CRM – important requirements and what solution is best for you

CRM (Customer Relationship Management) software helps you to acquire new customers and develop longstanding and profitable customer relations.
See a definition of CRM in the first article of this blog.

Let me give you a couple of requirements a CRM software should fufill and some aspects of what kind of software you need.

But first of all, the company culture is a very important factor for the success of a CRM software. The top level management has to believe in CRM and has to promote the usage of CRM systems.

Contact management
Many companies manage their contacts in Outlook, on PDAs or PIMs (Personal Information Managers), but this tools don’t offer all the functionality that is needed to really manage contacts and relations. Also the use of different databases and multiple applications worsens the effective management of contacts.
A good contact management is a basic functionality in a CRM system. It saves all the contact information of business partners, customers and interested parties and furthermore simplifies the communication over e-mail, fax and phone. An important selection criterion for this functionality is usability and short training periods.
The basis is an address database containing all the contact information, preferably one which stores companies and persons separately.
A complex search function with various filter choices and criteria helps to find the persons you’re looking for more effectively.
Nice to have and also important features are interfaces to office software, e.g. Microsoft Word and possibilities to print out customer letters and automatically stamp them.

Telephone integration
This functionality should be implemented in a CRM system. If a customers calls you, the system automatically detects the number and opens up the relevant information, contact history, bills and complaints on your screen – so you know the customer and its history right away. A convenience which saves you a lot of time you don’t want to miss anymore!

Regular customer maintenance
It is a fact that keeping a customer is cheaper than acquiring a new customer. Today for a customer it is very easy to end business with a company and start business with an other, so keeping customers is of crucial importance.
Keeping in touch with the customer, having a complete history and being able to respond in an appropriate way in order to satisfy a customer should be supported by the CRM software, letting you know when and how you have to interact with the customer, e.g. birthday greetings, offering great deals on products depending on customer preferences or reacting to a complaint.

Analyzing a customer
Several methods should be implemented in a CRM software to evaluate and calculate different customer values, such as Customer Lifetime Value etc.
The ABC analysis is a good method to gain insights on customers. It let’s you split up your customers into three different groups of importance (A-, B- and C-customers) combined with profit, complaints, etc.
The RFMR method easily let’s you break down customers into smaller segments depending on their purchases (RFMR = recency, frequency, monetary ratio).

Different solutions for you
There are many different solutions for CRM systems such as web-based tools, open source tools, SOA (service-oriented architecture) and SaaS (Software as a Service).
Integrated CRM-systems often come from ERP producers like SAP, Microsoft, Oracle etc. These systems can be connected to the corresponding ERP system and can provide a ‘win-win situation’, as the two systems CRM and ERP are made from the same company and so can be connected to each other, providing interfaces and tools that actually work.
It’s up to you what CRM solution you’re looking for, whether you prefer stable and established software that has been developed for many years or you want to take a look at open source tools, which will give you a good working system, but maybe will not offer the flexibility or specific requirements you need for your company.
You can also develop a complete new CRM system (either you develop it or you have a company developing it) but this process takes a long time to find out what specific needs you have, to test it, to receive feedback and implement the requirements and changes. Sometimes you’re better off with an existing CRM system, which will offer you a lot of functions (which actually will work fine!) and you will also be able to extend the system with modules that fit your specific needs.
But this all depends on the industry you’re in. If you need a software that has to fulfill various complex and specific needs then you maybe will look for a new developed system that will offer the required modules from the start. This will save you money in the future as massive adaptions are redundant then.

Institutionalization of Information Management into a Corporate Strategy, Pt. 3

I’m back from vacation and have some more time to continue my blog. Sorry for keeping you waiting!

In this post I will explain the method of the critical success factors and the portfolio analysis in more detail as the final part of the institutionalization so you hopefully have a better understanding of this complex topic.

Critical success factors
“Critical success factors (CSFs) are the limited number of areas in which satisfactory results will ensure successful competitive performance for the individual, department or organization.” (Rockar, Bullen 1981)

Let me give you some sources for CSFs so you get an idea what we’re talking about:

• Pattern of a branch (Strength and behaviour of customers and suppliers, …)
• Position within a branch (Image, geographical position, competitive position, …)
• Environmental influences (social, political, ecological, economical, …)
• Vision of the corporate management (ideals, business culture, …)
• Temporary influences (projects, exceptional events, …)

All these sources and many more can lead to competitive performance, but also determine the information need of the management.

Method of the inquiry of critical success factors
This method is a structured procedure to determine the information of the management, esp. of the top management.
Let’s assume there are three to six key factors, which determine business success. These factors have to be affected in a way so positive effects to the business success emerge.

The procedure consists of three steps:

1. Discuss and determine CSF in meetings with (top) managers in terms of business success
2. Determine indicators to measure the characteristics of the CSFs, the CSF-influencing activities and their impact on the achievement of objectives
3. Measurement of the indicators and achieved real values for the target figure

The pros and cons
Pros

• Top-down approach based on goals and strategies
• Intensive user participation
• Explicit consideration of external information
• Integration of soft information or soft data along with business indicators
• CSF method is realizable with reasonable effort in a short space of time

Cons

• CSF method is not suited to determine the whole information need of the strategic planning
• Difficulties finding the really relevant CSFs and the indicators belonging to them
• Success of the method is heavily depending on the methodical, technical and firm-specific knowledge of the analyzers and interviewers
• Time-consuming and constructive co-operation of the (top) managers ist necessary
• Intuitive procedure, where subjectivity can get critical

Portfolio analysis
I think many of you are aware what a portfolio analysis is so I’ll just give you a brief description from businessdictionary.com:

“Analyzing elements of a firm’s product mix to determine the optimum allocation of its resources. Two most common measures used in a portfolio analysis are market growth rate and relative market share.” (businessdictionary.com)

As we focus on IT we have to the adapt the analysis: The goal of the analysis is to provide information on how the information infrastructure is like (is-portfolio) and how it should be like (goal-portfolio). With that information it is possible to maximize the achievement potential of the information function (see also first post of this topic). In other words: bringing together existing, planned and potential information systems and assessing their business contribution.

The procedure
There are two main steps containing substeps for the is-portfolio (step 1) and the goal-portfolio (step 2).
Step 1:

1. Identify the competitors and their relative market shares
2. Break down the information infrastructure in components and identify the competitive position of the components in the actual state
3. Determine the competitive factors and their weighting and identify the resource strength of the components in the actual state

Step 2:

1. Identify the theoretical possible resource strength of the components
2. Identify the competitive position of the components in the goal state

Step 1.1
Consider max. seven competitors, set market shares up to 100%

Competitor	Market share %
A	35
B	25
C	15
D	15
E	10

Step 1.2

Competitor	Market share %	Procurement	Production	Marketing	R & D	Accounting
A	35	1	3	1	1	5
B	25	1	3	1	1	5
C	15	3	1	3	1	5
D	15	1	1	1	3	5
E	10	1	1	3	1	5
	C(Is)	150	220	150	130	420

1 = Competitor has powerful components
3 = Competitor has equivalent components
5 = Competitor has weaker components
C(Is) = Value of the competive position

Step 1.3

Competitive factor	Weight %	Procurement	Production	Marketing	R & D	Accounting
Technical advance	15	1	1	0	3	0
Price	10	3	3	1	3	3
Quality	15	3	3	0	3	0
Service	25	1	1	1	1	0
Dealer commitment	5	0	0	3	0	3
Brand loyalty	5	0	1	3	1	1
Close to the market program	10	0	3	3	1	0
Product design	15	1	1	1	3	0
	R(Is)	130	165	110	205	50

0 = Component has no influence on competitive factor
1 = Component has minor influence on competitive factor
3 = Component has medium influence on competitive factor
5 = Component has strong influence on competitive factor
R(Is) = Value of the resource strength

Here is the resulting is-portfolio (x-axis competitive position, y-axis own resource strength):

Step 2.1

The second step is to determine the portfolio for the goal state.
So step 2.1 is like step 1.3, with the only difference that the theoratically possible values of the resource strength of the components in the goal state are estimated.

Competitive factor	Weight %	Procurement	Production	Marketing	R & D	Accounting
Technical advance	15	3	3	0	5	0
Price	10	5	5	1	3	3
Quality	15	5	5	1	3	0
Service	25	3	3	1	3	1
Dealer commitment	5	1	1	5	0	3
Brand loyalty	5	0	1	5	1	3
Close to the market program	10	1	3	5	3	0
Product design	15	1	3	3	5	0
	R(Ideal)	275	330	195	335	85

0 = Component has no influence on competitive factor
1 = Component has minor influence on competitive factor
3 = Component has medium influence on competitive factor
5 = Component has strong influence on competitive factor
R(Ideal) = Value of the resource strength

Step 2.2.

This step is like step 1.2, also with the only difference that we identify the competitive position of the components in the goal state.

Competitor	Market share %	Procurement	Production	Marketing	R & D	Accounting
A	35	3	5	5	5	3
B	25	3	5	5	5	3
C	15	3	3	3	3	3
D	15	3	3	3	3	3
E	10	3	3	3	3	3
	C(Ideal)	300	420	420	420	300

1 = Competitor has powerful components
3 = Competitor has equivalent components
5 = Competitor has weaker components
C(Ideal) = Value of the competive position

Here is the resulting goal-portfolio (x-axis competitive position, y-axis own resource strength):

Interpretation
As you see the two portfolios you can extract information and plan further steps:
E.g. accounting has a very good competitive situation (is-portfolio) but its resource strength is too weak and as you maybe consider that accounting is not the most important strategic factor in your company you may slow down your efforts in this topic. Research & development (R & D) has the weakest competitive situation in the is-portfolio, but the biggest resource strength. With the estimated goal-portfolio it seems that R & D is the big winner, i.e. best competitive position and resource strength, so you should strongly consider trying to focus on R & D.

Evaluation of the portfolio analysis
It has a global character, doesn’t explain the is-situation and offers no guidance how to reach the goal-state.
But: supports in setting priorities when planning your strategic roadmap and considers the strategy of your competitors. You are also able to adjust your IT strategy to the competitive strategy (instead of procurement, production, R & D, etc. just use IT systems).

I hope I could give a brief introduction on this topic. I didn’t go into details as it would be too complicated to understand and you would need detailed consulting on this.
So please feel free to ask me regarding this topic or if you have further questions or comments. I am glad to answer your questions and to discuss with you further on this topic.

Institutionalization of Information Management into a Corporate Strategy, Pt. 2

After determining the value of the information function and how to use the IT in your company more factors have to be considered.

This article focuses on the next steps of the analysis, i.e. analysis of the competition situation, analysis of the information infrastructure and the environmental analysis:

Institutionalization pt. 2

Analysis of the competition situation
Although it sounds like analyzing only the competitors it is an important step to check your own performance and set up your goals:
This step – divided into more substeps by itself – of the process will fill your project with life – determining critical success factors.
It is important to determine these critical success factors so you know how to implement IT and new systems, specified on your and market needs, e.g. costs of projects, service quality, product quality etc.
The survey of the present state or current condition aims to measure your specific performance and to compare your performance with your competitors (benchmarking).
The analysis of the present state helps you to estimate how and how much your current condition can influence your particular critical success factors.
Now you’ve analyzed your current performance and the market situation, set up your critical success factors. This work has been done for a reason: you want to change things, want to improve your business, implement a new software system, gain more customers etc. – you have to define your target state. Where am I, where do I want to go and how can I reach it?
The method of the critical success factors helps you achieving your goals. The third part of this article will present this method more detailed with an example.

Analysis of the information infrastructure
The purpose of this step is the evaluation of your current success potential of the information infrastructure, i.e. finding the strengths and weaknesses with relation to reaching your corporate objectives.
The following aspects should be observed:

• data system, i.e. architecture, currentness, consistency, quality, security, protection
• system of methods, i.e. architecture, functionality, economical quality, interfaces, security, protection
• resources, i.e. staff, hardware including the system software, application software, project management, budgets
• organization (organizational and operational structure), i.e. tasks, structure, controlling, revision, quality management

Environmental analysis
This analysis evaluates strategic relevant developments in the informatics/computer science market.
These factors should be observed:

• IT-technology, i.e. hardware, programming languages, networks, database systemes, etc.
• methods and tools, i.e. software engineering, CASE tools, etc.
• services, i.e. basic software, outsourcing, consulting services, etc.
• shift, change of processes, i.e. new distribution channels, interfaces to suppliers, etc.

As you can see, there are a lot of steps you have to through and each step contains of more or less extensive substeps that can take a lot of time and need thorough execution. Each of these steps could be explained in detail but then this article would explode in length and I don’t want the readers being flooded with too much information at a time. Please feel free to ask me for more details!

The more prepared and informed you are the bigger your chances are to succeed with your IT!

The third part of the article will explain the method of the critical success factors and the portfolio anaylsis in more detail.

Institutionalization of Information Management into a Corporate Strategy, Pt. 1

It is a fact that IT can improve your business. But you cannot say: “Ok, let’s use IT then!” and hope everything is going to be fine. As the IT can have such an important role in your corporate strategy, you need careful consideration on what you really need, how you should implement it and what other factors can influence your way of proceeding and your decisions you are going to make.

Definition of Information Management
The use of IT and the information need to be managed. The huge amount of data, information, systems and involved resources, such as capital and employees, must be monitored and controlled in order to maintain an effective and efficient IT service. This is done with the so called information management.
Information management aims at providing a company with (after labor and capital) the third factor of production – namely “information” – and to offer it in an adequate manner.
Information management not only consists of the systems, technologies, information and communication but also overall managerial functions.
Therefore it is necessary

• to work out long-term strategic plans regarding the IT-potential and IT-infrastructure,
• to obtain and apply IT-infrastructures.

The strategic situation analysis
The implementation – or insitutionalization – of the information management into a corporate strategy consists of important steps you have to go through before “going online”. If you don’t consider these steps, aspects of IT can backfire, here some examples:

• You might acquire new software systems you don’t need at all – lost time and money
• Your employees can’t use or don’t accept a new system – dissatisfied employees
• A software doesn’t fit in your company and you can’t produce results – your business partners won’t wait for you and are displeased
• etc…

The following posts will discuss the strategic situation analysis in a generic and abstract way, speaking mostly of the procedure itself – of course this analysis has to be planned in detail and conducted to the specified needs of each company. When applied accurately this procedure will help you to minimize risks and to make the best of IT.
The goals of this analysis are:

• to identify the achievement potential – how can the information function contribute to the corporate success?
• to identify the success potential – the capability of the information infrastructure to transform the achievement potential into corporate success

See the image for an overview of the whole procedure. Each element of the analysis will be discussed in detail:

Strategic situation analysis

The strategic role of the information function
The information function is a factor that determines how powerful and effective the use of IT in your company is.
It is important to know how the information function can affect a company and a business. See the following image showing how the IT can impact on core operations (your daily work) and core strategies (your plans for the future):

IT Impact on Core Operations and Strategy

For example: If your information function isn’t so important at the present, but you want to use more IT in the future as a strategic part, you should emphasize the future achievement potential (IT functions as turnaround). If you’re satisfied on how you use the IT at the moment and don’t want to change anything in the future, you should consider the IT as a supporting role in your company – not many or not any efforts are needed to change the running system.

As you can see it is important to be aware how you use the IT at the moment and how you want to use it in the future – you have to be aware how it is able to support you.

The information infrastructure
After evaluating the specific need of IT it is necessary to check how your company is able to make use of IT, i.e. how is the given and planned IT infrastructure able to convert the information function into corporate success?

Furthermore, there are more things to bear in mind: the profitability and the effectiveness of your infrastructure. See the following image depicting the role of the information infrastructure:

Information infrastructure

It is important to find a balance between the profitability and the effectiveness, and this is the main point. If your effectiveness is high but the profitability is low you will lose a lot of money as your systems do the right things but waste too much money. Not to mention low effectiveness and low profitability: you’re doing the wrong things and spend a lot of money on doing that – worst case!
Find the perfect balance between doing the right things and doing the things right!

The next post will discuss the next steps of the analysis, i.e. analysis of the competition situation, analysis of the information infrastructure and the environment analysis:

Institutionalization pt. 2

Don’t be scared of BI, BPM, CRM, ECM, ERP, and SCM!

How more Information Technology (IT) can enable your business

Small and medium-sized enterprises (SMEs) in particular often don’t have the time and resources to filter through the vast amount of IT choices to find what would be necessary and useful for them to enhance their business processes. Additionally, they are mostly not aware of their own IT potential. Eventually some don’t risk interrupting a working business – if it ain’t broke, don’t fix it!

Yet today’s digital age requires companies to deliver faster and faster. Intensifying market pressure stemming from higher competitiveness and customers’ increasing bargaining power brought on by the Internet (which makes instant price comparisons possible) forces companies to take action. Not being informed and sticking to old methods can be deadly, especially in tough economical times such as these.

Investing in IT needs careful consideration and knowledge. Numerous software systems can provide support to deflect critical pressure and at the same time address market demands. Furthermore, many outstanding systems are available under “open source licenses”, i.e. with zero acquisition cost and the usage is free of charge.

From six days to four hours: A case study how to save time and money
The following case study points out how to significantly improve business processes and save resources with the help of the right software:
Before using IT systems, each step of a customer ordering process in a company was performed manually and forwarded to the next processor by (interoffice) mail. The whole process starting from the customer inquiry, the customer evaluation over the stipulation of the contract terms to the proposal preparation and service delivery took about six days on average.
The disadvantages for the customer and the company are clear: The customer had to wait too long for the completion and was not aware of the status of his request due to the non-transparent process. This uncertainty can lead to the result that the customer backs out and looks for an offer from another company – a blown deal for the company.
With the introduction of a proper IT system and the consequent analysis and radical redesign of the complete process, time could be reduced from six days to four hours. Whereas the system assisted well through the process, only one employee as a generalist was needed for the handling of the entire task. Furthermore the amount of processed inquiries went up by the factor of 100 per month on average.

Important IT concepts you should know about
The following listed IT concepts (and their according software systems) can improve your business in different ways:

Definitions of important IT concepts

IT as an enabler also opens up new opportunities to establish completely new business processes and segments generating new income.
Of course each company has its individual needs of IT systems. Every company needs a detailed analysis and roadmap on how to introduce a new IT system most efficiently.
The next post will discuss the institutionalization of the IT into the corporate strategy along with methods on how choosing the most suitable or needed software system for your corporate.

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