How BPM Can Enhance the Eight Building Blocks of CRM

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1 Research Publication Date: 6 April 2007 ID Number: G How BPM Can Enhance the Eight Building Blocks of CRM Marc Kerremans, Jim Davies Business process management (BPM) should complement an organization's CRM strategy not hinder it. The traditional operational focus of BPM can be honed to enhance the customer-centric process and improve the customer experience. Key Findings By aligning your company's CRM strategy and BPM initiative with an emphasis on endto-end customer processes, you can deliver better customer value. The adoption of a BPM approach will change the nature and content of the requirements, as well as impact tool selection, and the following implementation will fit closer to the organization and its processes. Recommendations Look beyond traditional CRM applications to find the processes that are not covered in CRM systems that are still important to customers, such as an end-to-end client intervention. Plan to build BPM expertise in customer-centric process design to allow execution against a customer strategy and delivery of the intended customer experience. Reproduction and distribution of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Although Gartner's research may discuss legal issues related to the information technology business, Gartner does not provide legal advice or services and its research should not be construed or used as such. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The opinions expressed herein are subject to change without notice.

2 ANALYSIS BPM is a management discipline whose goal is to improve agility and operational performance. BPM is a structured approach that employs methods, policies, metrics, management practices and software tools to manage and continuously optimize an organization's activities. Gartner defines CRM as a business strategy that maximizes profitability, revenue and customer satisfaction by organizing around customer segments, fostering behavior that satisfies customers and implementing customer-centric processes. Most CRM initiatives focus on a departmental approach based on how a business sees its customers. In many CRM implementations, this leads to a single, fixed process hard-coded into CRM applications, with a limited end-to-end view of customer-centric processes. Old-style integration between disparate systems to create a "joined-up" or "end-to-end" view of customer processes is often complex, time consuming and costly to achieve. While CRM focuses on sales, marketing, service and customer-facing processes, BPM is far broader looking at all processes and applying approaches and techniques that work across the whole organization but without necessarily adopting a customer-centric approach. However, because of the obvious overlap between these two worlds, organizations should meld the two to ensure that they complement each other rather than compete. In 2001, Gartner identified eight essential elements for successful CRM, which we call the "eight building blocks" of CRM (see Figure 1). These include vision, strategy, organizational collaboration, customer experience, processes, information, technology and metrics. All eight are essential for successful CRM. Figure 1. The Eight Building Blocks of CRM Source: Gartner (April 2007) The vision, strategy and metric aspects of this framework can help determine what role BPM adopts within the business. BPM can then directly impact the other five elements. This alignment Publication Date: 6 April 2007/ID Number: G Page 2 of 9

3 will help ensure the successful execution of the customer strategy that spans the entire organization, not just in the sales, marketing and customer service departments. CRM Vision, Strategy and Metrics: Shaping the Role of BPM To improve its competitive position in the market, a business must understand how its value proposition differs from other companies'. An organization's vision outlines the what and why of a company's existence, whereas the strategy outlines how it plans to achieve this. This plan will provide guidance as to the role BPM must play out to help the organization deliver and track its intended customer experiences. CRM requires a tiered hierarchy of interlinked metrics to understand the success of the CRM strategy and to provide visibility into corporate goals. BPM provides the framework to accurately track the performance of the multitude of end-to-end operational (process) metrics and simplify their combination to create customer-strategic metrics such as customer profitability and lifetime value or retention, which in turn can roll up to corporate metrics such as market share and revenue growth. An example of this alignment of the BPM initiative with the CRM strategy is provided by a utilities company that, when confronted with the opening up of its market, extended its focus from delivering the safest drinking water on the market toward providing the best services around its product. This meant looking at its entire end-to-end customer processes in terms of effectiveness and efficiency. "Marshaling the Troops for Business Process Management: How to Get Their Attention" "BPM Maturity Model Identifies Six Phases for Successful BPM Adoption" "Using Key Performance Indicators to Facilitate Business Process Improvement" "How to Create a Powerful CRM Vision" "How to Develop a CRM Strategy" "Get the Best Performance Out of Your CRM Metrics" Execution against a customer strategy will likely require the modification and enhancement of the five remaining building blocks. BPM can have an influence on each. Valued Customer Experience Customers have an experience during every interaction, whether it is intended or not. This experience can be a one-off event or a series of experiences built up over time. Experiences have both rational and emotional elements and can involve all five senses. Many organizations focus just on the delivery of the experience but must focus more on its design and expectation setting as well as feedback and continual improvement. BPM has an influencing role across all three of these dimensions (before, during and after). It can help with expectation setting because of increased end-to-end process visibility. For example, a call center agent can inform a customer of the current status of a mortgage approval process, using information that traditionally would not have been available. Traditionally, when assessing this customer interaction (for example, via surveys) to gain more understanding of how the organization is being perceived by its customers, this assessment usually is limited to the direct customer interaction points. However, many of the issues related to this interaction are based on Publication Date: 6 April 2007/ID Number: G Page 3 of 9

4 operational inefficiencies in the organization, whereas customers view them as issues with a single process from their point of view. In applying the principles of BPM such as business process discovery, business process modeling and business process improvement techniques the end-to end process visibility is enhanced. Customer survey data that highlights an issue with a process can be seen and rectified rapidly and in totality rather than in a piecemeal fashion. The result of this is better experience delivery. Feedback about customer interactions not only enters the organization through the usual client interaction channels (for example, call center). Some of these interactions may well hit the organization through various operational activities (for example, feedback on financial settlement arrangements through the finance department, feedback to service people in the field during maintenance procedures). Both elements (expectation setting and feedback management) will require enhanced process flexibility capabilities that are offered by BPM. Because of the uncertainty and volatility in business conditions, customer experiences are not static and are constantly evolving hence, the ever-increasing demand for self-customization. Excellent and responsive processes, improved process effectiveness, and the right flexibility are all direct results of BPM and can provide the agility needed for changing conditions. "Achieving Agility: BPM Delivers Agility Through New Management Practices" "Manage the Customer Experience to Improve Business Performance" Organizational Collaboration Organizational collaboration requires an enterprise to align its resources and capabilities toward supporting a CRM strategy. It involves changing organizational structures, processes, metrics, incentives, compensation, skills, training and learning, as well as the enterprise culture. This building block dovetails with the methodology behind successful BPM. Culture is critical because BPM benefits greatly from employees that can accept enterprise goals as equally valid to their own departmental or functional goals. Leadership must see to it that even the staff incentive compensation plans do not interfere with this goal. BPM success requires a broader view from people and a willingness to accept uncertainty and even turmoil as the process view takes hold. The governance or decision-making process in this environment must also be well developed to consider multiple viewpoints and gain adequate consensus. As business seeks more-agile operations within a process-driven organization, new expanded roles and responsibilities for the IT organization and business staff will emerge. However, most implementations will involve a significant degree of change management, with communication, training and education programs critical to ensuring that the modified processes are adopted. "Business Process Management as a Discipline" "Role Definition and Organizational Structure: Business Process Improvement" "True CRM Demands Organizational Collaboration" Customer Processes Customer process redesign focuses on improving the customer experience to help meet CRM strategy objectives. It is an evolution of the efficiency-driven business process re-engineering era Publication Date: 6 April 2007/ID Number: G Page 4 of 9

5 and requires customer input to help prioritize direction. The extent of re-engineering may be significant, cutting across multiple departments and functions, and may take years. Consequently, customer-impacting processes often stretch far beyond the realms of a traditional CRM application. Figure 2 illustrates the incomplete process coverage by processes in a CRM application. Publication Date: 6 April 2007/ID Number: G Page 5 of 9

6 Figure 2. Incomplete Process Coverage in a CRM Application Unstructured Activity (Outside the Scope of the CRM Application) (2) Processes Triggered by Internal Process (3) CRM (1) A Single Customer Process (Insufficient for Most Clients) (2) Source: Gartner (April 2007) Unstructured Activity Publication Date: 6 April 2007/ID Number: G Page 6 of 9

7 From a client perspective, one customer process (1) isn't enough. Different customer segments require different needs and want to be served differently, requiring different processes. Therefore, the ability to create and maintain diverse process flows is an important consideration. During the execution of customer processes, a large part of the activities is about collaboration. Many of these collaborative activities are not well structured and usually emerge in a very organic way (for example, exception processes, conflict resolution and consensus approaches). These unstructured activities (2) are usually not within the scope of traditional CRM applications and therefore are not easily tracked, except that some occasions allow for the registration of a final outcome. Finally, not all customer processes are the result of direct customer interaction. Some processes can be triggered by internal operational processes (3). For example, maintenance processes of internal machines or external installations such as public water mains or telephone systems can have a serious impact on the services delivered to customers. BPM creates an environment in which this cross-departmental process view and customer process design and optimization are greatly simplified. Within BPM, the role of business process modeling is crucial in understanding business processes and setting the right foundation for any business process improvement. Therefore, organizations should invest in the necessary skills (business analyst) to be ready for a BPM approach. "Gartner's Position on Business Process Management, 2006" "Seven Steps to Customer Process Re-engineering" Information The creation, maintenance and deployment of accurate, complete and timely customer information and insight are critical for successful CRM. Customer data typically resides in numerous systems across the organization resulting in the need to embrace customer data integration (CDI) technologies and master data management (MDM) concepts to deliver a highquality operational single view of the customer. A BPM approach will contribute to CRM information capabilities, because it pulls together fragmented information residing in different departments, programs, databases and systems to enable end-to-end process execution and, thus, provide a process-based view of customer information. For example, in a public water company, when a customer calls to complain about a water leakage, the call center officer is provided with a complete customer picture delivered by: 1. The customer center application (client identification and history) 2. The situational plans from the GIS (mains types and underground situation) 3. Information from the operations maintenance system (indicating recent ground works and maintenance in the neighborhood) 4. Free capacity planning from the workforce management system (the availability of rightly skilled service workers) 5. Some financial information from the ERP system (payment situation of the client) However, BPM does not create a complete or "single" view of the customer, because there will often be data sources outside of the scope of BPM that are equally important, but it can simplify the role of CDI. Publication Date: 6 April 2007/ID Number: G Page 7 of 9

8 "The Convergence of BPM and BAM" "Customer Information and Insight Are the Lifeblood of CRM" Technology CRM technologies are viewed as the enabler of a CRM strategy. They range from niche best-ofbreed tools to broad multidepartment suites. The advent of service-oriented architecture and the emerging event-driven design paradigm are enabling organizations to implement more-granular and more-flexible processes more quickly, using BPM functionality. As competitive pressure drives the emergence of the real-time enterprise, responses to events in the market and, more generally, the business environment must be processed more quickly. Some CRM applications are heading in the same direction as BPM and are supporting the concepts of the business process platform (BPP). Some organizations, on the other hand, are configuring their applications on a BPM system. The BPP is a combined IT and business model that enables enterprises to accommodate rapid but controlled business process change through the use of integrated process composition technologies and the delivery of reusable business process components and their management. The emergence of BPP will have a serious impact on future packaged applications as packaged process component sets covering specific functionality disrupt the packaged application market. "Magic Quadrant for Business Process Management Suites, 2006" "Technology Decisions Are Key to Enabling CRM Strategies" "BPP Changes Infrastructure and the Business Application Vendor Landscape" "Delivery of Commodity Business Applications in a BPMS Does Not Mean You Should Customize the Applications" BPM and CRM are not isolated enterprise ventures. BPM as a discipline and as a technological innovation will increase the strength and relevance of CRM implementations. CRM, with its practical guidance on customer interaction, will solidify enterprise BPM efforts by providing a clear business vision. Enterprises that have not already done so should seek new ways for BPM to support the eight building blocks of CRM. RECOMMENDED READING "Gartner's Position on Business Process Management, 2006" "The Eight Building Blocks of CRM" Publication Date: 6 April 2007/ID Number: G Page 8 of 9

9 REGIONAL HEADQUARTERS Corporate Headquarters 56 Top Gallant Road Stamford, CT U.S.A European Headquarters Tamesis The Glanty Egham Surrey, TW20 9AW UNITED KINGDOM Asia/Pacific Headquarters Gartner Australasia Pty. Ltd. Level 9, 141 Walker Street North Sydney New South Wales 2060 AUSTRALIA Japan Headquarters Gartner Japan Ltd. Aobadai Hills, 6F 7-7, Aobadai, 4-chome Meguro-ku, Tokyo JAPAN Latin America Headquarters Gartner do Brazil Av. das Nações Unidas, andar World Trade Center São Paulo SP BRAZIL Publication Date: 6 April 2007/ID Number: G Page 9 of 9

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