Hosted CRM: headache or helping hand?

The evolution of CRM systems presents as many challenges as it does opportunities for organisations looking to improve efficiencies.

By Johann Barnard, ITWeb contributor
Johannesburg, 10 Feb 2014

The hype around the cloud doesn't always match an organisation's experience. This was the case for Darryl Thwaits, CIO of Tiger Brands, who recently took the hard decision to cut ties with a single hosted provider and appoint multiple providers, when the expected ease of the cloud suddenly blurred some very important lines.

Companies that believe they can force people down certain channels are fooling themselves.

Graham Mansfield, senior director for Middle East and Africa, Oracle

"We had quite a traumatic and dramatic IT change this year that has taught me that one must never lose control of one's environment," says Thwaits. "I regard it as my fault for not [being clear] about who owns the IP around our data and infrastructure. We had great difficulty determining [where those lines lay] because it was not stipulated in the contract in sufficient detail.

"Our current providers are now suffering, because I've insisted that IP and transition clauses are clearly stipulated in the contract. Fortunately, we transitioned without loss, but I also learnt that we need copies of all passwords locked away."

The Tiger Brands case is not an isolated case, he says, as he's aware of a number of companies that have been similarly burnt by providers that have disputed where the lines are drawn in terms of the IP related to hosted data.

In Tiger Brands' case, one of the solutions was relatively simple to replace when the e-mail hosting and archiving was moved to Mimecast.

While this service is not strictly a customer relationship management (CRM) service, it can play an important part in the overall CRM environment.

Christelle Hicklin, customer experience director at Mimecast, says e-mail has traditionally been the first entry point into the cloud for many organisations, after which they move more advanced services into a hosted environment.

The choice of these value-add hosted services that complete the CRM picture is still quite a tricky one for local companies, she says, even for CIOs who have already gained confidence in the cloud. "Those who are now starting to look at sales force management tools find they're restricted in choice of local providers, and so this becomes a more complicated decision. The problem is that international providers may not yet have an eye on South Africa because the adoption has been so low."

A growth market

Graham Mansfield, Oracle's senior director for Middle East and Africa, says the region is nevertheless showing significant activity in adopting hosted services, with CRM in particular experiencing something of a revival.

"We're seeing the customer experience being driven by social media; the customers are more powerful than they've ever been, and they're tending to drive the agenda," he says. "Companies that believe they can force people down certain channels are fooling themselves."

The problem is that international providers may not yet have an eye on South Africa because the adoption has been so low.

Christelle Hicklin, customer experience director, Mimecast

This customer mindset change dictates that they not only expect immediacy, but also commonality in information irrespective of the channel they choose.

"One of the things companies are looking for is a way to put in a defensible social strategy with their overall CRM strategy. If companies are not ready for this, they will lose out," Mansfield says.

He suggests organisations need to have a common set of information available, in real-time, across multiple channels.

Mind shift

This need for adaptation is not restricted to technology users, but extends to the providers.

One such provider that has built a significant footprint in the enterprise, due to its ability to integrate multiple processes across the business value chain, is SAP.

Wynand Roos, CRM solutions manager at SAP Africa, says the company has had to adapt to this new social environment ? largely through acquisition ? in a bid to retain customers.

"People are hot-wired for instant gratification," he says. This applies not only to organisations' end-customers, but also to SAP's customers, hence the introduction of new services and functions that can deliver results in a far shorter period than it has traditionally been known for.

"We've seen dramatic growth in our cloud business, although in some sense we sit with an older service mentality with new product sets. This means our services and partner channel have to change their business model: we have to think differently about how we achieve a faster time to value."

Roos suggests this need for immediacy is a potential pitfall for CIOs, who he believes have missed the opportunity to drive profit and efficiency. "The mandate for the different business owners is different: the CIO has to manage costs, while the marketing and sales directors have to make the numbers. Power has therefore shifted into the business and other directors are making these technology decisions, in many instances bypassing IT, which has a detrimental impact on both parties."

He says CIOs need to change their perspective and focus on driving profitability by getting closer to the business and understanding that their role is about enablement, if they are to find the best CRM and sales management systems that will satisfy the business needs.

Fear of change

Oracle's Mansfield identifies some of the hurdles to greater adoption of hosted CRM solutions as the cost of bandwidth, which is improving, but also fears around the security of off-site data storage and processing.

"Some of this is driven by legislation, but also, in South Africa, certain government departments are not allowed to use services hosted outside of the country. A lot of it was written before this era of technology and I think it needs to be relooked," he says.

"The biggest problem is overcoming the fear of change: people are used to touching and feeling things, but from an economic point of view and the speed of reaction to customer needs, these fears have to be addressed."

Instances such as that experienced by Thwaits can be avoided if detailed IP and separation clauses are in place to safeguard both parties, and would go some way towards helping IT executives gain greater confidence in this new world of hosted services.

First published in the February 2014 issue of ITWeb Brainstorm magazine.