INNOVATE. INTEGRATE. TRANSFORM.

Business Solutions with SAP

Sustained Business Value from SAP Business Software

February 20th, 2012 by
SAP Benefit and ROI

SAP Benefit and ROI

From time to time I review academic literature about the application of technology and offer my SAP experience based perspective.  Recently I was reviewing one of these studies from a few years ago when the authors made a key clarification: they recognized two types of implementations which are  problem-based (i.e. address your “pain points”) or innovation based.

Their suggestion was that some elements of both would be present on any large scale IT project, like an SAP implementation for example, but each type of application presented its own special set of challenges.

=================

Throughout the study (linked to at the end) the authors managed to clarify key points so they are easy to understand.  I have always considered the hallmark of genius the ability to take the complex and make it simple. 

=================

There are many situations where a strong business case has been made for an investment together with a well-considered ROI calculation, yet the business benefits sought never actually materialized, despite the fact that the project was delivered on time, within budget, and met the technical specification.

The benefits to an organization from IT-enabled change essentially emerge from three causes: either stopping doing activities, doing what [was] always being done but better (i.e., cheaper and/or faster), or doing completely new things. If organizations are to increase the likelihood of success from their IT investments, they must separate out the different sources of the benefits before developing an implementation plan.  (Peppard and Ward, pg. 53).

They warn against one of the most common hidden pitfalls of Enterprise Software (ES) like SAP turning into a technology project rather than a change lever for advancing corporate strategy.  It is sadly very common to lose sight of the purpose of the technology being applied.  The study authors’ description provides great insight around enterprise applications.  Read carefully how they describe CRM.  Substitute your favorite SAP application, whether it is ERP (ECC), HCM, SRM, SCM, APO, BI/BW, or any other product for their description of CRM and the message is the same.

CRM is not a product that can be purchased; it is a discipline, a framework, [an] integrated approach to managing relationships with customers that requires continuous improvement.  It is a strategy, not a tactic; and although supported by IT, it involves considerable organizational re-design, often changing the focus and culture of the organization.  CRM implementation is not easy and the evidence suggests that many companies are struggling with their efforts. (Peppard and Ward, pg. 54).

One of the problems they noted with the case study they used was at a retail bank they wanted inconsistent goals for their CRM system.  I run into these frequently and call them “mutually exclusive requirements.”  Or, as some say, they “want their cake untouched and want to eat it too.” 

The case study noted the company wanted to implement a CRM system for better customer management and servicing but at the same time wanted a quick payback.  The whole idea of developing customer relationships–, through gaining intelligence, aggregating customer data, and analyzing customer interactions so you can manage and service customers better takes time.  Not only that, one of the key goals of the initiative was to deepen customer relationships to reduce their servicing costs while selling them better products and services.  If they had that level of awareness of their customers to do this within a short payback time period they wouldn’t have been looking at the CRM project.  The company had set themselves up for failure by insisting that a business approach which naturally takes time should have an immediate payback.

Attempting to resolve the current and future business models often highlight a major disconnect between the strategic intent of implementing the system and the resulting actions that must be completed. One UK bank had difficulty in getting branch staff involved in defining requirements during their CRM project. Senior management’s vision of the project was built around customer retention and cross-selling. Branch staff, on the other hand, just wanted a system to process transactions speedily and to get the customer out of the branches as quickly as possible. Getting appropriate engagement and buy-in proved difficult and progress was laborious at times. Yet, after the system had been up and running for a year, staff began to see what was possible and became very active in making suggestions for further development.  (Peppard and Ward, pg. 59).

This point where I will leave off this week is critical.  Frequently companies purchasing enterprise software solutions like SAP are not aware of the capabilities or how to apply them.  Only after some period of time, or a shakeout period, users begin to see and understand how the functionality and information can help achieve strategic business goals.  That is generally when the second phase of implementation, or new functionality, or new enhancements, or even a reimplementation begin to gain consideration.

This study was really well written and easy to understand.  The authors offered tremendous insights into the world of Enterprise business applications which are important for every business software customer and consultant.  I’ve included a link below and it really is worth taking the time to read through. 

==================

Peppard, J. and Ward, J. “Unlocking Sustained Business Value from IT Investments,” California Management Review, vol. 48, 2005, pp. 52-70.

Related Posts:

Customer Relationship Management or CRM

June 13th, 2010 by

Bridge to IT successCustomer Relationship Management (CRM) is a core business practice that most everyone reading this post will be familiar with at some level. It is likely that you’ve read about CRM, have attended workshops and seminars on the subject and perhaps you even believe you’ve implemented what you feel is a CRM initiative. While customer relationship management is certainly not a new business practice it is also not a practice that most executives understand or leverage to its maximum capabilities. In today’s post I’ll provide an overview of CRM and how you can apply it to your business.  

What is a TRUE CRM Software System – How do you Define CRM Solutions?

I can’t tell you how many times I’ve heard an executive and entrepreneur tell me how wonderful their CRM system is only to have me ask them a few questions and find out that what they thought was a CRM system wasn’t. Customer Relationship Management is an integrated process for managing customer interactions at every stage of the customer lifecycle. It means offering the right product or service to the right customer at the right time and price via the right contact point. CRM is much more than a product or service; it is an integration framework, or business strategy. A customer focused business has consistent, dependable, convenient, and value-added interaction with customers in every encounter.

True CRM Software Systems by Definition SHOULD Focus on Customer Acquisition and Customer Retention

An effective CRM implementation aids in the acquisition of new customers, improves customer satisfaction and retention rates and adds to the lifecycle value of customer relationships.  Current market forces and new technologies are dramatically changing the dynamics of the customer relationship. Market power is shifting from sellers to buyers, and competition for customer loyalty is rising. The bottom line is that customers are “raising the chinning bar”. Customers increasingly expect instant, 24×7 access to information and resources (product data, company information, pricing, project management, technical support, etc). They want rich, value-added information that is easy to find. Customers are beginning to expect a personalized experience – a personalized welcome message, individual relationship knowledge, the ability to review their status in real-time, and so on.

Customers/partners/investors/suppliers/venders simply will no longer stand for repeating the same information again and again to differentiate your company, its products and services and its value propositions from the competition.  Adding an additional layer of complexity to the current marketplace, today’s customers randomly traverse communication channels – from the Web to the phone system, to a fax, to email, to instant messages etc. Regardless of the channel, your customer will expect to be recognized. Companies need to do business the way that customers are demanding: at anyplace and anytime. An end-to-end CRM solution helps solve this multi-channel challenge. 

Components of a Properly Implemented CRM System are a Function of Business Drivers

The implementation of CRM will help you evolve into a “customer-centric” business. As a customer-centric organization, you will be able to more effectively share information, analyze the overall health of your business, build greater customer loyalty, and gain a competitive edge. Relevant customer and/or product information will be accessible anytime, anywhere to employees, customers, and partners. Your organization should evolve to include a minimum of the following traits of a customer-centric business:   

  • Online Customer Interaction 
  • E-commerce
  • Lead Management
  • Experience Management 
  • Task Management
  • Surveys and Data Mining
  • Literature Fulfillment
  • Knowledgebase 
  • Analytics
  • Campaign Management 
  • List Management 
  • Online encyclopedia/glossary 
  • Sales Process Automation 
  • Forecasting/Funnel Management  
  • Service Automation
  • Support Automation 
  • Client History 
  • Quality Assurance 
  • Online lead capture 
  • E-Mail Management and Support  

Your CRM system should empower your organization with tools to manage all aspects of the sales process: prospecting, lead tracking, opportunity management, reporting, etc. It should provide a single, real-time view of the customer allowing you to instantly determine: account status, pending deals, service request, history, profitability, etc. A CRM implementation should allow you to become much more effective in the management and allocation of your time.  A customer-centric CRM system will also provide many benefits to your marketing infrastructure. CRM will allow you to develop and execute campaigns based on powerful, real-time data. You will be able to mine for data, and tailor marketing campaigns to different market segments and customer profiles.

Proper Customer Relationship Management Provides Actionable Marketing and Sales Information

The CRM tool-set will provide comprehensive tracking capabilities so marketing results can be captured in real time allowing for any necessary adjustments to be made.  CRM will allow you to more effectively manage your extended enterprise relationships. A CRM application will allow you to route leads, opportunities, and service requests to the appropriate party, and then track the performance. Partners/customers will be able to browse products and pricing information.

A CRM based infrastructure will enable you to manage channel partners as an extended virtual sales and service organization should you desire to expand your indirect marketing efforts.  The proper CRM application will have a single, complete view of the customer, with instant access to all relevant customer data. Equipped with real-time access to specific customer account information, this customer service infrastructure will deliver a high quality experience to the end-user. Web-based self-service will also enable you to provide world class service, providing customers, partners, and/or investors with 24×7 access to appropriate information. 

The implementation of a CRM solution specifically tailored to your unique requirements will provide the ability for personnel to bring the definition of excellent customer service to an entirely new level. A CRM system is designed to be used by employees who interact with your entire value chain. It is an enterprise relationship management system from customer to employee to supplier. A specifically tailored CRM solution will provide you with a central, single source of information with a complete history of the relationship’s activities to date. The ability to present a complete and consistent view to a relationship is invaluable. A specifically tailored CRM will allow you to:     

  • Maximize customer acquisition efforts
  • Retain profitable customers for the long term
  • Foster customer loyalty 
  • Enhance profitability by leveraging every role, channel, and customer touch point within your company.  

If your business has not adopted Customer Relationship Management as a key business driver then you are missing out on a substantial opportunity. 

================

The original source for this post can be found here: http://www.n2growth.com/blog/customer-relationship-management/

Re-posted with author Mike Myatt’s permission, he runs a great blog at http://www.n2growth.com/blog/

================

For more information on the implementing CRM software systems which are focused on customer retention, customer acquisition, and revenue generation please read:

CRM, ERP, BI, and IT Investment — Where Do You Find the Business Benefit?
http://www.r3now.com/crm-erp-bi-and-it-investment-where-do-you-find-the-business-benefit

================


Related Posts:

IT Outsourcing, Off Shore Support, Cost Cutting and IT Department Changes

March 23rd, 2010 by

cost savings


Businesses everywhere are looking to shore up their bottom lines by cutting costs.  As a result, cost centers, like IT departments, are prime targets for outsourcing and off-shore maintenance.  The typical business script is that as the IT organization moves into maintenance mode that cost center with high overhead becomes a prime target for reducing costs.   

However, in spite of how things might appear, cost is NOT the real driver of IT outsourcing.  The real driver of IT outsourcing has more to do with its function than its cost…

IT departments generally have not focused on customer acquisition, customer retention, profitability or revenue generation and have become commodities to be outsourced. 

How Should Your SAP Support Department Differentiate Itself?

Imagine a presentation to the Board of Directors about how much money the company could save by outsourcing the sales and marketing functions.  I mean come on here, look at the massive budgets dedicated to sales and marketing!

If you were making that presentation I would suggest you have your resume in order and already have another job lined up. 

Can you imagine outsourcing discussions with that same Board of Directors if IT were seen as a strategic business partner, a business partner integrated with and indispensible to the revenue side of the business.  What if IT were actually considered a very real or even a pseudo profit center?  Not only would outsourcing be off the table for the IT functions that are directly related to revenue generation, but budget discussions and project ideas would be much easier to navigate. [FN1]

Why Has IT Become Nothing But An Expensive Cost Center?

The typical IT script has created an environment where it is seen as an expensive and expendable cost center.  For too long Information Technology departments have focused on applications, programs, and business support to address process improvement, operations, and quality.  These are all the cost side of the business and only look at “operational excellence.”  Once the bulk of the business processes are set up, running, and stable all those significant IT labor costs make great targets for reducing cost and overhead.  And from there the next step is to outsource, reduce staff, or off shore.

Is “operational excellence” important?  Of course it is.  But after integrating and automating the “back office” functions or operations of the business IT must then move on to product or service innovation and also revenue.

Without a move to the key revenue generation functions of the business IT will forever remain an expendable cost center rather than a key business partner.

Why Won’t CRM Applications Work to Change the IT to Business Dynamic?

A few of the applications in the market have tools and resources to help structure the customer acquisition and customer retention processes.  And some of them have some decent rules-based tools for automatically evaluating, and then stratifying customers.  There is application functionality in a number of major applications, and several niche applications for handing special offers, marketing programs, or other incentives focused on customer retention or increasing sales conversions. 

What is the CRM Problem, Why Isn’t it Delivering? 

There are three primary reasons:  1) clueless “CONsultants” who may have some exposure to a CRM application but little or no business knowledge (they lack an entrepreneurial perspective) [FN2]; 2) there are few applications, if any at all, which integrates and then actively engage customers in the business they are buying from [FN3]; 3) sales and marketing programs are poorly structured and designed and do not allow for good sales process analysis. [FN4]

In the SAP CRM space a lot of the benefit that is lacking is because of the number of frauds and fakes in the marketplace.  They entered the market when the applications were immature and experience requirements were low.  They came in droves with fake resumes, fake credentials, and little or no concept about sales and marketing.  [FN4]

Nearly all CRM applications are focused on sales processes, measuring conversion or retention, and all of the other sales process areas.  Software and IT applications do not directly engage the customer in the new product or service development cycle, quality management, marketing, feature or benefit development, or in working with them to address their product or service frustrations.  Archaic customer service centers serve as a “touch point” to the customer but beyond that customers are not intimately involved in, or incorporated into the business product or service lifecycle. 

Conclusion on IT as a Cost Center and IT Outsourcing

Until IT starts to more aggressively focus on the business side of the equation (like revenue, profitability, customer retention, customer acquisition, product development and engineering, etc.) then IT is little more than a dispensable cost center.

This model shows the IT application landscape of the future. It also shows the CIO role as a bridge between the CFO and the CEO, or between lagging and leading indicators of business performance and success. 

source: Future Technology Landscape Alignment for the CIO, IT Director, or Key IT Decision Maker

Once again I will reiterate one of my opening paragraphs here;

Can you imagine outsourcing discussions with that same Board of Directors if IT were seen as a strategic business partner, a business partner integrated with and indispensible to the revenue side of the business.  What if IT were actually considered a very real or even a pseudo profit center?  Not only would outsourcing be off the table for the IT functions that are directly related to revenue generation, but budget discussions and project ideas would be much easier to navigate.

This model shows IT in precisely this way.  Application alignment is focused on the customer–, customer retention, customer acquisition, revenue generation and profitability.

Footnotes and Resources about IT Strategic Alignment with Business – Customer Retention, Customer Acquisition, and Revenue Generation

[FN1]  See these additional resources about business to IT to customer alignment:

Changing the Direction of SAP, ERP, and IT Applications to Focus on the Customer and Innovation
http://www.r3now.com/changing-the-direction-of-sap-erp-and-it-applications-to-focus-on-the-customer-and-innovation

CIO, CFO, and CEO Alignment – Why ROI is Lacking from Today’s System Landscape
http://www.r3now.com/cio-cfo-and-ceo-alignment-why-roi-is-lacking-from-todays-system-landscape

[FN2]  Many businesses and Corporate IT departments have been sold a “bill of goods” with little to show for their investment

CRM, ERP, BI, and IT Investment — Where Do You Find the Business Benefit?
http://www.r3now.com/crm-erp-bi-and-it-investment-where-do-you-find-the-business-benefit

[FN3]  See the customer integration model for the IT landscape of the future which integrates the customer into the business process.

Business and IT Alignment – Integrating Technology and IT Spend with Business
http://www.r3now.com/business-and-it-alignment-integrating-technology-and-it-spend-with-business

[FN4] There is a fundamental change needed in how performance is perceived and measured to understand how to make a difference.

Designing Startup Metrics to Drive Successful Behavior
http://www.r3now.com/designing-startup-metrics-to-drive-successful-behavior

Related Posts: