Enterprise resource planning (ERP) software can't do it alone. While ERP applications may offer improved operating efficiencies, those gains are unlikely to bear fruit without a comparable improvement in the way organisations interact with their customers, said Brent Frei, president and CEO of Onyx Software.
For many organisations, however, justifying the cost of customer relationship management (CRM) tools is more difficult than doing so with ERP applications because the financial benefits are more difficult to measure.
"Everyone spends a lot of money on ERP systems because they can think, 'Well, if I increase my manufacturing efficiency, if I reduce inventory, those are all cost-savings,' " Frei said. "It makes sense to spend a couple of million dollars on an ERP system because they can basically put a pencil to it and understand it."
In the case of CRM applications, the benefits are much less quantifiable.
"There are definitely some cost savings and some efficiency gains, so those are things you can put a pencil to. But the real value [of deploying CRM applications] is in the productivity gains and the sales efficiencies and some of the soft costs and soft values they get out of that," Frei said.
It is those "soft costs" that make CRM so difficult to evaluate on a cost basis and so important in terms of ensuring long-term competitiveness, he said.
"How do you measure the improvement in your business from a more satisfied customer? Or better service? Or a sales person being more effective?
"Those are harder things to quantify, a little harder to determine, but that's where the real business growth is," Frei added.
As Asian organisations look towards ERP as a way to boost competitiveness and reduce costs, they should be considering front-office applications as well, said Frei.
"You can have the most efficient company in the world that's capable of delivering pro- duct for almost nothing, but if you've got no customers to deliver it to, what does it matter?"
The importance of interacting with customers is even greater with the increasing role of the Internet as a medium for business transactions.
"It's not just about how you automate and make more efficient your sales, marketing, and service departments in your company," Frei said.
"It's all about the Internet. That's providing a whole other medium for interacting with prospects, customers, and partners. They're all of a sudden now an important part of your business systems because they're on them. They're in them just like your sales people are or your marketing folks. The very successful organisations are gaining market share because they're out there interacting with their customers," he said.
Significant benefits
As an example, Frei cited Amazon.com as an organisation that has demonstrated the significant business benefits that CRM systems can provide.
"They know exactly who you are. You get on there, they know what you've bought, they push stuff at you that's relevant to the things you've been interested in in the past. It's a whole environment.
"Then there's e-commerce, where you actually, physically can buy the thing. But prior to that there's this one-to-one personalisation of you with them," Frei said.
While most organisations won't be able to repeat the success of Amazon.com "they can definitely take advantage of some of the means to have that personalisation on the Internet", he added.
