When ERP is not enough

Enterprise Resource Planning systems, or “ERPs”, dominate everyday activities in a variety of productive organizations: orders, contracts, production plans and other necessary material is produced in seconds or minutes. After processing the deliveries to end up in the correct addresses and the bills reach their recipient. Cash flows in and the business roars nicely. Many companies swear that they couldn’t do without their magical system.

Due to the nature of ERP systems, they are also quite meticulously used solutions: if someone starts using the tool with not much effort and preparation, the processes become paralyzed.  Bookkeeper-like precise information is a prerequisite for all activities.

Meticulously used, critical system is an attractive platform to extend to be used by something else than just boring productive and economic activities. In fact, operators in this very sector encourage aggressively to this: one promises comprehensive customer care and the other wants to give you a platform that agilely adapts to the entire organization's development. Alluring, isn’t it?

ERP opens a window to your client?

General criteria for the CRM tools development include improving the customer experience, increasing the customer acquisition and making additional/ cross-selling more effective. They are all good reasons, and on this day also they are also on the lips of everyone providing solutions in this sector.

A CRM module cuddling in the arms of ERP seems like a perfect solution: customer data is directly available, as well as a complete purchase history - even up to the item level. Now let’s identify customers and make deals!

After a short euphoria in the beginning, the everyday life begins to unfold: the customer trees are built on the terms of goods and the euro logistics, contact staff is mainly non-commercial administrative people and the sales process is tuned entirely from the perspective of supply chain forecasting and manufacturing. In this phase a developable Sales Manager thinks: “No worries, we’ll just tune this a bit to fit us better." Next observation is often that Sales Manager is more tunable than the system. Customer structures in ERP systems are almost sacred: they are not to be altered or levels added - other activities could be jeopardized at once. It is a same thing when it comes to the sales process: the information required by the system is obligatory regardless of its effects on the sales.

The encore in the disappointment of ERP-driven CRM is generally achieved at the point where marketing and sales should be able to talk to each other with newsletters, web analytics and the rest of today's standard equipment. "No problem," says the ERP dude, “you just import the e-mail addresses to Excel and then to the mailing system you use!" Well, 2010 is still far away from smooth compatibility. As a result, things certainly are exported to excels - but for a quite different reason. In the end, the spreadsheets that have their own lives, form a shadow ERP and shadow CRM. And that is efficient and effective, isn’t it?


Tool is a tool

Nikolai Gogol has allegedly said that it is no use to blame the looking glass if your face is awry. The same rule applies to CRM in the arms of ERP: do not blame ERP for not being a flexible tool for customer work.

ERP approach is inward-looking, and with a good reason. Its mission is to spur productive activities and supply chains so that the right things face the right resources at the right time. In this xx the customer is only an offshoot - a necessary evil in the end of a long chain. And to make sure that the end of the chain gets what it deserves, must customer data be in tip top condition. And specifically this goes for the supply chain. Everything else is irrelevant. The structures are inevitably reticent, because otherwise the production process could be unduly challenged.

The business ownership of ERP systems is allocated almost exclusively to the production, financial or other relevant administrative director. This will also bring a perspective tied in their functions in all development: process and economic optimization often overdrive several more vivid needs.

So it is not ERP’s fault that it does not fit in the purchase behavior of a new customer, or in the happy cooperation within the customer interface functions. Both of these are external issues and therefore already conceptually very unfamiliar to most ERP systems. ERP is a great tool for organizing the operations and production, and it is where it is the most beneficial.

Window, door or even an entire wall open to your client

The difference between the ideology of ERP and customer relationship management can easily be seen, when they are used in parallel. And when I use the word "they", I mean, of course, a solution from each system that is made for exactly to this very purpose. In the parallel use the customer view of a CRM solution opens up in a whole new level: how the customer works, who makes the decisions, what things are important and which are not. Customer behavior is changing from the component-level purchase history to tracking of interest and the need. It results to a completely different picture of the customer and its future than ERP, dragging history behind, could never tell you.

CRM development happens in the light speed when compared to traditional ERPs. New address next to the existing ones? No problem. A radical reorganization of the client structure based on the new strategy? Piece of cake. The new monitoring instrument for marketing? Yes, bring it on! Only sky is the limit when the platform is flexible and without the burden of everyday activities.


Right tool for the right need

Few of us would try to dig a pit with a rake. They would rather run to a local hardware store to buy a shovel. The same attitude should also be maintained when considering business information systems: the right tool for the right need.

CRM module that seems inexpensive on the list, can become company’s most expensive investment mistake, if it does not bend to a form we want to bend it. Small fixes done with Excel spreadsheets are mostly a vast waste of working hours and knowledge leading to frustration.

The key question before the acquisition of the CRM plug-in or system is: What are the challenges it must answer to? What do we need to understand about our customers? How does the customer wants to work with us? How do the knowledge and action need to travel between marketing, sales and production? What can change when it comes to customers, customer structures and operating models? These four questions will certainly help to shed light on what is really needed.



Nordic Waterproofing



Vine's customer Nordic Waterproofing was faced with ERP’s inadequacy for customer relationship and marketing management and started using Vine CRM. Read the whole story about when ERP is not enough:


Tommi Oksanen

Kirjoittaja on asiakkuudenhallinnan ammattilainen, jolla on kieli poskessa mutta sydän paikallaan.

The author is a CRM professional with tongue in cheek but the heart in place.




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