Even in the minds of CRM's top archrival technology vendors, one thing is agreed: customer strategy equals business change. That was a key message echoed at the Smart CRM West conference, held in San Francisco June 16-18, sponsored by TechTarget and Peppers & Rogers Group.

"The only constant is change," says Darc Rasmussen, VP of global CRM at SAP. He emphasizes that this personal adage is also applicable in the enterprise technology business. "We build technology to help companies adapt to and manage business process change. In SAP's mind, ROI actually measures the amount of change in a business."

Similarly, according to Kevin Nix, VP of Siebel Systems, Siebel's strength comes from the verticalization of its CRM application (Siebel claims 23 different vertical markets) but also its approach to CRM as a strategic business initiative. "You cannot have a product that is too usable," he says. "CRM is hard. You have to think of the business outcome and make it a goal that is approachable and applicable to the people that have to use it."

Fighting for space
Moving forward, Nix says the bulk of Siebel's differentiation in the marketplace will come not only from the introduction of new vertical CRM applications but from hosted CRM. "Hosted CRM is a non-trivial thing," he says. "Upshot [a CRM hosted-software company acquired by Siebel in 2003] provided a lot of domain knowledge for us to do it well. But what's surprised us most is companies' interest in doing a hybrid -- with our hosted CRM application in some parts of their business and our traditional application in other parts."

Nix also highlighted another perceived differentiator, its "Charter Customer Program." The program is embedded in Siebel's engagement model to share knowledge across some of the company's top customers and industries. The group often facilitates several key developments in both functionality and implementation, one being the transfer of capabilities from one vertical industry to help develop another. "For example, in wireless, the concept of churn management is an established business process," explains Nix. "But retail banking is not as sophisticated. Our common data model and architecture allows us to scale and cross-pollinate industry functionality, so we took the approaches we used in wireless and applied them appropriately to retail banking."

While SAP also boasts vertical CRM functionality, it emphasizes the need to develop a customer-based strategy that is driven by company-specific business needs, not just industry ones. "For over 30 years, we have been in over 20+ industries with our applications," Rasmussen says. "We have actually developed some of the leading business processes in industries."

He adds that SAP's primary edge comes from its ability to be integrated "throughout the business ecosystem," to respond to an individual company's changing demands. SAP's history as a provider of software for back-end IT systems such as enterprise resource planning (ERP) and supply chain management (SCM) helps the company show its customers how to deploy CRM software to generate enterprise-wide results.

No doubt, this rivalry between the two CRM software behemoths will continue to simmer. But despite their polarized positions, both SAP and Siebel acknowledge that technology alone, no matter how customizable or sophisticated, will never produce results without a business backbone.

With multiple offices spanning Eastern Europe, Sterling Group is one of Russia's emerging systems integrators and IT consulting firms. The company's in-depth industry expertise, along with a strong reputation in ERP systems implementation, helped make Sterling a powerful player in its space. To keep its momentum going, the firm made an enterprise-wide commitment to customer strategy.

Founded in 1992 and unrelated to Sterling Group in the U.S., Sterling works with some of the world's largest oil, financial services, transportation and telecommunications firms. Since its inception, Sterling has made significant progress through Russia's market transition and the global evolution toward an IT-driven economy. However, it was not immune to competitive pressures and profitability constraints.

As the company expanded, the scope of its activities organically grew and it faced increasing competition in the IT services market. The company's lack of a solid infrastructure to manage the complexity of its relationships within client organizations, as well as the activities of its own numerous branches, resulted in declining productivity and ultimately decreased profitability.

Enter relationship strategy
Sterling's response: Embrace a new vision by transforming the business from a one-time systems integrator to a trusted long-term solutions provider for clients. This meant substantially enhancing its customer focus. "CRM is a new philosophy of our business -- the customer-oriented business," says Sergey Tokmakov, president of Sterling Group. "It is one of the keys for Sterling to achieve its vision of becoming a leading IT services organization."

To enable this vision from an operational perspective, Sterling worked to unify customer data and inject increased customer centricity along all aspects of the sales cycle -- from business development to engagement to follow-on sales activities.

"We have more than 12 local offices in different cities, and it took some effort to coordinate the activities of our salespeople," Tokmakov says. "Plus we were working with large companies that all have branches throughout Russia. For example, the oil companies we deal with may have more than 50 branches. We had a lot of problems managing information and sales administration, and were concerned about missing opportunities. Clearly, this did not enable our strategy to become more of a solutions provider."

The strategy comes to life
In 2002, Sterling implemented mySAP CRM (which competes with Oracle, Siebel and PeopleSoft) to increase efficiency, reduce cost and capture additional revenue by learning more about customer relationships. The new system consolidates customer information into a central database and categorizes clients based on their spending habits. "With full and reliable information in a uniform central database, we can form different systems of customer classification, giving us general business models to determine long-term approaches for our marketing strategy," says Tokmakov.

Today, every Sterling salesperson can now access a single customer profile. The consolidation of information allows Sterling to standardize sales processes and efficiently allocate resources. Managers can obtain customer data quickly, which helps decision makers deploy the right amount of resources toward a sales effort. Centralized data also standardizes and supports contract preparation processes. "When a sales agent meets with the customer, that agent is well informed about the customer's individual needs," Tokmakov notes. "We are in a better position to offer appropriate services and products, which will bring us the maximum profit."

Results
According to a study conducted by Peppers & Rogers Group on behalf of SAP, Sterling's investment is paying off. Based on a net operating benefit of €229,500 on an investment of approximately €134,000 worth of hardware, software, consulting and training, Sterling achieved a 74-percent Internal Rate of Return (IRR). From improved sales force productivity to the increased sale of higher margin services, Sterling continues to reap benefits.

Sterling's near-term plans include implementing a company-wide sales methodology to support alternate sales and marketing channels including the Web and e-mail. The firm considers CRM to be a critical component of these plans. With this success, Sterling is committed to satisfying customers' requirements and demands on the road to becoming an information technologies market leader.

Re: CMO Versus CIO: Who Wins the Budget Battle?
Issue Date: May 24, 2004

I have worked both in Marketing and Information Technology, although I have spent most of my career in IT. It has been my experience that most companies, even software companies, let marketing drive everything, from features in software to some of the technologies used in development. However, most marketing people don't even know enough about technology to plug in their own PCs -- they just go on buzzwords. As a result, there is frequently an adversarial relationship between the two departments. However, what you state is absolutely correct. It is only when these two departments work hand-in-hand that a business can succeed.

Marketing knows how to talk to the customer, but they need to let IT be involved in formulating the questions and participate in any customer dialogue. IT knows how to develop what the customer needs, not always what they say they want. In fact, a successful IT department needs to have product or program managers who can translate customer needs (which are often not clearly articulated from an IT perspective) into true technology requirements. These employees must also work with marketing to determine which customer requests deliver the most bang for the buck. This is how the two departments can present a unified front to the board of directors.

Without this communication between the two departments, more businesses will find themselves out in the cold, particularly as the technology marketplace continues to evolve at its rapid-fire pace.

Gilda Sebenick
Managing Partner
DGCC.com
Torrance, Calif.