Is ERM the next CRM?

There's another acronym to track and -- if you listen to Siebel -- employee relationship management has legs.

If you listen to Siebel Systems Inc., employee relationship management (ERM) is following the same growth path as its big brother, CRM. San Mateo, Calif.-based Siebel is so bullish on ERM that it has teams dedicated to developing and selling the software. Three years into selling ERM, about one in 10 Siebel customers has bitten. So what is it, and how might it benefit you? That's where we began this month's Siebel Speaker Series conversation...

with Anthony Deighton, Siebel's general manager of ERM. Give me your 15-second elevator pitch on ERM. Anthony Deighton: What we're doing in this business unit is building out a new market. We see ERM today where CRM was eight years ago. At the time, [companies] were purchasing separate solutions -- for lead management, contact management -- and would spend 18 years to get that stuff to work together. The central innovation Siebel has had is that stuff should not have to come from 14 different vendors. It should come from one vendor and all be integrated on the same platform. That's the value proposition behind CRM.

To date, we've seen customers purchase standalone learning systems and competency management systems and then spend 18 years trying to get the stuff to work together. We think the right answer is to buy a set of integrated software that all works together. You need to drive organizational performance in an integrated suite of software from a single, stable vendor. It's our vision that, in the future, nobody would purchase a standalone learning management system. It'd be as silly as purchasing a standalone opportunity management system. The central components of [ERM] are employee service, learning and performance management. You say these things have to come from a 'single, stable vendor.' So the problem with point solutions is vendor viability?
Deighton: There are two major problems with them. One is viability. That is increasingly a problem. That's something you can imagine going away if the economy turned around. There's a more fundamental problem. Not only do [smaller vendors] have to invest resources in building an architecture, but [they also have to build] also features. I only have to invest in building features and functionality [because I can build off the Siebel platform]. In the same point of time, I can develop significantly more functionality. That's an important differentiator, from a customer perspective. To some, ERM may sound like an artificially created market. Why integrate these three seemingly distinct software categories?
Deighton: You could have asked that question and replaced the 'E' with a 'C' seven years ago. Why should you care that your customer service and sales system are on the same platform? What people realized is that those processes are highly interrelated. I would argue [that's] true for these processes: [employee service, learning and performance management].

When I take a training class that should update my skills, those skills should be available to my manager in my performance review. These are highly interrelated processes. The reason customers aren't all thinking this way is because the best-in-class solution, to date, has been to build that integration yourself. And most customers don't have the appetite for doing that. The conventional wisdom is that CRM is a strategy enabled by software. Can the same be said for ERM?
Deighton: I think your point is equally valid in the ERM space. The way I like to say it is it's not process or software; it's process and software. Take performance management as an example. Most organizations have a process, but it's typically supported by Word documents and e-mail. If you ask how effective is it, [companies] will say it's largely ineffective. So there's this breakage between what I'm asked to do, how well I did it and what I'm getting paid. The answer is a process supported by software. The other thing I would add is that CRM is a strategy that's important to the organization, and it's a strategy that can be really well supported by ERM. Companies these days aren't eager to take a big-bang approach to software implementations. Can you take a piecemeal approach to ERM and, if so, how would it go?
Deighton: Yes. Realistically, that's what we see customers doing. You have to differentiate between deploying out to every employee and deploying different functional components. A big bang means you deploy all of the functionality to all of the users in one go. You're right, that model is not something we see being wildly successful. [With ERM] you can scale back on a few dimensions. You can do fewer employees -- only to certain departments. The second [way to scale back] is from the functionality dimension. You may see customers who deploy help desk or employee service first and then scale over time. By now, we've heard all the factors in making CRM a success. What distinguishes the good ERM initiatives from the duds?
Deighton: I think having realistic goals about deploying the software -- making sure the deployment scales from a user or functionality perspective. Also, having strong executive involvement is important -- especially where ERM is used to drive corporate change. Having execs be involved is an important component of ensuring that it's successful.

SearchCRM: Siebel has made a lot of noise in the hosted space of late. Is ERM heading down that path?
Deighton: Not in the immediate future. It is something we are investigating in the mid- to long term. We haven't see significant primary demand for that. When we do see that demand, we're able to meet it through the models we have in place, like having a partner host [the software]. Over time, I could see [hosting] being important. It's also possible that we'll take some ERM components and integrate them [into] our [Siebel CRM] OnDemand [hosted offering] directly.


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This was first published in February 2004

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