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CRM in how long? (first appeared in InfoWorld)

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I wonder how many ERP customers actually use their ERP software to plan Enterprise Resources?

The point of enterprise resource planning software is to run your whole business from a single integrated suite, making integration problems a thing of the past. So where’d that name come from? Answer: First there was materials requirements planning (MRP). Then there was manufacturing resource planning (MRP2 — a more comprehensive and integrated planning process). What do you do plan for once you’ve finished with manufacturing resources? Enterprise resources, of course! Which doesn’t mean anyone truly mastered the discipline, only the acronym.

Regardless, a recent column critiqued Larry Ellison’s message to his ERP customers that whether or not the theory is reality they should act as if it is. If Oracle doesn’t ship it, you don’t need it — no customization, no custom applications, and no third-party applications either.

You do have to wonder: If Ellison thinks internally developed applications are such a bad idea, why does Oracle sell application development tools? And if it thinks third-party applications are such a bad idea, why does it work so hard to get all those other application vendors to use its DBMS?

Just asking.

Oracle, as does every other major ERP vendor, also sells a CRM solution. Oracle says, in fact, it can deliver global CRM in 90 days.

I know almost nothing about Oracle’s CRM solution and I know that it can’t. That’s because software is merely a CRM enabler. In that respect CRM implementations are fundamentally different from ERP implementations.

When you implement an ERP suite you have three choices: Adopt the business processes designed into the software, adapt the software to your existing processes, or re-engineer your processes and then customize the software to the new process designs.

CRM isn’t like that. Where Enterprise Resource Planning isn’t really the point of ERP software, managing customer relationships really is the point of CRM.

If your company is planning to implement CRM there are four key concepts you need to understand.

The first is what it means to be a customer. As has been mentioned previously in this space, customers are people (usually) who make buying decisions. That distinguishes them from consumers, who make use of your products and services, and from wallets, who provide the money. CRM is about customers. It is, however, vastly easier if your customers, consumers, and wallets are all the same individual.

The second is what the term CRM itself really means. A company that truly adopts CRM treats customer relationships as assets. That means it maintains them, performs preventive maintenance on them, invests in them, and measures the return it receives from them — each customer’s Lifetime Value (LTV). Understand this and you’ll understand the difference between customer service and CRM: Customer service happens one interaction at a time; CRM integrates all interactions with each single customer.

Years ago I heard a great explanation of this, ascribed to Sid Applebaum, founder of a major supermarket chain here in Minneapolis (now a vanished brand due to an acquisition). Applebaum explained that every time he saw a customer leave one of his stores he saw them walking out with $50,000 worth of groceries — what he expected them to buy from him over the life of the relationship. Which was why, he said, “Of course I take back the tomatoes.”

The third concept is that not every company is ready for CRM. Just as there are capability maturity models for software development and IT operations, so there are capability maturity models for CRM as well. Different industries progress through different stages, but CRM isn’t an early stage for any of them. You have to get good at delivering your products and services, and supporting your customers one interaction at a time, before you’re ready to start managing customer relationships.

Then there’s the fourth, and perhaps most important concept: Customer relationships aren’t something to be discovered or left to chance. You have to design them. This means you don’t start by analyzing the customers you have. You start by targeting the customers you want, deciding how you want them to relate to you.

In the end, you manage customer relationships through your customer interactions, mostly between individual customers and individual employees. CRM software is just a tool you provide to make your employees more effective in handling those interactions.

Now … do you think you can design and implement CRM globally in ninety days?