When ERP and CRM meet

If a company views Enterprise Resource Planning (ERP) as a necessary base function, Customer Relationship Management (CRM) can be seen as the complementary next step, enabling greater functionality and access to information.CRM generally becomes a higher priority for an organisation when it has already invested in ERP. Any company must have functional ERP or financial processes in place to, at a bare minimum, create an invoice correctly."Whenever there is a need for financial analysis across a customer base, ERP is a vital ingredient. In the past, organisations have used data mining tools to analyse such patterns, but with the introduction of fully integrated business applications, this requirement goes away so that organisations can now pull real-time data and make faster, more informed decisions,” says Dean Stockwell, NetSuite’s Vice President, Professional Services, APAC.New Zealand has witnessed a growing acceptance of software-as-a-service (SaaS), with both ERP & CRM cloud solutions becoming more and more popular. Uptake of Salesforce’s CRM solution, for instance, has rocketed in the last year from 30 to over 700 NZ-based customers, while success stories like Xero have become widely adopted.According to NetSuite’s Stockwell, "The New Zealand market is a prime target for cloud-based ERP vendors due to the large number of small and medium enterprises that exist in the market. This is where cloud technology has a massive competitive edge over traditional ‘dinosaur’ ERP vendors.”A year ago, Gartner predicted that CRM would become a top purchasing priority for CIOs, despite contracting budgets. Developing a 360 degree view of a customer, and allowing all relevant information about that customer to be readily available to any relevant member of staff grows more and more critical to a company’s bottom line, marketing strategies and growth."For most organisations, the single most logical way to differentiate the business is through great customer experiences, rather than having the lowest cost or most innovative products and services,” explained Analyst and Vice President at Gartner, Ed Thompson.For New Zealanders, cloud-based CRM and sales force automation (SFA) make sense. "95% of New Zealand businesses have fewer than 15 staff,” says Tom Risbrook, NZ Country Manager for Sqware Peg."They don’t have to have the hardware or software on site and can pay just for the people they’ve got. There are good economic benefits.”So in a country like New Zealand, where small businesses are prevalent, when does it make sense to adopt ERP and CRM solutions? And does it pay to integrate them?A business’s size shouldn’t always be the determining factor when it comes to the question of whether or not to implement or upgrade ERP and CRM solutions. Complexity of business process, says SAP ANZ’s Director of Communications Peter Sertori, is a significant factor. "One of SAP’s smallest customers globally is Aotearoa Breweries – which had only six employees at the time of implementation,” he told IT Brief.For new or small companies, financial management applications like MYOB may suffice, with traditional ERP applications having been built with larger organisations in mind, requiring significant investment in infrastructure and human resources. In recent years, however, "cloud ERP has become very much a reality and a viable option, leveraging new multi-tenant technology that allows the organisation to share the cost of infrastructure in a secure way”, says NetSuite’s Stockwell.Regardless of size, it often comes down to how much of an asset data is to a company, and how access to and use of that data is perceived to enable the business’s ongoing success. Virtually any business in growth mode is going to need to upgrade its ERP and implement appropriate CRM at some stage.Whatever your size and situation, knowing where and how to invest is critical to the success of an ERP or CRM adoption and rollout. An ROI must be put together before making any investment decision in this area."Today, it’s not enough for an ERP [or CRM] project to be on time and on budget. They must also deliver to value, says Sertori."Projects must deliver against the business case that justified the investment in the first place.”Risbrook suggests asking a multitude of questions, including: ‘How much time can be saved?’; ‘What is that time worth financially?’; ‘What percentage of our processes can be automated?’; ‘Will the visibility of our pipeline increase with CRM?’ etc.Asking specific questions that can then be measured over time better ensures that the chosen solution will meet the specific needs of the business.Engaging a local systems integrator or contractor can be invaluable, in terms of expertise and manpower. An early litmus test as to whether the solution is working, he says, is whether the salespeople are happy using it, as they will typically complain before staff in other departments."Set a reasonable target and a reasonable timeframe, commit to it and measure progress on a regular basis,” agrees Stockwell.Risbrook has found that many New Zealand clients struggle with the idea of process and identifying their own key processes, sales and otherwise. Therefore, mapping those processes, with outside help if necessary, is a good place to start.Bear in mind that processes need to change to continue to meet the needs of the business, so don’t get locked in to anything that cannot be adapted later. This is made particularly easy with cloud-based solutions. Flexibility is inherent, and making changes can be very cost-effective.Integration of ERP and CRM makes sense, but it is not the norm in New Zealand. Real practicalities, such as prohibitive cost, often stand in the way of true integration.But it is, unquestionably, a healthy goal for a CIO and can be a brilliant asset if achievable.CRM applications give a company "deeper functionality”, says Sertori, and complement its ERP system. The more these systems can ‘talk’ to each other, the more effective they will be for the business.Many organisations are put off by the cost involved in integrating ERP and CRM systems, particularly when potential benefits have not been adequately explored or conveyed. It is important to understand that the cost can be more aptly seen as an investment, with genuine benefits to be realised.While not many suppliers can currently offer an integrated platform for CRM and ERP, experts, analysts and vendors tend to agree that this will undoubtedly change."CRM is an extension of the core functionality provided by ERP systems,” continues Sertori. "The more extensive and integrated a company’s information systems are, the greater the value the business will derive from its information."When coupled with Business Intelligence tools, users will get greater insights from the data collected by ERP, CRM and other systems, thereby contributing to better decision making to support customers.”Alan Parker, EXO Sales Manager for Global BizPro, recommends that all existing IT infrastructure be carefully reviewed prior to integration, as certain facilities such as Microsoft SharePoint and Reporting Services may not already be in use, though they can extend and enhance the user experience when working with CRM and ERP systems.In New Zealand, at the start of 2011, very few organisations have a single platform that gives them an overview and single point of reference over everything – financial and operational data."ERP systems are often referred to as ‘back office systems’, while a CRM is typically seen as a ‘front of house’ system,” Parker explains."By integrating these, data can flow freely from the point of capture all the way through the CRM and financial system to provide the company with end-to-end reporting. Integration between the ERP and CRM systems can deliver more value to the individual system than a standalone model; for example, feeding transaction or sales history from the ERP system to the CRM enables sales team members to quickly review trading history with a client.”Ultimately, whether to integrate CRM and ERP is no different from any other major business decision – the benefits must be weighed against the risks and costs. Employees must be involved from selection to deployment, and there must be senior-level buy-in to ensure the process will be supported and the tools adopted.Stockwell recommends that the CIO or relevant IT senior staff identify key power-users early, and include them in the process to ensure wide-spread adoption through the organisation."A CIO has the ultimate responsibility to deliver the right technology to the business,” says Sqware Peg’s Risbrook. "It is not enough to go with the status quo and assume what they’ve been doing for the last 10-15 years is sufficient."Theoretically, there is no future for CRM and ERP, because those applications will one day be welcomed as a single application. In my view, the future is the combination of the two.”