In an interesting Harvard Business Review (HBR) research story about customer retention and the direct relationship to a company's bottom-line profitability, the research illustrated that for many businesses, an increase in customer retention rates of just ten to fifteen percent can more than double a company's bottom line profits. This comes as no surprise to savvy executives that know that their best source of profits is their existing customer base. However, the challenge not as easily grasped is how to identifying the most profitable customers and then implement an automated information system that maximises their retention and increased customer share growth over time.
CRM software systems are the most prescribed tool for such a task. CRM (Customer Relationship Management) is a customer focused business strategy on customer management, growth, retention and profitability. It is a purpose built and systemic process to help businesses implement customer facing business processes to better accommodate customers, grow customer relationships and increase revenues and profitability from those customers. Business software systems empower CRM business objectives and processes by leveraging software applications to automate customer facing activities and processes. In most scenarios, CRM applications integrate with back office sales order processing, inventory management, accounting software and enterprise resource planning (ERP) programs in order to deliver a 360 degree view of the customer relationship. This front-to-back office system integration significantly increases automation and efficiencies. CRM applications also enable business managers and decision makers with increased visibility to real-time information and permit them to better control of their businesses – without needing to hire more people.
For many companies in Russia experiencing growth or incurring business challenges in growing customer share, a big benefit of CRM software may be business process efficiency. Every manager and sales professional knows it is much faster to improve the bottom line by decreasing costs as opposed to increasing revenues. CRM software systems can help do both. The CRM software report from quote CRM shows that CRM applications improve the time and activities of nearly all customer facing staff. However, depending upon the CRM system and particular implementation goals, businesses will likely be different as to who are the primary beneficiaries of CRM system automation and efficiencies. For some businesses, the most benefited people are the users, such as customer support agents, marketing people or sales staff. Their real-time access to important information and use of software automation permits them to more easily achieve their stated objectives, key performance indicators and sales quotas. CRM applications often result in users becoming much more self-reliant and productive.
For other groups, the most valued rewards are achieved at the decision-making level. CRM systems empower knowledge workers with digital dashboards, operational metrics and clear business process visibility in near real-time. Graphical dashboards deliver detailed snapshots of operational results from customer service to marketing campaigns to daily sales achievements. Real time visibility into the business details is a major competitive advantage for today’s Russian executive. More so, with growing competition and rapid market changes posing constant difficulties and pressures – it is critical that Russian decision makers be empowered with information in order to make the best decisions. The real time visibility provided by CRM software systems gives a business new flexibility and new strategic advantage by permitting near real-time action and reaction in order to be proactive in meeting customer demands and growing the business. Customer Relationship Management software systems also deliver executives with competitive intelligence (CI) visibility, what-if operational modeling and the added time needed to outperform competitors.
How businesses plan and execute new market initiatives is another make or break business opportunity. Not that long ago, businesses had a limited number of methods to contact customers, measure responses and view trends. Today, there are multiple customer contact and distribution channels that with real-time reporting and analysis can be effective in measuring performance and making adjustments. Example include e-mail campaigns, nurture marketing campaigns, faxes, social CRM and social media, online media, print, network marketing, various Internet promotions, trade shows, VARS, distributors, seminars and many more. Complicating the go to market efforts, prospects and customers are overwhelmed with media noise and only select messaging touch points will be effective with each type of customer. Within a powerful in-house or on-demand CRM system, businesses can cut through the marketing noise, target specific customer classes, collect and group consumer or customer data and then design, test and automate marketing campaigns that are based on quantifiable analysis – resulting in the most cost effective marketing programs and highest marketing ROI.
CLOUD COMPUTING & THE INFORMATION TECHNOLOGY EVOLUTION
At the Putnam conference I had some conversations about IT's relationship with the growing concept of cloud computing and it's interesting to hear the vision that many business and IT people have of IT's evolving role. For many years IT staff have been treated like simple drones, or behind the scenes computer jockeys who simply implement the decisions made by other, more visionary people in the organization.
This patronizing opinion of IT staff has to change in order for business to get the maximum IT services value from their IT colleagues. It's very easy to internalize a view of the last-generation IT guy – the drone who selfishly guards his turf for job protection purposes, wants little interaction with the business people, and who is always in reactive mode fighting fires and arguing with users.
The next generation of IT role and delivery is a lot more strategic, and technology advancements such as cloud computing and software as a service (SaaS) are primary reasons why. IT staff now play a much more meaningful role in developing and executing business decisions – and according to Troy Miuse, CEO of Salesboom, they can do so faster and with less risk.
Miuse gets that IT staff, contrary to some people's view, are very creative – "they're like artists," he says. Miuse comes by that understanding from personal experience, having gone from civil engineering to programming because of the creativity IT offers and the personal gratification a well-delivered technology project can bring.
Initially, cloud computing and SaaS were framed in terms of reduced costs. "That was big mistake for the cloud computing industry," claims Miuse, because lowering costs suggests lowering IT head count. "That made IT staff enemies of the cloud because it was seen as something to replace them." Today, however, the clear upside of cloud computing has won IT over, because the technology allows them to deliver business solutions that make the business people more efficient. "Your business doesn't grow by getting rid of IT people – it grows by increasing top line revenues," he advises.
IT professionals have a more direct business impact in the cloud computing era because so many of the operational distractions have been removed, such as back-up and business continuity, hardware maintenance, software upgrades and so on, and because software customizations and integrations can be built and pushed out much more quickly than ever before. When you can get a business system pilot out in two weeks instead of six months, it's a lot easier to implement and mature the business ideas people in your company have and it makes IT staff look like heros for being able to bring them to life.
Many CRM application purchase decisions are still IT driven purchase decisions, which is a mistake. But IT's new strategic role in helping to select and implement new ways of doing business is growing, and it will bring new, creative minds to the process and a much improved working relationship with the business people.
According to official Russia data, the IT industry in Russia fell by 18% in the first quarter of 2009. The single greatest segment of decline was new hardware sales, followed by software and then IT services. The fall made up 37% as compared to the first quarter of the prior year.
Russia is certainly not alone in an IT industry being dragged down by a globally challenged economic recession. Even recognized software technology vendors such as Microsoft lack immunity against a global financial crisis. At the end of April 2009, Microsoft announced the first quarterly profit decline in over 23 years (by 5.6 percent as compared to the first quarter of the prior year). Microsoft is also shedding 5000 workers around the world. Chip maker Intel announced the same number of redundancies and other global and Russian technology businesses are following the same unfortunate cycle.
News from Russian members of the IT industry also lacks optimism or much to look forward to. The majority of Russian businesses have been shaken since mid-2008. A research survey conducted by @Astera channel among IT businesses in February 2009 shows that the slump in technology sales is experienced by 65 percent of the market members. Yandex and Mail.ru renounced their IPO conductions. The companies of Betalink and Cifrograd are teetering on the edge of bankruptcy. Several hypermarkets of the Mir chain were closed and significant financial difficulties have been detected in the Eldorado chain. Many IT businesses are planning to conduct the next wave of redundancy soon.
The Russian IT market has suffered a lot from the financial crisis. Information technologies provide the tools for solving business objectives and problems.
It has long been experienced that when Russian businesses are financially distressed they cut IT budgets more so than other industrialized countries.
As a result, IT investments of most Russian companies are incurring significant reductions. IT financed purchases are virtually stopped in their tracks and dead. Complex business software projects such as Enterprise Resource Planning (ERP) software or Customer Relationship Management (CRM) software implementations are in steep decline. Long-life projects are winding down or being cancelled and businesses are trying to extract maximum value from existing IT infrastructure. For most businesses, any new technology investments are limited to small scope and short-time IT projects which demonstrate low investment and fast payback. Changes in IT budgets change business objectives and executive teams are bracing for continued challenging economic times. Russian IT spending is turning to IT optimization. Businesses still have problems that must be resolved with hardware and software technology. When everything that can be cut is cut, it is time to seek new value from existing assets.
According to a 2009 IDC survey, investments on ERP business software systems in Europe and Asia will be more influenced by the economic crisis than in America. 21 percent of respondents indicated that in 2009 their financial investments in ERP software will be lower or much lower than in the prior year. The strongest influence of the crisis will be experienced in France; the lowest influence will be in Germany and Scandinavia and Russia seems to lie in the middle. Beyond just the reduction in new ERP software system purchases, companies with 2,500+ employees will have to sufficiently cut software and labor expenditures related to ERP applications. The situation in Russia is similar.
CRM software systems which are widely understood to help with keeping customers and increasing top line revenues - even in hard times - are also incurring decline. These front office business software systems automate the marketing, sales and service processes, but are often not interfaced with back office accounting systems or ERP applications and therefore lose some efficiencies.
Statistical information of the Russian developer of financial B2B software and company management systems Meta Quotes Software confirm the growing interest in short term, low risk and inexpensive projects that could help lower costs and optimize investments.
“Demand for business management systems has started to grow. These software products help to cut costs, and the interest in them from the business side is fully justified, says Gaines Chreis, the deputy CEO of Meta Quotes. True, recently there appeared to be a lot of companies interested in purchasing business management systems. Moreover, they have proper financial resources for this. However, the uncertainty about the future urges companies to be cautious and to postpone the introduction of new business systems. This is the situation all over the world, not just in Russia. However, the very fact that the number of such prospects in the client base keep growing makes us feel optimistic about the future. The crisis will be over some day and the interest in new technology will remain.”