Looking for CRM ROI in All the Wrong Places - InformationWeek

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Looking for CRM ROI in All the Wrong Places

Operational CRM applications are necessary, but not sufficient for ROI.

VentanaView™

CRM systems rarely deliver on ROI expectations. Ventana Research suggests that CRM systems, like ERP systems, are fundamentally operational applications, offering little more than efficiency contributions to specific departments. Operational CRM ROI expectations are misplaced. On four key dimensions, these systems are not well suited for significant process or performance improvement. Ventana Research suggests organizations should re-think their expectations on CRM return on investment and look to customer intelligence to leverage data assets and apply information to demand chain processes.

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The business press has often suggested that CRM systems have not demonstrated a proven positive return on investment. Given the current slow economic recovery, flat-to-declining IT spending, and fair-to-poor earnings trends among enterprise software vendors, the ongoing blame-game for lack of ROI from CRM systems continues. What is it about CRM applications that makes so many believe that ROI cannot be achieved? Ventana Research sees the lack of CRM-ROI issue arising from misconceptions and misalignment of CRM expectations on four dimensions.

Demand chain silos. Operational CRM applications tend to address one department or function within the demand chain. This singular focus on marketing, sales, field service, or customer service makes it very unlikely that any such application will achieve measurable impact on more broadly defined customer related processes. This hampers significant improvements, impacting potential ROI at most organizations.

Inside-in focus. Most CRM applications are designed to promote internal efficiencies within a single department or function. Almost without exception, the goal of CRM is to manage and/or mandate behaviors and processes in order to improve internal operations in customer-facing functions. This operational focus is not an inherently bad thing, but neither is it appropriate to look to such applications by themselves for ROI. CRM systems establish an important enabling foundation for the execution of core demand chain functions and are a critical source of customer information.

Insufficient attention to the customer experience. A corollary to the inside-in focus and silo approaches to operational CRM, this speaks to the tendency for CRM to actively address managing the organization while often overlooking the customer viewpoint. Even the CRM suite vendors have been slow to integrate their applications — many derived by acquisition — on the customer dimension, leaving that task to separate customer data integration projects and specialty vendors.

Too little customer intelligence (CI) on top of CRM. Investments in individual functional applications can and do help many organizations gain efficiency in the demand chain. Gaining cross-functional insight requires a customer intelligence (CI) loop on top of the operational foundation. CI provides a more holistic view for higher demand chain management and leverages the information assets contained within the CRM foundation. This is where the ROI rubber meets the road. In much the same way that business intelligence (BI) helps organizations derive greater value from ERP, CI leverages the CRM investment in ways it cannot be expected to on its own.

Assessment

Few would argue that expectations of CRM ROI have been fully realized. It's hard not to point a finger at vendors for setting unrealistic expectations — often promising that the software alone will solve problems. At the same time, organizations can't afford to be gullible. Assess your business requirements, your technology infrastructure, and your software capabilities with eyes wide open, and carefully analyze how you can benefit from customer-centric information assets by making use of them outside of the operational CRM applications. This customer intelligence perspective will almost certainly reveal previously unseen paths to ROI.

Ventana Research would argue that if organizations expend resources to challenge the core value of operational CRM systems, they are addressing the wrong issue. Rather, organizations should be re-thinking their customer-driven business imperatives and should stay focused on performance and process improvement.

Jack Hafeli is Vice President & Research Director — Customer Intelligence and Demand Chain Performance at Ventana Research, a research and advisory services firm.

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