The shift from pure CRM to customer engagement and commerce (and why your back office is more important than ever)

Customer relationship management (CRM) was always meant to be more than just a tool – it was, in fact, a philosophy. So what went wrong, and how are organisations getting their customer relationships back on track? Freya Purnell reports.


If you’ve been burned by a CRM implementation, you’re not alone. That’s probably because a CRM system was never meant to be the silver bullet to improve customer experience.

“The whole concept of CRM was supposed to be a philosophy about how we build organisations that are customer-centric, and that’s where it started in the late 90s,” says Marco Formaggio, managing director of SAP partner and CRM/customer experience solution specialist, BluLeader. “We turned CRM into a tool, and the problem was it didn’t always meet the original goals.”

While SAP, Siebel, Salesforce and a myriad of others released CRM systems, at their heart they were tools designed to manage the sales and marketing process, not improve the customer’s experience.

Ovum principal analyst, customer engagement, Jeremy Cox, says CRM suites were often little more than salesforce automation tools, with some campaign capability on the marketing side, and basic case management functionality for service.

“But really CRM was about how an organisation connects with its customers, and how can it manage those relationships to first of all retain customers, but also increase their lifetime value,” Cox says.

Fast forward 15 years, and the new buzzword, certainly in the halls of SAP, is Customer Engagement and Commerce (CEC), as this area of the business is now called. It seems like ‘everything old is new again’ – except this time we might have the right tools for the job, as well as more understanding of the holistic strategy needed to fully encompass all points of the customer relationship in the digital world.

We now not have a proliferation of touchpoints in any given customer relationship, but the control has also shifted from the organisation to the customer themselves, as they decide how they wish to interact, in what order, and who they want to tell about the interactions.

So with the focus now firmly on the bigger picture of customer engagement, is traditional CRM dead?

No, according to Cox. CRM systems still have a part to play, but as a component in an enterprise-wide strategy.

“The good news as we head toward 2015 is that leaders of enterprises in increasing numbers across all sectors have recognised that they must develop coherent, enterprise-wide approaches to their customers. For those with this more transformational objective in mind, CRM software is not a solution, but an important component of a highly integrated customer platform and omnichannel customer engagement capability,” Cox wrote in Ovum’s ‘2015 Trends to Watch: CRM’ report.

And customers have realised they need to put their money where their customers are – in Ovum’s 2014/15 ICT Enterprise Insights survey, more than 40 per cent of enterprises said they would be investing during the next 18 months in either installing new, completely replacing or significantly modifying existing marketing automation, CRM, commerce and business process management applications.

The promised land: great customer experience

Why are organisations so willing to invest heavily in this area? Partly because changes in customer behaviour demand it.

Tony Armfield, customer value officer, SAP ANZ, speaking at a BluLeader breakfast session recently, said customers today are far better connected and informed than in the past.

One of the challenges in truly visualising the customer journey is that there is actually no single customer journey – rather an endless multitude of customer journeys, none of which are linear.

“We are dealing with a customer base that actually in a lot of situations will have done an infinite amount of research about your business. The mere fact of booking holidays is a very different experience than it was 10 years ago, because the information is socially connected,” he said.

“According to research, over half the people that are engaging with you and your brand to procure a good or a service are already partway through the buying process.”

Cox says organisations that embrace an omnichannel approach to customer experience – which fundamentally means that customers are able to access the most relevant experience with that business through whichever channel they choose, and the organisation has a unified view of the customer throughout that journey – will experience above-average levels of growth, profitability, and customer retention, as well as greater customer lifetime value, “something that CRM software alone could never offer”.

Formaggio believes some of these benefits are achieved by simply by giving the customer a reliable experience, which makes them want to interact with that organisation again.

“Right from initial marketing to sales and service, what we try to achieve is a common, consistent message to the end customer,” he says. “If they call the call centre and get a quote on a product, and then they go onto the website and get a different price, that’s a bad customer experience and you’re defeating the whole point of getting the customer to self-serve. So consistency across different channels is one very important aspect.”

The continuing role of ERP in delivering great customer experience

It’s no secret that customers love attractive, responsive design, so they can interact with organisations from whatever device they choose and wherever they are, but the important aspect about great customer experience is that it doesn’t end at the interface. The brand promise must be totally aligned throughout the customer experience, supported by solid back-end systems integrated with those sexy front-ends, and offer simple processes around delivery and returns, for example.

“You can go through the whole process of getting customers to your new website, but if you don’t deliver on time, they just won’t come back and you have lost those customers forever,” says Formaggio.

“What people seem to forget is that when you set up a digital environment, you are essentially opening the windows on your organisation, and you better make sure that you don’t have a lot of dirty laundry lying around.

“My view is that it will actually create a lot of impetus for organisations to improve the way their ERP processes work, their warehouse management, and their stock planning. The need for good integrated back-end systems becomes really critical. That’s why I think SAP is well placed, because it doesn’t have to just put lipstick on a pig – that is, put a nice e-commerce system on the front of a badly run business and expect it’s going to work.”

Formaggio is not alone in this view.

In Ovum’s ‘How to Develop an Omnichannel Customer Engagement Capability’, Cox writes, “The omnichannel challenge is enterprise-wide, not just a front-office concern. Brand promise must be matched by fulfilment, and there must be a tightly integrated demand chain from the customer all the way back to the supply chain or network. Developing an omnichannel customer engagement capability demands a transformation for the majority of enterprises.”

This means eliminating silos within the organisation – whether they exist in on-premise or cloud systems.

“I have seen lots of organisations say we are implementing the software-as-a-service CRM, and it has no relation to their call centre environment, and there is no relation to their e-commerce environment,” says Armfield. “They are creating silos, and this is what we are looking to address as an organisation. We saw the impact and the pain that our customers would experience trying to address their customers’ needs, because fundamentally all of those systems are built upon a linear process of a customer’s journey.”

Acquiring hybris: SAP’s masterstroke

SAP’s 2013 acquisition of commerce platform provider hybris software has been widely regarded as a masterstroke in bringing its customer-facing capabilities up to scratch by providing the omnichannel piece of the puzzle.

“By making the acquisition, SAP has now moved themselves into this digital space to be recognised as a leader. It allows them to glue together a lot of the solutions they have in this space to give a more seamless feel in a single product to the customer,” Formaggio says.

This is certainly SAP’s intention in creating the Customer Engagement and Commerce area, bringing together a portfolio of solutions including SAP Cloud for Sales, SAP Cloud for Service, SAP CRM, SAP hybris Commerce Suite, SAP hybris Marketing, and SAP Billing and Revenue Innovation Management (BRIM), for high transaction volume businesses such as telecoms and utilities.

While Armfield admits that the architecture and roadmap for full omnichannel customer engagement capability is not yet fully realised, it is certainly well on the way.

“Our intention with the integration of the suite of products that we have had previously and have acquired, is that irrespective of the medium through which a customer is interacting with you, you understand that it is that person, that customer, that organisation, at every point – whether they are coming into a store, looking you up online, calling a call centre, or [visiting] your Facebook page,” Armfield said.

Cox says that the value of SAP’s CEC solutions is not individual, but how they can in combination create a more customer-adaptive environment through “better orchestration of enterprise activities from the customer back to supply”. This includes utilising the strength of the HANA platform to “act as the organisation’s central nervous system, increasing its ability to sense, respond, and adapt at the right frequency to be persistently relevant to its customers”.

Importantly, according to Cox, hybris has also brought an important customer-centric way of thinking to the SAP table.

“The hybris people really understand the customer piece probably better than anybody else. There has been an injection of intellectual capital and knowledge around this, which added to SAP’s traditional strengths of being able to make stuff work and integrating it effectively, is particularly positive.”

The future for traditional CRM

In terms of the way forward, Formaggio believes CRM as a module will still be an important component of an overall ERP system to drive marketing campaigns and manage sales and the service application layer, but he expects to see much more change on the front-end to improve user adoption – with design and useability a key barrier to CRM usage in the past.

The shift to cloud-models for CEC solutions and the increased agility this brings will also have an impact on the role of the traditional CRM module – particularly as those functional components of marketing, sales and service can be broken up and put separately into the cloud.

“When an organisations seeks that omnichannel capability, they might pick and choose those components and integrate them to support that environment. CRM could never achieve it on its own – it always needed adjacent technologies that links to the activity in the contact centre, for instance, and commerce systems,” Cox says.

“I suspect it will become more componentised, and that’s where it should be going so that organisations can build the appropriate blend of CRM and other technologies to deliver that fantastic customer experience. Of course, that needs to be fully integrated with the back office so you have got the complete demand chain fully integrated and working.

“Cloud is definitely where it’s at in terms of the front-end of an organisation, because it allows for more rapid adaptation, which is so essential today. It needs to be enhanced on a fairly regular basis, so cloud is the obvious way forward as opposed to plugging in an on-premise CRM suite. ”

Stalking SAP: competitors in the CEC area

SAP might have been a slow starter in this arena, playing catch-up to some of its more advanced rivals, but it is now a fierce competitor. Cox says Salesforce has “done a good job of blowing its own trumpet” over the last 10 years and so has grown strongly, Microsoft is making significant progress following its reinvention, and there are plenty of specialist organisations which are particularly strong in the contact centre environment. But the battle will really be waged over which vendors can connect all the dots to deliver on the omnichannel promise.

There are two options for organisations looking to take this on – identify various components from multiple vendors, and then integrate them together; or find the vendor who can provide the range of pre-integrated modules that will deliver that omnichannel capability.

“To my mind, the most obvious vendors for that, in the battle of the titans, are SAP and Oracle,” Cox says. “Oracle has, over the last three or four years, been looking at that holistic customer experience and putting together the pieces of the jigsaw to support it. SAP has been playing catch-up, but I think the hybris acquisition was a brilliant one, so that has given them the commercial power. With all the other developments going on in SAP, it has the capability to actually provide that end-to-end holistic integrated enterprise, so that the brand promise can be delivered.”

However Cox believes SAP has to get better at telling its omnichannel story, because many enterprises still see it as focusing only on ERP and long implementation projects.

“SAP really has to step up its marketing significantly. It now has a far more coherent story, and it’s only going to get better in that the S/4 HANA platform embraces the front-end capabilities as well as the back-end.”

Coming full circle

Ultimately, the move from CRM to embracing engagement, experience and commerce in an omnichannel environment comes back to the customer – understanding their intent and responding accordingly to deliver what they want. Formaggio warns against repeating history by getting hung up on technology.

“What’s changed now is we have got more tools, but we still have to have this customer-centric view, and say, ‘How do we make sure that the customer experience is superior?’ If we don’t look at the process from the customer’s perspective, we will still miss the boat.”


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