1. Get CRM Right The First Time: Best Practices for CRM Success Steve Bonadio Senior Program Director Enterprise Application Strategies META Group steven.bonadio@metagroup.com

2. Business & Technology Scenario CRM continues to be a strategic priority Risk-tolerant early adopters have given way to pragmatic, risk- adverse, and more moderate organizations CRM investment is bifurcated between tactical LOB projects and CRM “infrastructure” Prevailing economic conditions are mandating hard ROI vs. “leap of faith” CRM technology is maturing, yet continues to evolve Critical Issues  Developing a CRM Strategy  Avoiding CRM Program Failure  Rationalizing CRM Technology

3. Develop a CRM Strategy: Design Around the Customer Best-Practice CRM Principles Derive customer patterns by applying “ETFS” as a lens to drive sales, service, marketing and commerce chain process Anchor offer, channel, and business processes around customer patterns Technology-enable customer relationship with CRM ecosystem Customer Life Cycle Management (CLCM) as a Three-Domain Business System Engage Service Customer Life Cycle Fulfill Transact Cust. Pattern Channels & “POIs” Sales “Offer” Customer-Related Business Processes Mktg.Service CRM Technology “Ecosystem” Collaborative Analytical Operational CRM is not an IT project — it is an iterative and continual transformation of people, process and technology

4. Building the CRM Business Plan Addresses three basic ideas: Business vision — How do we want to treat customers? Business design — How do we want to (re)engineer our business to enable customer treatment? Technology enablement — How will technology support the new design? Organizational Constructs: Program Management Office and Chief Customer Officer. Strategic Fit: Strategic Fit:CustomerPhilosophy Brand and CRM Customer Value Proposition Schedule and Portfolio Strategic Partners Legal, Regulatory Impact Staffing and Organization Competitive Analysis Market Research Opportunity Outline Financial Analysis Risks Critical Success Factors Value Measurement Construct CRM business plan iteratively; it does not have to be a novel, but must codify (and value) future customer strategies Business Plan T.O.C.

5. Assessing CRM Capabilities Maturity Assessment Measures the maturity of CRM program methods and how well it has been institutionalized relative to others in similar industries Helps predict failures and recommends remedies Readiness Assessment Gauges how well the CRM program concepts will be accepted and indoctrinated within the organization Collect and plot key indicator values along eight dimensions Look for dimensions in the “danger zone” and a high degree of inconsistency Assessing true CRM capabilities requires looking at both CRM maturity and CRM readiness CRM Readiness: Sample

6. IncreaseRevenues ReduceCosts Increase speed to market Reduce customer contact/ support requirements Reduce fulfillment and customer response errors Driver Direct Revenue Impact Indirect Direct Cost Reduction Indirect Cost Reduction Acquire new customers Increase revenues from existing customers Develop new products and services Increase brand awareness Increase brand perceptions Increase customer satisfaction Increase loyalty of customers Improve productivity Displace costs Reduce capital requirements What About CRM Value? CRM investment is justified by top- and bottom-line impact CRM creates business value through “hard,” “soft,” and “hybrid” returns Hard: Preferred, but difficult Soft: Easier, but lack credibility Hybrid: Viable, but require KPI consensus Most credible/ measurable ROI Cost displacement Customer penetration/wallet share Improved resource productivity CRM value metrics must be incorporated into the business plan, monitored, and updated periodically

7. Avoiding CRM Program Failure There are several identifiable early warning signs that predict eventual failure (and can guide you towards success). Learn how to identify these often surprising red flag indicators, and the appropriate mid-course corrections to avoid a potentially fatal CRM situation. Headline: CRM is Not Doomed to Failure!

8. People Still Make the Difference Failure Warning SignRecommendation No executive support or visibility Establish leadership (and accountability) by proactively seeking out executive support Too many individual projects going on (usually in different directions) Harness thematically related projects into a CRM program management office IT-driven “hero culture”Apply reusable CRM program processes to avoid the “hero culture” Not using a systems integrator Use a systems integrator, at least to bootstrap early activities and leverage skills Appropriate leadership to promote business/IT alignment and mitigate change impact on employees and groups is critical to CRM program success

9. “Process” Is Not a Dirty Word Failure Warning SignRecommendation No business planCreate a CRM business plan, even if it’s initially just a few pages; Take no more than 4-6 weeks to develop initial plan Substituting a vendor implementation methodology for a CRM methodology Embrace a technology-neutral CRM methodology to encompass the big picture No process re-engineering plan (or criteria by which to judge when to adopt vendor processes) Create a process re-engineering plan and the criteria to ascertain when to adopt processes instantiated in applications vs. extending the application to handle unique processes No metrics (developed in advance)Develop success metrics/KPIs, and embed them in CRM processes; Establish governance and accountability Automating and optimizing customer processes is at the heart of CRM value delivery – Never automate a bad process!

10. Technology — It’s Not Simply “Add Water and Stir” Failure Warning SignRecommendation Over-customization of applicationsConfigure (declaratively) and extend applications; Limit programmatic customization whenever possible Lack of architectural standardsTap into enterprise architectural standards — if there are none, use CRM as an opportunity to begin developing them No strategy for development, extension, and integration Create a strategy for development, extension, and integration BEFORE implementing the application No CDI approachUnderstanding who your customers are is a requirement of ALL CRM initiatives, although getting there is the ultimate challenge CRM technology will ultimately support both people and process – Technology-only CRM strategies will fail

11. Rationalizing CRM Technology:The CRM Ecosystem Customer Interaction Front Office Back Office Mobile Office Resp. Mgmt. Web Conf E-Mail Conferencing Voice (IVR, ACD) Web Storefront Collaborative CRM Direct Interaction 1 4 1 4 1 444 1 4 1 ERP Sales Automation Service Automation Legacy Systems Marketing Automation Mobile Sales (prod cfg) Field Service Operational CRM Supply Chain Mgmt. 2 3 4 2 3 1 1 4 4 32 Order Mgmt. Order Prom. Campaign Mgmt. Customer Activity Data Mart Customer Data Mart Product Data Mart Data Warehouse Analytical CRM Category Mgmt. 1-4 1 Vertical Apps Marketing Automation Closed-Loop Processing (EAI Toolkits, Embedded/Mobile Agents) There is no “ecosystem in a box”; CRM will remain a multi- vendor/product/domain effort for the foreseeable future. Engage 1 2 3 4 Fulfill Building CLCM Transact Service Legend CRM application Non-CRM app. Example Integration

12. Exploring Operational CRM Implement discrete CRM functions (e.g., sales, marketing, service) to enable management of customer: Transactions Interactions Expectations Surface and re-use underlying application services (e.g., business rules, workflow, various “engines”) to enable: Integrated processes Flexibility and re-use Issue 1 CRM strategies mandate strong support for operational services to automate customer-related business processes Operational CRM Domains  CIC/Call Center (agent-facing)  Campaign Mgmt./EMM  Channel/Partner Mgmt.  Incentive Mgmt.  Product Configuration  Sales Automation  Service Automation (live and field)

13. Exploring Collaborative CRM Implement portals to enable UI aggregation and contextual navigation Develop multi-channel interfaces to enrich interactions and increase exit barriers Infuse personalization into all customer interactions Organize content and knowledge for use by customers and employees Issue 1 Exploit collaboration to enable rich interactions with customers and to improve communication and information sharing  CIC/Call Center (customer-facing)  Content/Knowledge Mgmt.  Customer Interaction Mgmt.  Personalization  Portals  Service Automation (e-service) Collaborative CRM Domains

14. Exploring Analytical CRM Leverage analytical applications to recognize customer behavior patterns Support multiple analytical methods (e.g., reporting, OLAP, data mining) Build a strong foundation (e.g., DW) to enable analytical CRM Implement effective data management (e.g., ETL) strategies Issue 1 CRM will fail without support for analytics — leverage existing infrastructure to jump-start analytical CRM  Balanced Scorecard  Behavior modeling & profiling  Data Mining & Recommendations  Marketing  Segmentation  Scoring  Planning/Analysis  Performance Measurement  Reporting/OLAP Analytical CRM Domains

15. Rationalizing CRM Integration Approaches Plan integration strategy early CRM integration can account for 60% of total implementation cost Recognize that integration methods, costs, and effort varies dramatically Use customer patterns and ETFS processes to ascertain integration scenarios CRM Integration Domains Operational/ Analytical Across Channel Internal/ External Front Office/ Back Office Batch, API, EAI Batch, API, Portal API, EAI, CTI Batch, ETL Integration technology is the glue that binds people, process, and technology

16. To Get CRM Right, Enterprises Should... TRANSFORMATION STEPS Refocus on business and CRM planning to align existing technology investments to enterprise goals Avoid potential failure by perceiving early warning signs Automate and optimize business processes, while developing a framework to manage customer data

17. To Get CRM Right, Enterprises Should... (continued) Business Impact: CRM is a business strategy that will transform your business; Understand this fact and you’re on your way to program success TRANSFORMATION STEPS Rapidly sense and respond to environmental change through tightly coupled analytics Expose collaborative interfaces (e.g., portals, touch-point synchronization) to enrich interactions Pull everything together by fixating on integration

18. Next Steps Attend META Group’s Events METAmorphosis 2004 — The Adaptive Organization: Building Value by Remodeling for IT Flexibility See metagroup.com for dates and locations Listen to Upcoming Webcasts and Teleconferences Connect With metagroup.com/events for Details Contact Your Client Services Representative

19. Next Steps (continued) Engage META Group’s Analysts and Consultants Teleconference Half-Day, On-Site Briefing Browse Related Research Connect With META Group’s Enterprise Applications Resource Center on metagroup.com