-business strategy, designed to provide online collaboration with business partners.
"This system can deal with a wide variety of business processes, languages, and cultures," says Mehrdad Laghaeian, CIO of Osram Sylvania. "At a corporate level, we've coordinated our activities and laid out a map that will fit the majority of our international operations. But at the same time, enough local autonomy exists to permit localization." In Mexico, for instance, local management can adapt content to align with currency, language, and business practices.
Osram's model permits different technological sophistication among its partners. Those with Extensible Markup Language capabilities reap the greatest benefits from SAP's CRM. They can check account statements, enter and track orders, and verify product availability. Additional features such as return authorization and payment submission will be added soon. The company can also communicate with partners and customers via E-mail, electronic data interchange, or fax. However, Osram eventually plans to phase out fax so its Microsoft BizTalk middleware can process every transaction automatically, removing data re-entry and consolidating all customer transactions on SAP.
Compaq has also opted for a largely centralized CRM system for its worldwide operations. After acquiring Digital Equipment and Tandem, the computer company's traditional customer-support expertise in indirect warranties had to be expanded to encompass high-volume, direct customer calls. Compaq turned to Nortel Networks Corp.'s Clarify eFrontOffice CRM suite to provide partners and customers with integrated E-mail and online CRM. Clarify eFrontOffice consolidates and routes information from every customer interaction, whether online, via E-mail, over the phone, or face to face. The resulting database lets sales, marketing, and customer service establish more personalized relationships with customers. The system cost the company more than $10 million over a three-year period.
However, Compaq officials are quick to point out that the company hasn't installed one wholly centralized system that the rest of the world plugs into. Instead, Compaq has evolved a localization model based on profitability and customer satisfaction. For 60 to 70 low-volume sales countries in Europe, Latin America, Asia, and the Middle East, Clarify is deployed largely out of the box. For large markets such as the United Kingdom and United States, though, a more-robust CRM functionality is required, and a significant amount of customization is engineered centrally before the CRM systems are delivered to these areas. Regional executives then have the freedom to conduct more detailed customization locally. This might involve adjusting the Web site to suit local demographics more closely.
Achieving complete centralization is too time-consuming, says Mike Whitney, VP of information management at Compaq Global Services, especially when agreement is needed on items such as code and business processes. "It's better to agree on standards and allow customization around that," he says. Compaq wants to achieve economies of scale through global and regional CRM consolidation, but not at the expense of speed and service quality. For instance, instead of call centers for every European language, the company has combined all its call centers into one unit in Ireland--reducing costs for IT and personnel. "I don't see further consolidation into one worldwide call center as you reach a diminishing point of return," Whitney says. He expects to realize millions of dollars in savings by not having to replicate call-center infrastructure and personnel in as many as 20 countries.
With major companies gravitating toward comprehensive CRM packages, it's no wonder sales are booming. "CRM is by far the fastest-growing area of business application software," says Ovum's Wood. According to Ovum's research, more than half of the $2.5 billion annual CRM market is dominated by large, traditional vendors such as Baan, Clarify, Oracle, SAP, Siebel Systems, and Vantive selling to big U.S. and multinational operations.
Illustration by Aaron Thomas Roth
Photo of Laghaeian by Stephen Sherman
Photo of Whitney by Stephen Sherman
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