For many large organizations -- particularly those that have been through a series of acquisitions -- managing...
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customer relationships is not a matter of whether they have a CRM system, but how many.
Take, for example, Synopsys Inc. a maker of electronic design automation (EDA) technology for developing systems on chips. It grew its revenue from $500 million to $1 billion by acquiring more than 40 EDA companies in roughly 10 years, and with it came 17 different legacy CRM systems.
You know you have too many CRM systems …when no one can tell you where the master data is.
Ray Wang, CEO and principal analyst with Constellation Research
"When we had a new acquisition it would just add to the list of systems," said Ani Bhutkar, group director of corporate applications for the Mountain View, Calif.-based company. "Halfway through the spree of acquisitions we [realized that we needed] a master system that things would integrate into."
Many companies like Synopsys find themselves with different CRM software systems running across lines of business as a result of acquisitions. But there are also a number of non-acquisition related scenarios where companies find themselves with multiple CRM systems. For example, individual business units within an organization may buy software to meet their specific needs with little IT involvement. This typically happens with Software as a Service (SaaS) products. Additionally, companies expanding globally sometimes find that far-flung operations have implemented their own CRM systems. Another scenario occurs when a company comes up on an upgrade and may want to choose between upgrading or going with a different application altogether.
It's not always a problem, or one that needs to be fixed immediately, but there are some signals to look for which indicate that that you have too many CRM systems -- and they can sound a bit like a Jeff Foxworthy joke.
"You know you have too many CRM systems when no one can tell you where the master data is," said Ray Wang, CEO and principal analyst with Constellation Research in San Mateo, Calif. "It's a very easy test. If you're keeping more than three mailing lists … you already have one too many CRM systems. If you can't tie your marketing list back to your service and account list ... you have too many CRM systems."
The myriad customer data repositories at Synopsys convinced leadership that something needed to be done. "It was almost a yearlong investigation into whether the native Scopus system was the right system," Bhuktar said.
It wasn't. In 1999, Synopsys elected to go with SAP CRM, partly because it had been running SAP ERP since 1996.
CRM consolidation considerations
Cost played a significant factor in the decision to go with SAP, particularly the cost of supporting a separate system. Synopsis determined it would need to increase headcount in IT by 60% if it wanted to support a different CRM system, Bhutkar said. Additionally, SAP's investment in its CRM application, "one of the biggest in the industry," Bhuktar said, convinced Synopsis that if it undertook a large implementation SAP could handle the scale.
But not all organizations do need to consolidate CRM systems, according to experts.
"If sales and marketing customer bases are quite separate, then the need to have the same CRM solution is low," said Bill Band, research vice president with Cambridge, Mass.-based Forrester Research Inc. "But finance and accounting is still important, so they're going to integrate those back-office solutions sooner. If it's an organization where there's going to be shared customers or one of the drivers is cross-sell or up-sell or consolidating sales organizations [then it needs to be done sooner]."
Bringing sales together
Unified sales was a CRM software consolidation motivator for one company.
At IGH Solutions, the CRM systems were as myriad and complicated as its corporate structure. IGH Solutions, a specialty printing company, is one of 80 subsidiaries of the Taylor Corp. Several Taylor subsidiaries were brought together to form IGH, including Travel Tags, Western Graphics and Data and PhotoCraft.
Sales people at the company were using everything from ACT! to Salesforce.com to Microsoft Outlook to Post-it Notes and legal pads, company officials said.
"It was a hodgepodge," said Drew Climer, business technology specialist with the company. "If you market a CRM app, IGH was a target market."
In late 2007, the company elected to consolidate on Microsoft Dynamics CRM, replacing in large part a Salesforce.com implementation that had been brought in by marketing.
As is often the case with SaaS, a business unit brought in an application that didn't necessarily fit well with the rest of the organization. That's what happened at IGH. Marketing had customized some Salesforce.com features, and the system wasn't working.
"Marketing was overwhelmed with the project and complexity and getting users to buy in and use the app," Climer said. "There were easily 150 different processes and applications they had hard-coded into the sales process. They walked away from it and said, 'IT, it's yours.'"
Both Synopsys and IGH established groups to evaluate and consolidate their CRM systems.
"During the evaluation, the first and foremost question and highest-rated question was, Can a platform integrate with multiple applications across the organization," Climer said. "Our primary goal was to reduce redundancy in sales information. Reps were entering data into Salesforce if they needed to generate a job, a quote, any of those 150 processes. They also had to enter data into ERP."
That lead to a drastic decrease in user adoption as users found workarounds or simply didn't enter data.
Alternatively, Synopsys was focused on a consistent process for its engineering support staff across the multiple business units. That meant focusing heavily on the data model and the usability.
"The preferences that were articulated to us were, 'it has to have a nice interface, be easy to use and not too many clicks,'" said Nishant Pandya, director of corporate applications.
ROI of CRM software consolidation
Both organizations reaped the rewards from CRM software consolidation. IGH conducted and analysis and determined it would receive a 595% ROI over three years after swapping out Salesforce.com with a Microsoft Dynamics CRM on premise implementation. While that included saving salespeople an hour of productivity each day -- multiplied across the sales organization for three years -- which can be a slippery metric, it also included $370,500 in savings on Saleforce.com license fees.
Synopsys, too, saved on licenses and hardware purely from eliminating some CRM systems.
"We did eliminate many of the systems, retire old hardware but the real ROI came from business side," Bhuktar said.
Synopsis savings came on the customer service side. It estimates it has reduced the amount of time application consultants spend on reactive support from 33% to 22%; avoided a 4% staff increase; improved support cost accuracy from 65% to 90%; shifted 40% of support center application engineers to low-cost locations; and cut minor release cycle time by 50%.
Synopsys took a "big bang" approach, with a small pilot group, and then rolled it out to the entire support organization in about three months. But the biggest challenge?
"Getting workflow to be supported through a common system," Bhutkar said. "Multiple engineering groups had different models for how things flow from one group to another. They had different technical capabilities also. We needed something that was a superset of all. More than having a superset there was an effort to consolidate business process model across all groups."
Companies seeking to consolidate CRM software should take a cautious yet decisive approach, one similar to an initial CRM evaluation.
"The key there is to set up a process," Forrester’s Band said. "This applies to vendor selection as well. People have to make a decision one versus another. Go through that process in an orderly fashion and have everybody participate. Make the process fair but have a process, 'in 90 days we're going to make a decision' as opposed to leaving it as a political battle with no ground rules."
With software that's already established in an organization, any consolidation project is going to create turf battles.
"Sales wins," Wang of Constellation Research said. "The system that you use for sales force automation wins. We don't see as much in the marketplace where you're running multiple SFAs unless you're in large global 2000."