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From ERP to CRM: Exploring new profitability potential

CRM, ERP October 12th, 2009

In the mid to late ’90’s, I started my career as a business analyst and project manager for a boutique ERP consulting firm. We specialized in helping manufacturing and distribution companies streamline their business processes and implement supporting technology applications.

The years leading up to Y2K were busy as companies prepared for the millennial changeover. Uncertainty was widespread. Rumor had it that legacy systems and applications might potentially explode, stop working, or at the very least invoices, purchase orders, sales orders and the like would be generated as if we had been transported back to the pre-industrial era with William McKinley as our president (1900).

Fast forward a few years, and fortunately the world did not collapse. All was well in the world and the exuberance of a new millenium was upon us. During that time, thousands of companies had successfully transitioned the operational side of their business from spreadsheets, standalone database silos, and paper file systems to a fully integrated ERP system that functioned seamlessly across the enterprise: Demand planning, production scheduling, inventory control, multi-site distribution, purchasing, cost accounting, and the automatic financial tracking of each individual movement of goods had transformed operations at thousands of SMBs and positioned them for their next phase of growth. You may find your company in a similar position today.

The birth of CRM

During that same era, in the mid to late 90’s, there was also a growing new phenomenon capturing the attention and imagination of forward thinking enterprises that had already streamlined their back office, and were looking for more opportunities for competitive advantage. Pat Sullivan and Mike Muhney had pioneered contact management systems with the creation of ACT! in the 1980’s, and companies like Siebel Systems and SalesLogix (also created by the co-founder of ACT! - Pat Sullivan) were helping sales organizations become more efficient and productive in their sales efforts.

With the intention of finding new ways for our customers to profit, my company (at that time, an award winning, globally recognized ERP consulting firm) asked me to be part of a team that began to find compelling ways for our customers to benefit from these emerging Sales Force Automation / Enterprise Relationship Management solutions.

In 1998, I was beginning to read some articles and see potential, but the concept of CRM was relatively new to me. While excited about new opportunities for innovation and growth, I was thinking, “We can already forecast and enter sales orders in our ERP system - how much value can this additional module add?” Perhaps you’ve had similar thoughts or questions.

So how much value can CRM add to a Small to Mid Sized Company?

Over the last decade, my eyes have been opened to the transformative power of CRM. I’ve had the privilege to work with dozens of companies who have benefited from the profitability potential that CRM truly does provide. During that time, Sales Force Automation has matured into Customer Relationship Management; a customer centric approach to business, executed by the strategic alignment of people, business processes, and market leading technology that enables new value creation opportunities for companies large and small. To this day, CRM is still revolutionizing how companies drive profitability through their organizations.

CRM is not simply an add-on module for your ERP system, but potentially a huge profit driver for your organization.

In an independent study, Nucleus Research found the following financial benefits for those deploying Sage SalesLogix CRM in their organization:

Increased sales force productivity between 7 and 15%.
Reduced marketing spend between 8 and 20% while increasing the overall productivity of the marketing staff by 5 to 12%.
Were able to reduce the burden on the customer service staff, resulting in an increase in productivity of between 8 and 12%.
Managers increased their overall productivity between 5 and 8% using the standard capabilities within Saleslogix.

Consider the impact of those numbers for your organization. Using the low end of these numbers represents a potential impact of several million dollars annually for the typical Small to Mid Size Organization.

In addition, what was once considered a differentiator is now largely being recognized as a necessary initiative and toolset for those who want to succeed in the most challenging marketplace this generation has seen. A 2007 AMI Partners study showed that companies who had implemented a CRM solution outperformed companies who had not by 44% (measured by revenue per employee).

At Blytheco, we regularly discuss how we can and are offering more and more value creating solutions for our customers. We see daily how streamlining processes, reducing adminsitrative waste, and making businesses more efficient in the back office (ERP) and front office (CRM) save our customers hundreds of millions of dollars each year.

A main differentiator between the benefits of ERP and CRM, is that a CRM solution offers not only the power to streamline processes, and thereby reduce costs, but also drive additional revenue through:

More targeted marketing efforts
Increased lead conversion rates
More productive sales people
Better customer service
Better analytics and visibility to key metrics

A CRM deployment can not only help save time and costs, but drive significant revenue increases through helping enable your organization to:

Find and acquire the most profitable customers more quickly
Keep those customers, creating additional revenue, and helping to turn them into fans who happily refer other customers to you

If you’ve been looking for new ways to increase your profitability, or have been considering a CRM solution but weren’t quite sure where to start or how to measure the potential benefits to your organization, let’s have a short conversation to explore whether it makes sense for your team to take a closer look at CRM.

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