Darc Dencker-Rasmussen Looks At The Evolution Of CRM Into Customer Centrism

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SAP

The customer centric enterprise requires a technology platform that can integrate informationand business processes across organizational and technical boundaries.

Defying the Limits: As CRM has evolved over the years, SAP has learned quite a bit about the difference between the original concept and what the reality is today. Very briefly, what can you share with executives reading this?

Darc Dencker-Rasmussen: There’s been a very strong evolution in the discipline from the days of salesforce automation to the thinking that CRM transcends a number of organizational boundaries, to a level today where we’re talking even beyond the concept of CRM as a single organizational concept, as one that transcends the organization through its entire ecosystem. So we’re talking today about customer centric enterprises along with creating customer centric ecosystems.

DTL: How does customer centrism differ from CRM?

DDR: It’s really part of the evolution of the discipline in that the early phases of CRM were implemented at the departmental level. It was seen very much as a function of the sales, the marketing or the service organization. The reality is, as we know, the interactions with our customers happen across the organization, and our ability to service our customers – to truly and effectively achieve collaborative relationships with our customers – requires that not just the entire organization but its ecosystem is customer centric. That’s the next level we’re moving to.

DTL: What new technologies come into play when you move to customer centrism?

DDR: The customer centric enterprise cannot depend any longer on siloed technologies. It really requires a technology platform that addresses the need to integrate people – that’s people within our enterprise, within the extended enterprise, within our customers. It’s a platform that needs to integrate information and business processes across organizational and technical boundaries. It’s a whole new requirement in terms of integration platforms.

DTL: Has the sluggish economy of the last few years slowed the adoption of that kind of technology? Do you expect that to pick up in the coming year?

DDR: In some areas, the economy has had an impact. But I think successful and competitive companies recognized during the tougher economic times that the appropriate use of customer relationship management could not only help them curb costs and increase margins, but more importantly, build customer loyalty to the extent that they were more profitable during the downturn and much better positioned to gain market share once the economy improved.

DTL: We’ve seen some consolidation among the smaller vendors. Do you see that continuing in the near future?

DDR: We do, and certainly all of the analyst research we’ve seen points in that direction. Analyst research from Gartner indicates that by the end of 2005, there is an expectation that 80 percent of the small- and mid-sized vendors will either have been acquired, merged or go out of business. I won’t comment on whether I think that’s the right number, but I certainly think the trend is moving in that direction.

DTL: Do you think that’s a good thing in the sense that larger CRM players like your company can provide better products and better service? Or is there something that will be missing from the niche players?

DDR: One of the advantages of a free market is that it moves in a direction that will best serve itself. Earlier we were talking about a customer centric enterprise. To be able to achieve that means it is important to be able to engage with a company that can deliver a platform that truly can integrate people, information and business processes across organizational and technical boundaries. And that does, obviously, favor vendors who have the scope, the ability and the financial capability to invest in the research and development that is necessary, as well as the viability to continue to be a partner with their customers as they evolve their customer relationship strategies.

DTL: SAP’s approach to Web services is a little different from your competitors’. Would you outline briefly what those differences are?

DDR: It’s a good question because while we embrace Web services and see it as an important part of an overall enterprise services architecture, the difference in SAP’s approach is that we realize that it is only a part, and that there are at least five other key platform elements that constitute true enterprise services architecture. Our approach is that Web services are a part of that broader platform that encompasses elements such as an enterprise portal, business intelligence as an embedded element of an enterprise services architecture platform, master data management that supports a single view of the customer across the enterprise and its ecosystem, as well as a mobile infrastructure that }extends the enterprise into pervasive devices beyond its physical realm.

DTL: Salesforce.com recently conducted a successful IPO that was seen as a watershed event for the industry. Do you think that validates the CRM space and the hosted software space?

DDR: First, I think it’s important to differentiate between the offerings of recent IPOs and hosted environments. A hosted environment is generally a one-to-one environment whereas what is being offered by these recent IPO companies is a one-to-many environment. And in that environment, we need to recognize they’re serving a very thin niche of the market. It’s the equivalent of a software candy bar. It provides a very quick and momentary relief to a specific problem, but doesn’t provide the long-term sustainability. It doesn’t provide the integration capabilities and ultimately doesn’t have the capabilities to drive toward a customer centric enterprise.

DTL: Pepsi recently decided to standardize on the SAP platform. Could you give us a very quick look at what kind of fundamental changes that might mean for Pepsi as an organization?

DDR: Yes, for companies like Pepsi, there is a recognition that the seamless integration of mobile and back-end activities is critical to their ability to service their customer and be successful long term. The initiative we have with Pepsi really will result in a new generation of solutions that will improve their direct store-delivery processes, their fullservice vending for their beverages and other products. Pepsi certainly sees this as a strategic move that will allow them as an organization to be customer centric, not just across Pepsi but across their entire ecosystem.

DTL: CRM has been evolving for many years and we seem to be shifting more into a discussion of customer centrism. How do you see that evolving just in the next three or four years?

DDR: The fundamental change is that we’re absolutely going beyond the concept of departmentalized CRM. In the next couple of years, CRM is going to be focused on business processes – end-to-end business processes that serve the organization and the customer. Processes like opportunity-to-cash, processes like – at an industry-specific level – trade promotion management for the consumer products industry, or intellectual property management for the media industry. It’s really going to be a transformation from a siloed departmental approach to an end-to-end business process that allows the organization to focus on and service the customer from end-to-end.

DTL: Long term, looking 10 or 15 years down the road, do you think we’ll even be talking about CRM at all? Or will customer centrism be such an intrinsic part of the enterprise that it is more or less assumed?

DDR: You’re absolutely on the mark in the latter part of the question. For companies to be successful long term, they need to have customer centrism as an intrinsic element of their entire operating strategy. What that drives is the need for organizations to change very quickly to changing market requirements and changing customer demands. As a result of that, the success or failure of the entire business platform that a company adopts is going to be driven by its ability to adapt to new business processes.