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IDC

As automation becomes more pervasive, and customers feel increasingly remote, preconfiguredsolutions are a means of bringing you back into their good graces.

This paper looks at the merits of preconfigured solutions in CRM and whether or not the absence of customization is actually harming customer service. The disconnect between customer relationship management (CRM) applications and the reality of customer experiences will also be examined. As technology and automation become more pervasive, the customer is feeling more alienated from the purchasing experience. However, with the right application of technology and the necessary processes, this scenario need not occur.

• IDC recognizes that technology and business processes are intertwined;
• CRM tools are not enough for a total customer experience – it is about the technology, with the right applications and the right processes that create the total customer experience; and
• Preconfigured solutions are a key driver toward better customer service that paves the way for faster, more efficient and more responsive services that will overall benefit the customer.

Insight From IDC

The age-old saying that “the customer is king” never goes out of style. In today’s increasingly cluttered and complex buying environment, getting customers to stay loyal to your products or services is critical. Therein also lies the issue of whether every customer is unique and must therefore receive special treatment. Companies are now grappling with the question of making the customer experience special, yet not overtly stretching their resources by making each and every customer experience unique or customized. Companies also need to make the tough choices of customizing versus standardizing in some form of preconfigured solution. Perhaps it is a lack of facts out in the market or a general misunderstanding of terminology that leads to preconfiguration and standardization, conjuring up images of cheap, unreliable, poorly made products or solutions that come in a box. This does not necessarily have to be so, and one only need look around to see that many products or services are preconfigured/standardized; from buildings, to cars, to software. This paper aims to present facts and insights to support preconfigured solutions in a CRM environment. IDC continuously interacts and engages key decision makers in both end-user companies as well as solution providers to uncover the facts, reasons and trends behind consumer reactions to preconfigured solutions in both IT and business services.

Situation Overview

Isn’t CRM on the Decline?
Before discussions can even begin on the merits of preconfigured solutions, it is important to first analyze whether CRM is growing. IDC figures show that CRM is in fact not on a decline but increasing at a compound annual growth rate (CAGR) of approximately 6 percent. In 2005, worldwide CRM services revenue exceeded $25 billion; this is expected to surpass the $26 billion mark by the end of 2006 and is forecast to reach almost $34 billion by 2010. The fastest growth would be in the Asia- Pacific region (in excess of 8 percent CAGR) with opportunities arising in places such as China and the other emerging Asia-Pacific markets.

Great Tools, But Where Are the Business Results?
Ironically the very foundation of CRM tools is preconfiguration, delivered through automated solutions. In the late 1990s and the early part of the millennium, companies worldwide spent billions to automate their CRM processes to simplify and standardize communications with customers in the hope of increasing frequency and reach to customers more effortlessly. While it worked well at the start, the reality of the experience from IDC’s interviews with end users was anything but effortless. Many found the tools to be complicated and cumbersome to use. What was supposed to simplify communication and interaction with the customers soon became a burden and was subsequently underutilized. IDC also believes that this subsequently led to the premature judgment that preconfiguration does not work for CRM. The tools also failed to deliver the promised results, due mostly to their not being used properly as a combination of human interactions and automation. What happened was that the human interaction portion was frequently left out of the engagement, leading to the CRM tool functioning primarily as an automated interface – creating more frustrated customer experiences, as customers could only deal with machines. Understandably this led to many CRM implementations being labeled white elephant projects that promised a lot but delivered little business results.

Future Outlook
Fortunately some companies have started to realize the immense benefits of properly using CRM tools. A well-constructed customer strategy, coupled with the combined process of human interactions and automation, has started to produce the results promised by CRM tools. IDC has found that such progress has also led to a greater understanding and appreciation of preconfiguration in a CRM environment.

Why Preconfiguration Works

The main issue is finding the right balance between preconfiguration and customization so as not to lose the customer touch.

Ideally every customer wants to feel special and unique. In reality customizing every customer interaction would prove too costly and will slow down growth and expansion plans for many businesses. Companies simply cannot afford to waste resources on making every single customer interaction unique. It does not make business sense to do so, nor will it guarantee better sales results. In fact, it is not hard to see examples of preconfigured solutions all around us. Everything from cars to buildings, cooking to high fashion, has some form of preconfigured solution embedded in its production. IDC believes there are many positive aspects to preconfiguration in a CRM environment, with the following being the key attributes:

• Speed and agility – Preconfiguration enables businesses to quickly respond to customer requirements, proactively find solutions and be able to quickly look for alternatives when the situation warrants it. For example, a properly configured CRM solution in the airline industry would go far toward satisfying the frequent flyer. Assuming that all the updated information is fed into the system, an airline can help alert customers of delays and even assist in proactively booking alternative flights. The customer interaction can be a preset automated process that can seamlessly transfer directly to an agent over the telephone. The ultimate goal is that the customers are delighted with the airline because of timely, proactive responses that meet their requirements.
• Cost cutting – In examining all types of purchasing processes, it would not be surprising to find that many steps have certain commonalities that can be grouped together. Preconfiguration helps to find these commonalities, standardize them and avoid costly and unnecessary repetitions. Combining common processes also saves time, leading to a smoother and lesscomplicated customer engagement. This then frees up more resources to be used for customization and the ability to benchmark standardized processes for further improvement.
• Helps the user of the tools – IDC found that the biggest complaint among end users of CRM tools was the cumbersome and complicated processes required in entering data into the system. The mistake of making too many processes unique was that users had to cope with more complicated administrative procedures that took too long. This led many end users to abandon the CRM tools, resulting in information not being properly updated in the system. Preconfiguration aims to simplify the process at the start so that end users find it more straightforward in entering the necessary information into the CRM system. The irony is, unless good information gets fed into the CRM system, the whole customer interaction process breaks down even before the tools have had a chance to produce results. It is a simple case of garbage in, garbage out.

The 90/10 Rule

One common misconception about preconfiguration is that 100 percent of processes are prefabricated – leading to dull, unimaginative and undifferentiated solutions. This need not necessarily be so, and IDC believes there is room to allow for some customization to occur in preconfigured solutions. Hence the idea of the 90/10 rule, which suggests that almost 90 percent of the engagement can be preconfigured, with the remaining 10 percent to be customized to a particular customer need. This does not mean that the 90 percent that is preconfigured is exactly the same for every single process. What this suggests is that the 90 percent can be assembled from previously planned solutions that can be put together in a tried and tested “premix.” This not only saves cost but also speeds up the time to respond to a customer request and come up with a proven solution that works. The remaining 10 percent can then be customized to particular customer requirements to give a total, satisfying customer experience. The 90/10 rule can be seen in such examples as buying a car. Almost 90 percent of the car is preconfigured in the factory’s assembly line but the remaining 10 percent can be tailored to a customer’s needs – be it leather seats, the color of the car or alloy wheels. The preconfigured process also enables better quality checks to be put in place due to standardization. This also helps companies better monitor and benchmark the process for further improvement.

Collaboration Is Key

To ensure that preconfiguration does not lead to poor-quality, unimaginative and undifferentiated solutions, IDC strongly believes that collaboration is essential to make it all work. No single vendor by themselves can claim to have the best end-to-end solution to a customer’s needs, nor would they have all the necessary resources to do so. To ensure that preconfiguration works well, the ingredients that go into the premix need to be best of breed, spanning solutions across a multitude of vendors. Hence, there is a need to collaborate and combine efforts with other solution providers to come toward standardization of processes and work together to achieve win-win outcomes. Bringing together different partners is not hard; IDC believes the challenge is getting the disparate vendors to commit to best prices and resources. Nevertheless some examples of collaboration are already starting to appear in the marketplace, such as the Agility Alliance and Accenture’s CRM-configured model as described in the next topic.

Accenture CRM Preconfigured Model

Built on a matrix structure, the preconfigured Accenture solutions essentially answer the question: “How should managers think about planning and implementing a customer interaction strategy?” It helps to begin by considering the three core or “generic” strategies introduced by strategy scholar Michael Porter in 1985: cost leadership, differentiation and focus (or niche). These categories can be applied to the problem of crafting a customer interaction strategy as well. But the solution cannot automatically be one in which the company’s generic strategy is identical to its customer interaction approach. In some instances, the two should line up directly, but in others, a company’s “back” (generic or overall) strategy should be different from its “front” (customer interaction) strategy.

Figure 1 shows the nine possible permutations of this front-back framework as devised by Paul F. Nunes, executive research fellow at the Accenture Institute for High Performance Business.

It is timely that companies like Accenture are looking at issues that solve customer problems from a business perspective. While it might seem constraining to preconfigure solutions in a matrix, the idea is to at least put some structure and parameters to work that diagnose the issues at hand. It also helps to have some set steps if CRM vendors want to team with others to create a collaborative solution. IDC sees that having certain standardized structures offers merit in helping disparate technology companies in software, infrastructure and technology, among others, to work together and deliver true CRM solutions effectively and quickly.

IDC Summary

• It is no longer just about the technology. In the late 1990s and the first years of the new millennium, companies rushed to invest heavily in setting up CRM technology platforms and infrastructures. While this is prudent and almost a necessity for any customer-serving corporation, enterprises have come to realize that having the right tools is not enough if those tools do not get used. Now that the proper software and infrastructures are in place, enterprises are looking at connecting technology to business results to deliver truly end-to-end solutions.
• It is still all about the customer. At the end of the day, the end-to-end solutions need to satisfy what really matters – the customer. It is vital that enterprises know their corporate objectives and directions and invest accordingly in the relevant CRM solutions that match their needs. Enterprises in fastgrowing and niche areas would require a different set of solutions than those that serve mature and slow-growing markets.
• Investing in improving customer service has never been more critical. As automation becomes more pervasive, customers feel increasingly distant and isolated from the products and services that they purchase. The interactions with technology need not be cold and soulless; it simply takes the right understanding and application to make the whole experience pleasant and profitable.
• Preconfigured solutions are a means toward improving customer interactions, not an impediment. It needs the determination of disparate parties working together to create common solutions that achieve what really matters – delighting the customer.