The Basics of CRM
Outsourcing a system or buying software to host the system in-house, which is best to develop a CRM system?
Introduction
A saying in the business circles goes, “successful outsourcing enables organizations to focus on what they do best-accomplish their mission.” This has formed the basis of many arguments as to which is better over which, but can it be endorsed or refuted? However, it can’t be disclaimed that for organizations to “best accomplish their missions”, which in this case is maximizing their business opportunities, they must not only value their most lucrative customers but also react to them. Many companies react to CRM in varying ways, each with its own levels of success. Is there any more efficient than the other? Using George Day’s article, this article focuses on the factors that may compel a company to implement one system or the other.
Review
An outsourcing system has been described as contracting a third party to carry out various tasks of a company that in most cases would have been done by its in-house staff. There are advantages associated with this type of system. One is that companies are eased of the management issues that would otherwise have been difficult to them. Thus there are expenditure savings which implies that it is cost effective. Outsourcing may be turned to if a company doesn’t have enough skilled staff. The outsourcing system allows companies, more so the large ones, to concentrate on other company issues while other contracted experts execute its details. The contracting company is relieved a lot of burden because all security and technology updates are carried out by the hosting company.
On the other side, there are setbacks that are often associated with this form of system. One is that the link between the company and its customers is cut, a step that may severe long-lasting links with its clients. Then, the company that is contracting may not be in a position to run some of its issues as there would be holdup of contact or execution by the contracted third party (Kumar, 2003). There may also matters regarding the loyalty of vital information should the outsource providers choose to opt out of the contract if the company had become overly reliant on them. An example of companies offering hosted CRM is Upshot, Salesfroce.com and Siebel.
In-house CRM requires the concerned company to have staff that is programmers and coming up with software made by the company. This system of CRM may be cost effective to a company in cases where the company can be able to handle and apply the CRM without involving third parties. The company saves on money that would have been paid to the contracted company on monthly or yearly basis to cater for the licenses, more so with the unstable economic environment where money paid for licenses may fluctuate. Data is accessible easily without delay as all the information is on-the-premises and no time wasted on contacting a third party (Gerhard, 2008). Its setbacks include the requirement of IT skilled personnel. The company is required to invest heavily and it may be difficult to assess the Return of Investment (ROI).Where companies want their hosted CRM to run quickly, that is time efficient, hosting can be a good solution. They can be either have sophisticated customization or very limited options for customization.
However, there is more than meets the eye when developing the CRM. No matter the system of CRM development use, either hosted or in-house, there are determinants of either success and/or failure of these systems. In his article “Why Some Companies Succeed at CRM (and Many Fail)” George Day (2009) delves into the reasons that make some organizations become better at managing their customer relationships than their business rivals. These reasons, Day calls them “three approaches to CRM”; he reached unto them after conducting carrying out surveys and interviews on high-profile companies.
One is market-driven approach. Hereby, he suggests that the organization’s main focus is to give outstanding customer value using ways such as great service and a compliance of gratifying the client needs (CRM Industry.com). There is the considering of the company’s clients and perceiving them alike. Second is the inner-driven approach. Hereby, the company focuses on minimizing the inputs by improving the internal data, assisting the employees in closing deals more rapidly and operations that improve their market target. As Day notes, this type of approach focuses more on tackling the setbacks of the company instead of improving customer gratification. Third is the defensive approach. Here, the company implements means than gives it advantage over its business rivals. Even though there may be little merits to gain over their rivals, as Day notes, it nevertheless ensures a status quo.
In Conclusion, the system of the CRM, either hosted or in-built by the organization is vital in CRM. However, as George Day notes, there are various factors, which he termed “approaches” that can either vouch for their successful accomplishment of their business or lead to the failure: market-driven approach, the inner-driven approach and defensive approach. Thus on top of choosing either the hosted or in-built system for developing the CRM, the three approaches he suggested are of the same caliber as the system namely customer satisfaction, fast and effective carrying out of its business and gaining advantages over its competitors.
References
CRM Industry.com (n.d). Hosted CRM vs. In-House: Which Direction Should Your Company Take? Retrieved on October 21, 2011 from http://www.crmindustry.com/whitepaper04/index_ks.htm
Day, G. (2009) Why Some Companies Succeed at CRM (and Many Fail). Retrieved October 20, 2011, from http://knowledge.wharton.upenn.edu/article.cfm?articleid=699
Gerhard, R. (2008). Customer relationship management: a global perspective. Burlington: Gower Publishing Ltd.
Kumar, S. R. (2003). Customer Relationhip Management. New Delhi: New Age International.