Great Article on CRM Innovation by Gabriel Gheorghiu

I was impressed by a great blog entry about CRM innovation for innovation's sake on the TEC blog. You should have a look and check out some of the other entries. Great insight and information.


Beware of CRM Innovation for Innovation’s Sake

by Gabriel Gheorghiu


When I first wrote about the upcoming TEC CRM Buyer’s Guide focusing on innovation, I stated that customer relationship management (CRM) vendors can differentiate themselves from their competitors through innovation. But I also mentioned that innovative technology should not be embraced just because it’s new or cool, or  seems to bring the answers to your problems.

Innovation is great, but remember that innovative products can also bring challenges that your company might not be ready to deal with. So after all the excitement settles, here are a few things you should consider before adopting innovative technology.

1. New technology and old business logic can be a terrible combination. New programming languages and platforms can be used nowadays to create user-friendly interfaces, dashboards, and widgets to group and display information into a single screen, but this is not very useful if the data is not stored and managed based on business logic and best practices that make it easier to retrieve and analyze.

To avoid falling into the trap of acquiring new technology with old business logic, test it before you buy, and focus on the operations that you perform on a regular basis in your company. Sometimes the new interface is just another way to make the solutions look better, which may make it more user friendly and accessible, but may not help with important business processes and workflows.

2. Innovative technology doesn’t always fit well with your existing tools. If you found a great tool to gather customer feedback using social media, but you need to first export the results manually in order to import them into your CRM system and then analyze them in a separate BI tool, the whole exercise might not be worth the investment.

This pitfall can also be avoided by looking at the tools that the new innovative solution needs to integrate with. And start with the ones that are critical for your daily operations. Try to estimate the resources required for implementing and using innovative technology, as well as their costs, and compare them to the expected output. For instance, using a portal for account receivables may not help if your customers prefer to receive invoices by e-mail.

3. Innovative technology will always cost you something but return on investment (ROI) is always hard to calculate. Even when it’s free, an innovative CRM solution will cost you time and effort to test it, implement and integrate it, maintain it, etc. And it’s almost impossible to calculate ROI for innovative technology, because you don’t know what extra investments it will require in the future; it’s also hard to isolate the effects that innovative technology has on the efficiency of your company.

Adopting innovative technology will always entail risks, but you can limit them by using a phased approach: start by embracing the innovative technology for a few business activities that are important to you and only extend it to others if it proves to be really useful. A good practice is to first have a small team of motivated and enthusiastic people that will pilot such initiatives and then scale them to others if they prove to be efficient. Imposing the innovative technology at the enterprise level right away will most probably create disruptions, which will translate into indirect costs.

4. Innovation isn’t always a commitment for vendors. Your CRM vendor may not have innovation included in its long-term product map. For niche vendors, it gets even more complicated, because they might be acquired by larger companies, which will incorporate the solution into theirs and perhaps decide that future development does not necessarily focus on innovation.

Vendors with a proven history of innovation may be considered safer from this perspective, but the ideal way to address this challenge it to make sure that the solutions you use for CRM are flexible enough to allow you to integrate with others by adding or removing new modules and add-ons, develop new functionality, and keep the changes when your vendor changes its development strategy. Also, make sure you can easily get your data back when you decide to opt out of solutions that seemed innovative but aren’t meeting your expectations.

Embrace innovation, but never for innovation’s sake

A person can afford to spend hundreds of dollars for a new gadget just to be one of the first to have it, but companies cannot afford to invest hundreds of thousands of dollars and a lot of time in innovation without a strong motivation and analysis of the investments required. In other words, impulse purchasing of innovative technology will be much more costly for a company, thus the need for a more level-headed approach to innovation. Unless you are careful, you will end up investing a lot of time and money, not to mention the disruptions you may bring to your relationships with your customers and partners (e.g., some of them may not be ready or willing to adopt the innovative technology you find so great or others may not have the IT infrastructure to use that technology). Not to mention the false hopes that you can give them and the disappointment if you’re not able to deliver (e.g., if you build an online community, make sure someone will manage it, otherwise it can be worse than not having any).

Innovation for CRM, with its advantages and challenges, is described in more detail in the upcoming TEC CRM Buyer’s Guide, where I will be discussing cloud computing, mobile, social, and extended innovative technology for CRM. In the meantime, I welcome your thoughts on the risks of adopting innovative technology and the ways companies can reduce them.