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October 10, 2003

Relationship Dynamics: The Savior of CRM

Falling victim to the "silver bullet" syndrome, too many businesses thought a CRM system alone would cure all ills. In truth, the key relationship dynamic is between people and the system — and in tying performance metrics to customer satisfaction and value.

by Terry Jabali

Continued from Page 2

ERP and CRM are inter-dependent macro processes for shared value creation. For example, in the HR process, "hire to retire" is most effective when success indicators drive HR's subprocesses. These same indicators should be shared with the customer experience where appropriate, yielding shared value creation for the enterprise and its customers.

II. People and Technology. Premise: Technology is an extension of human behavior, and is thus only as effective the people are. This is where over half of CRM efforts fumble. Merely installing technology and tracking the customer experience across a defined technology flow does not necessarily mean the customer is receiving excellent service. Application interfaces should be friendly, easy to use, and configurable with a flexible application workflow to support changing business requirements. It is rapidly becoming imperative for technology to support virtual teams through advanced wireless and fully featured Web portals and interfaces.

III. People and People. Premise: A customer-centric strategy is first and foremost a behavioral strategy embedded in all relationships. This is where we see well-regarded organizations fall short. Employees, partners, vendors, and suppliers are often at odds. When things don't go as planned, internally and externally, finger pointing dominates. Many performance systems promote turf protection: For example, HR and performance incentives frequently focus on departmental goals, which are often isolated from the total customer value creation. Again, HR, CRM, and related performance systems should reward collective behavior in addition to desired individual behavior.

Now, let's look at the system perspective.

IV. Process and Process. Premise: Interdependent processes monitored by key performance indicators (KPIs) are the backbone of enterprise performance. After optimizing a process so that it becomes focused on creating customer value, the organization must assign a KPI to gauge ongoing effectiveness across enterprise touch points. The most effective processes are those that use intelligence capabilities to become self-monitoring.

V. Process and Technology. Premise: A technology solution is a collection of processes that promotes or hinders customer value creation. Merely installing an application and its processes — often after much customization — and adopting those processes as your own does not make your enterprise effective in creating customer value. The enterprise must revisit processes to optimize workflow, not disrupt it with the new technology.

The marriage of processes with technology can be happy or it can be troubled, depending on whether the organization enables process intelligence. CRM processes, for example, should be configured so that business rules, notification engines, and customer auto-suggestion capabilities will reroute processes that are no longer effective — and escalate such developments to management, which can then identify root causes.

VI. Technology and Technology. Premise: Technology infrastructure should be smart, self-monitoring, self-healing, flexible, integrated, extensible, and scalable. As I mentioned earlier, smart technology is becoming a "doing-business imperative." Particularly in CRM, applications must be able to track and gauge service quality. Today, in the enterprise value delivery chain, XML and integration gateways make it possible to monitor processes that extend out to other vendors and supply chains. Enterprises need assurance that service legal agreements and acceptable performance standards are being met.

We have now sliced these entities into two dimensions: people and technology systems. How wisely we integrate the relationships described will determine the scope and scale of enterprise effectiveness and subsequent customer value creation. The three entities (people, processes, and technology) intersect to form an enterprise synergy that promotes shared, customer-driven values. Here are some details to consider regarding that intersection:

Enterprise Strategy and Data Intelligence (Data Warehousing). Design premise: You can improve only what you measure. Organizations should create external and internal (that is, employee) customer metrics. This way, they can gauge the end-to-end customer experience with special attention given to the satisfaction of customer needs across all phases of the customer cycle (acquisition, retention, extension). This can be accomplished by installing metrics that gauge the "how and when": for example, metrics for "time to resolution" and "getting it right the first time."

Internal metrics can measure employees' contribution to enjoyable customer experiences through problem-solving and innovative thinking. This metric would be an essential gauge of employees' contribution to making the organization a leader in its industry in terms of proactively serving its customers.

Finally, a data metric lets you monitor the effectiveness of data relationships (as described in the enterprise data schema). You'll see how well data relationships are serving analysis and prediction and how flexible the relationships are for slice-and-dice reporting.

CRM, ERP, and Legacy Systems. To make the technology entity's intersection with the other two entities beneficial, these service delivery systems must provide interface mechanisms. The mechanisms should feature intuitive workflow through portal interfaces that give users seamless data access across the extended enterprise.

People Behavior. A view of the power of this entity begins with a leadership premise: Promote in your people only what you value. And to back up this premise with systems, I repeat: you can improve only what you measure.

Thus, the relationship dynamics in a healthy enterprise model are built on value management, intuitive IT solutions, and balanced metrics to help gauge both external and internal effectiveness. The "relationship hub" through which people, technology, and processes interact forms the heart of the enterprise's ability to execute in the marketplace.

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So What?

CRM, ERP, and other strategic IT initiatives that fail to understand the importance of the relationship hub are doomed to suffer shortcomings, both large and small. Without this understanding, success will be short term and subject to stifled performance and impoverished ROI.

Remedies that measure only the systems aspect may attract investment, but focusing on this entity alone won't deliver the ROI sought. The dynamics of people and systems must be in harmony to achieve the full potential of any initiative.

I close with the following observation: Best practices are backdated practices when they do not include sound process and people enablers. Ill-conceived processes can prevent employees from delivering value to customers. Elaborate technology applications and architecture become a black hole if they don't come together as part of this vision: Sustained value creation is derived from the enterprise's relationship dynamics of people and systems.

Terry Jabali [tjabali@appliedleverage.com] is managing director of Applied Leverage, a consulting firm specializing in relationship dynamics, customer value creation, and enterprise performance. Previously, he was Clarify-Nortel Networks' North America CRM Practice lead and principal at Computer Sciences Corp.