Users facing up to customer IT challenges

Customer-facing applications, but not fully fledged customer relationship management (CRM) software, will see significant growth in the near future, as manufacturers’ spending on IT, particularly for collaborative e-commerce, rises. This is chief among findings from a study of e-business among senior manufacturing personnel across industries and functions by Benchmark Research. It shows growing expectations of e-business for everything from customer transactions via private exchanges, sharing scheduling data, improving after-market operations and exchanging design data online. It also demonstrates increasing numbers of manufacturers planning to spend more on them, especially among larger companies – although uptake rates are unlikely to immediately reflect understanding of the potential. But Benchmark’s does not find the same for all-embracing CRM. Benchmark managing director Guy Washer says: “There is little evidence that many companies will be purchasing [CRM] in the near future.” Most manufacturers below the global 5,000 have a limited number of predominantly business-to-business relationships (89%). Only 21% sell direct to end consumers. Although they do have multiple sales channels, mostly with agents and distributors, necessitating for example, digital catalogues, portals and product configurators for sales support, they do not exhibit the complexity and style of interaction that sophisticated CRM supports. As a result, manufacturers recognising both the opportunities of the web and the drivers to do better with their customers will continue to take a pragmatic line. They will move to capitalise on their existing enterprise (ERP) systems, where much of the data resides, and look for extensions that can deliver low cost, rapid ROI (return no investment). Ironically, they may go for applications that arguably fall under the CRM umbrella (but typically don’t in users’ eyes), but actually they will turn to specialist software providers, like Eden Origin for product configuration and the like. Most users, however, look likely to rely on their original ERP providers and implementers. Hence the many releases of manufacturing business focused ‘CRM’ suites of modules, recently from for example Baan and PeopleSoft. Hence also the smaller vendors, like SSI with its Tropos, championing the importance of customer-orientated ‘CRM’ developed within their own ERP. Watch this space, however. There is now an emergent class of ‘CRM’ application vendor aimed at managing what’s being termed the ‘lead-to-order’ set of processes and the ‘complex multi-channel sales’ environment. Firepond is an example of the former. It’s software purports to do more than product configuration: it automates the processes from ‘needs analysis’ (what the customer wants and why), through option recommendations, to configuration and change management (including validation), pricing, quoting and financing. The emphasis is on right first time and business process web automation. Blue Martini is a new name to most, doing the latter. It launched its suite for manufacturers just six months ago, covering ‘partner relationship management’, with digital catalogues, management, web portal technology and integration of all that with everything from call centres to the back office systems, including SAP and JD Edwards. Both have examples of big user manufacturers (Global 2000) with complex product, market and channel requirements in common. Both, as yet, have high project price tags, starting in the $250,000—500,000 range. But both are already achieving what’s undoubtedly good ROI with users that fit the characteristics. They also both offer fast implementations for fixed web-based deliverables. As customer-facing applications become more sophisticated – and lower cost – providing the potential to automate and improve what are currently largely disconnected, often manual business processes, we can expect to see this coming to the middle market.