Call Centers in the Cloud

Why run customer service in the cloud? Well, let’s rephrase the question in terms of business results. Namely, doesn’t every top-notch call center want to improve:

• Growth by cross-selling and up-selling customers with relevant offers?
• Efficiency by providing service representatives with a better picture of the customer?
• Customer satisfaction by talking with customers more knowledgeably, as well as with greater empathy and intimacy?

For example, you call to renew your car insurance policy. In the call center, the service representative sees not only your account history but also your current Facebook profile picture—a family photo—and notices you have a teenage son. He asks if you’d like to add him to the insurance policy as well.

Or say you’ve been in a fender bender and need to get your car fixed. When you phone your insurance company to locate the nearest auto body shop,  the service agent notices—again from your Facebook photo feed—that you have small children. She asks if you need car seats with your loaner, or if you want to use the ones you have.

In both of these situations, giving the service agent a fuller picture of the customer they’re assisting helps everyone and makes for a richer customer experience. These are just some of the benefits of moving customer service to the cloud.

Insurance Agents Relocate to the Cloud

Recently I asked, Why not run CRM in the cloud? (Just for definition’s sake, by CRM I refer not only to sales force automation, but also to marketing and customer service.) In other words, why not use software-as-a-service (SaaS) CRM applications, provided they deliver—as they typically do—more rapid procurement, easier manageability and a lower total cost of ownership, compared to on-premise CRM applications?

For many organizations, SaaS customer service applications will meet their needs. For example, Innoveer recently helped a property and casualty (P&C) insurance company deploy a SaaS-based customer service application for about 100 call center agents. This isn’t the largest call center we’ve ever worked with, and perhaps the SaaS application doesn’t have all of the advanced features that some of our bigger call center customers have, such as interactive voice response (IVR) integration or computer-telephony integration (CTI) support.

But from a functionality standpoint, the application meets all of the organization’s case management needs—from case capture and assignment to resolution and closure. Furthermore, thanks to having a good plan (because pursuing SaaS CRM applications without a plan is a recipe for failure), the P&C insurer quickly got and running.

What’s not to like about less expensive software that rapidly delivers business value?

Cloud-to-Cloud Integration Benefits

Another reason to run service applications in the cloud is for cloud-to-cloud integration. Many organizations, for example, would love to link their customer service platform to Facebook, so when a customer calls in, the service agent can literally see who they’re helping.

Well, connecting your SaaS customer service application to Facebook is much easier than integrating on-premise CRM with Facebook. (For example, salesforce.com has a Facebook connector; on-premise Siebel does not.) In fact, integrating any two cloud applications will always be easier than integrating an on-premise application to the cloud. With SaaS, one person builds a connector and thousands of people can use it. Whereas when integrating an on-premise application to the cloud, finding that economy of scale is, at best, difficult.

As the Cloud Expands, So Do Service Possibilities

Is SaaS right for all customer service requirements today? No. But that’s changing as the cloud (which includes platforms and infrastructure—not just SaaS) continues to expand.

In other words, as the cloud evolves, the attendant costs and benefits will drive more companies to host their call center in the cloud.

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Mastering customer service, regardless of whether it’s backed by on-premise or SaaS applications, first requires treating the call center as a strategic asset. In other words, drop the “necessary evil” thinking and remake your call center or contact center into a valuable corporate asset.

Until you get your customer service business practices and self-service sites in order, from a service standpoint also forget social networks. (For more on setting the right service priorities in a social networking world, see The Tweet Must Die.)

Finally, with online self-service success rates declining, maybe we should all just use Facebook for every online customer service interaction instead.

SaaS Seeking Large Enterprises

As the cloud expands, it's extending SaaS to even the biggest businesses. Photograph by doug.siefken.

Large + Complicated = On-Premise CRM?

Why not run CRM in the cloud? In other words, why not use SaaS CRM applications, provided they deliver—as they typically do—more rapid procurement, easier manageability and a lower total cost of ownership, compared to on-premise CRM applications?

Well, size may be one factor. Many people’s perception is that SaaS doesn’t work well for large enterprises. But in fact, we’ve found that SaaS solutions are quite a good feature and functionality fit for many organizations, large or small. As the list of salesforce.com customers shows, many heavy hitters are SaaS devotees.

On the other hand, SaaS isn’t the best fit for every organization, and especially large organizations with quite complex requirements. For example, we’re currently helping a large legal information services provider to adopt a new CRM system. Based on our recommendations, the company is implementing an on-premise application, in part because it needs to integrate its CRM software with various back office, order management and provisioning systems. The goal: to enable the company’s sales force to quickly move from quote to order, and then organize product delivery, all from within the CRM application. Building this is relatively complicated, technologically speaking.

Given that technical complexity, as well as the required integration, this type of project is not a great fit for SaaS—at least not in 2010.  I include that caveat because, going forward, we do see more projects of this nature—technically complex CRM implementations requiring advanced functionality and integration—being well served by SaaS.

Redefining the CRM Choice: On-Premise or SaaS

A little over one year ago, Innoveer released its guidance about when to use SaaS versus on-premise CRM software: The New CRM Choice: On-Premise Software or SaaS.

The gist is that in 2008, SaaS CRM applications didn’t offer as many features, or as much functionality, as on-premise applications. For projects with a greater degree of technical or organizational complexity, on-premise CRM software was the better choice.

But that equation has been changing rapidly—and will continue to do so—as cloud computing evolves, further extending SaaS and providing greater business benefits. CRM analyst Denis Pombriant explains:

The Cloud [has] three parts: infrastructure as a service (IaaS), software (SaaS) and, now, a development platform (PaaS). (…) The new ubiquity [of computing access] spawned by Cloud Computing — all three components — is spawning new, fast and, above all, mobile business processes, not just applications.

In other words, SaaS is now just an application layer—albeit with some minimal accompanying tools—in the cloud. To which the cloud adds an infrastructure layer (servers, storage and bandwidth from the likes of Amazon and Google) and platform layer (such as Force.com). Altogether, these layers can make any SaaS application much more useful and easy to work with.

Bigger Clouds, Greater Benefits

As cloud computing expands, it makes SaaS more extensible, useful and cost-effective. Hence my prediction is that SaaS CRM will evolve to become more deeply connected with the expanding cloud ecosystem. In other words, organizations of any size will be able to support much more complex business processes, at lower cost, using SaaS CRM applications.

In 2008, we said that “CRM projects must now begin by answering this fundamental question: on-premise or SaaS?”  Today, however, the question is simpler: Why not use SaaS? And as the cloud evolves, in another three or five years, will we even bother to ask?

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When weighing the pros and cons of on-premise versus SaaS CRM software, assess functionality requirements, organizational structures, costs and long-term goals. For more information, see our aforementioned white paper, The New CRM Choice: On-Premise Software Or SaaS.

Finally, want to know which SaaS CRM software is best? See our CRM Software Smackdown.

Why SFA Failure Rates Will Increase

CRM: A History of Failure?

Are customer relationship management (CRM) projects prone to failure? ZDNet reviewed analyst firms’ reports to chart general CRM failure rates for 2001-2009:

• 2001 Gartner Group: 50%
• 2002 Butler Group: 70%
• 2002 Selling Power, CSO Forum: 69.3%
• 2005 AMR Research: 18%
• 2006 AMR Research: 31%
• 2007 AMR Research: 29%
• 2007 Economist Intelligence Unit: 56%
• 2009 Forrester Research: 47%

Failure is defined broadly, covering projects that didn’t meet expectations (at best) or failed outright (at worst). Because these statistics come from different research firms using dissimilar research methodologies, you can’t accurately compare year-on-year trends. But to pick just about any given year, my immediate reaction is: There’s no need for CRM failure rates to be this high.

Will project success rates improve? In fact, I predict that sales force automation (SFA) project failure rates are going to increase even more. (The majority of CRM implementations today are for SFA.) Why is that? Simple: Companies are shooting without aiming, just like it was 1999 all over again. The only difference is that instead of implementing on-premises CRM software, they’re using SaaS.

SFA Success Starts With a Plan

What can companies do to ensure that their SFA—or broader CRM (encompassing not just sales, but also service and marketing)—projects meet expectations?

For answers, let’s flash back to 1999, when Lee Iacocca, then CEO of Chrysler, was still a well-known business figure. In those days, he talked a lot about planning as a way of saving money.

Here’s the great thing about planning: you don’t need to spend much money to get a great return. For example, say you spend less than 1% of your expected return on a one-week—or, if you like, two-week—exercise to identify the objectives of your SFA system, as well as what your two-year plan will be to achieve those goals.

As a result of having that plan, you’re probably five times as likely to achieve your objectives, versus just implementing this or that software. And really, what did the planning cost? If your returns are over 100 times that initial planning exercise investment, wasn’t the planning more than justified? In fact, why would you neglect such a foundational step, given the potential returns?

Is SaaS Short-Circuiting Our Brains?

If you follow the Freakonomics camp, you know that psychologically speaking, we humans approach financial matters not from a rational perspective—though we think we’re being objective—but rather with our emotions. And perhaps that’s the answer: SaaS offers the opportunity to have something up and running in days or weeks. It’s the latest and greatest. You want it now. Why bother pausing for even a week or two, to plan?

Just as we’re not naturally adept at rationally analyzing financial patterns, when it comes to CRM projects, we also need to check our innate tendencies at the door. Meaning, sit down and figure out what you really want to do, and how you’re going to do it. Unless you want to fail?

Planning Is Cheap

Based on our experience, and—organizationally speaking—having lived through the dot-com bust as well as the boom that preceded it, we’ve continued to emphasize this theme: Want to succeed? Then don’t just implement software. First, plan.

The good news is that over the past 12 years, we at Innoveer have codified what people should be doing in terms of their CRM planning, and have developed best practices to very quickly help people determine what their plan should be. So whereas a decade ago, planning may have been relatively expensive, today, it’s much easier and less expensive, because we already know the best practices for sales effectiveness, marketing, or customer service.

As a result, creating a plan doesn’t require starting from scratch. Rather, to create an SFA plan, one excellent starting point is to benchmark your company’s sales capabilities—in such areas as relationship management, territory management and pipeline management—against other companies to see understand where your organization excels or needs work.

We’ve found that companies often continue to invest in what they’re already good at. In fact, we recommend investing in what you’re not doing well, because that weakest part of your SFA—or wider CRM—program is what holds you back. Of course, you won’t learn that from just having SaaS CRM software. To find out, you need to build a plan.

Learn More

Innoveer offers a brief workshop to help organizations identify the cost, time and business benefits associated with achieving new and more advanced—meaning, more effective—SFA capabilities. During the workshop, Innoveer examines the five core elements of an organization’s field sales program, identifies the optimal enhancements, and produces specific, technology-agnostic recommendations for building plans and budgets, with detailed estimates of the required project time and costs to improve specific elements of your sales program.

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