Beware The ERP/CRM Split

The next time you talk to your ERP (enterprise resource planning) system, make sure you ask it two questions. First, "How well can we see our customers?" Then, "How well can they see us?" Your customers need you to move quickly and efficiently, and you want to demonstrate that you're doing just that. Therefore, barrier-free visibility between you and your customers is the goal.

You can keep the window clean by having customer relationship management (CRM) tools fully integrated within your overall ERP system. After all, if any of your departments are disconnected from customer information, it's unlikely they're working to keep customers happy. As Joanie Rufo, research director, customer management strategies for AMR Research (www.amrresearch.com), puts it, "Even if you have deployed some CRM front office packages, such as a call center application or an automated marketing application, you probably still have key customer information residing in various parts of your organization. You'll need to pull ERP and CRM together."

Responsibility Across The Enterprise
One integration problem many enterprises face is a legacy ERP system comprised of multiple proprietary and stand-alone applications. Even if a company has purchased an integrated ERP system, the product might not include a sophisticated CRM module. In fact, many ERP vendors, including some major ones, have only recently begun to build CRM modules into their ERP suites. Without that integration, your customers can't easily find answers to questions about the status of their orders or their support requests. From the other side, you can't determine who is out there, trying unsuccessfully to peer inside your enterprise - and perhaps getting anxious and frustrated.

According to Terry Cline, VP of operations for IQMS (Paso Robles, CA), deploying an integrated ERP/CRM system that offers customers a window to your supply chain helps to "remove the friction in the relationship." Instead of leaving voice mail for a shipping clerk or waiting until a customer service rep researches the issue and calls back, customers can log on via a browser-based interface and immediately get the information they need. Moreover, because complaints and questions are electronically stored in the CRM module, the ERP system can track how problems were resolved and what caused them. "You can identify trends and fix common problems," Cline says. "You can determine which areas of your operation are responsible for certain problems. A common database allows any department to determine if it needs to take corrective action."

Another benefit of a CRM-enabled ERP system is the ability to push enterprise data to departments that have been isolated from ERP functionality. "ERP has traditionally helped production, inventory control, order management, warehouse management, transportation management, human resources, and accounting," says Scott Rich, VP of marketing for Lilly Software Associates, Inc. (Hampton, NH). "But, now you can bring ERP to the entire organization." By integrating CRM and ERP, companies can increase the effectiveness of sales and marketing, two service-oriented operations not typically connected to production and supply chain processes. "The activity of forecasting the demand for certain products and services - a common ERP function - can help you to direct your sales force and decide where to spend your marketing dollars," Rich says.

ERP Systems Shake Hands On The Web
Customers want fast, convenient ways to review products, place and track orders, and submit and monitor service requests. Therefore, Web enablement is increasingly essential for a successful CRM/ERP integration. Web tools allow companies to broaden customer accessibility beyond the limited functionality (for example, ordering and invoicing) of EDI (electronic data interchange) over a VPN (virtual private network).

Cline points to XML (extensible markup language) as the essential tool for enabling interoperability between ERP systems. As an open standard for identifying the content, not just the format, of data, XML facilitates the transfer of documents and database items accessed from Web pages. ERP interoperability riding on XML means you can seamlessly exchange the most current information with all of your customers' and suppliers' ERP systems. For those preparing to purchase or upgrade an ERP system, Cline cautions, "If a vendor doesn't seem to be prepared for XML or doesn't consider it to be important, I would be very wary." Jay Taylor, director of services for Macola Software (Marion, OH), agrees that Web-enabled ERP is a must. "From the big box retailers down to their $5 million suppliers, the big push is for the Web portal application that ties right into the ERP system. Firms that don't go that route will feel it in terms of customers noticing differences in speed of access and delivery," Taylor says.

Taylor also reminds companies moving toward Web-based orders processing that they may first need to invest in communications infrastructure. Otherwise, they may experience the kind of pain represented in the TV commercial about the company that cheers as its first few Web orders roll in, then groans as they quickly reached the overwhelming thousands. "We worked with a distributor that had opened up its Web site and, literally overnight, was flooded with orders," Taylor says. "The company hadn't considered how many phone lines and dedicated T1 lines it would need, so it was unprepared for the volume of transactions."

In addition to carefully studying their own communications capabilities, companies should carefully study those of their customers. If they don't, they may waste money developing Web portals that end up generating little revenue. Says Dennis Gaughan, AMR's research director for enabling technologies, "Companies tend to roll out the latest technology for Web self-service without first auditing their customers to determine what channels they want to come in on. Some of your customer may not even have Web access," Gaughan explains. Even if their customers are clamoring for Web site access, companies may want to refrain from offering it until they have all of their key customer-related operations available online. "You might unveil the support component of your Web site, while your customers may be more eager to order from your Web site," AMR's Rufo says.

CRM Needs C-Level Support
To successfully weave CRM across the enterprise, the top levels of the organization must be involved. "Middle management often doesn't have the influence to get everyone across the enterprise on board," Rich notes. "When top management merely delegates and doesn't take an active role in strategizing the use of all components of an ERP system, there can be breakdowns in making the necessary adjustments in business practices." Cline agrees. "You absolutely need to have upper management dedicated to the role of CRM within your overall business planning. You can't just hand CRM to your orders processing staff and hope they manage it," Cline asserts. "CRM is a mind-set as much as it is a functionality."