Sooner or later a company head of whatever business size starts thinking about the optimization of managerial, administrative and other resources.   They particularly include business processes necessary for ongoing work, as well as communications between officers from different regions. This problem can be solved in several ways. For instance, by means of CRM (Customer Relationship Management) system implementation. CEO of Sputnik Labs Kirill Bulgakov told FM how implementation of such system can help to fine tune your business.

CRM means customer relationship management.  This term can be interpreted in two ways. First, CRM strategy is customer-oriented, in other words, it suggests turning from a product to a customer as a customer is in focus. In the case when customer base is too large the implementation of the customer-oriented strategy requires a certain tool – CRM system. The second meaning of CRM is a technology, software.  CRM technology represents up-to-date technical solutions to front office automation that ensure customer servicing of required quality, but at lower cost of interactions (adjustment of operating costs).

There are 2 basic CRM components:

Operational component – an automation of basic business processes (marketing, sales, service). Activities of these departments are closely connected, so to improve company performance each department officer should have a uniform image of a customer: have access to customer personal data, history of company-customer relationships (when the customer was contacted for the last time, what goods the customer bought, was the customer satisfied or not, etc.).

Analytical component – analysis of customer data and his/her behavior using Business Intelligence methods.  This system analyzes customer data accumulated in the operational CRM to define methods that will help to improve relationships with the customer in the future. The analysis results can by used for assessment of marketing campaign efficiency and planning, determination of the level of customer satisfaction, and anticipation of customer leave, etc.

Overall, CRM strategy helps a company to improve its earning power by retaining the most valuable customers and strengthening their loyalty, as well as by attracting new ones.  

Our CRM project in Investsberbank is a good example of how to implement a system supporting consumer lending business processes within the shortest possible time.   As a result, the launched CRM project was repaid in 2 months, and the bank became one of the five leaders in the consumer lending market.  

Despite CRM concept popularity, a few Russian companies apply it. Though, we should note that the number of such “bravehearts” is growing. Among them are primarily large enterprises. By now some industries have been using CRM technologies on a large scale as automated systems have become a crucial factor for their survival in the market.  

CRM consumer number one among all industries is a retail bank.   A retail bank today is a business totally built on information technologies, and its performance directly hinges on the effectiveness of the applied technologies.  As a customer is the highest priority to a bank, its main efforts should be focused on interactions with customers.    That’s why CRM is the key system in a modern retail bank.  Telecommunication sector seems to be fully prepared to implement CRM, too.

Tinkoff Bank may be a good example of why banks need to apply CRM. “Credit Systems” is a relatively new project of Oleg Tinkoff launched only after the creation of the powerful technological platform with Oracle Siebel CRM solution as a major component.

Many businesses in Russia are based on the product principle.  But today some industry leaders realize that they will achieve their strategic objectives, if they get competitive advantage not as a result of actual product sales, but as a result of their business and additional services oriented to help customer achieve his/her life goals whether short-term or long-term.  If the system is implemented successfully, such companies may well go far ahead of their rivals.

The second factor that makes companies turn to CRM is the supply conditions in the Russian CRM market. Complex projects on CRM implementation are expensive, and high availability solutions for mass consumers are absent.  

CRM developers

Below we give an overview of Russian CRM market.

The leading CRM products include:

1) Oracle Siebel CRM sustains the reputation of CRM leader and runs ahead of its competitors, promoting the newest solutions in Russia.   The hottest product in Russia was a vertical for financial organizations, implemented in banks and insurance companies.  

2) SAP CRM. All largest Russian enterprises (almost without exception) implement SAP R3 as a corporate ERP system. This is a natural reserve for promotion of CRM solution integrated with SAP basic blocks. Recently SAP has expanded its own customer base (where SAP implemented CRM in the first instance) and showed great appetite for the competitors’ areas, e.g. banks, where SAP R3 never had chances with its back office system.    CRM product from SAP has the strongest analytical opportunities.

3) SalesLogix – a popular product in Russia, implemented by the largest companies. In this country it has become a de facto standard of corporate banking. In the west this system is purely a SMB market player.

4) Microsoft Dynamics CRM marches through Russia with its sales continiously growing.

Rapid growth of the domestic market made many foreign manufacturers turn to Russia. For example: Pivotal (working projects in telecommunication sector), E.piphany (unfortunately, by now a brilliant marketing functionality of E.piphany has not been implemented in any of the Russian companies yet, though the product definitely has prospects in Russia), Onyx, Amdox (a strong position in telecommunication sector, for example, VimpelCom).

As for home developments, there is nothing similar to the functional of the west solutions, though first Russian products appeared in the market back in 2002.  Meanwhile, the niche of Russian developers is small business and the lower segment of the middle market thanks to the extremely low price. Let us give several examples of Russian and Ukrainian CRM solutions:

1) Terrasoft – the most successful domestic manufacturer with head quarters in Kiev (Ukraine). Thanks to the adequate marketing policy (Internet, partner network), the product has become popular and marketable, despite the obvious limitations and flaws of the first versions. Rather competitive price. It is recommended for small companies and local solutions in medium business (on the division level).

2) WinPeak – pleasant interface, limited functionality, modest popularity in Russia. Its niche is a small business.

3) SalesExpert – the first Russian sales management system, which customer base growth has slowed recently, perhaps, because it focuses on solutions for projects (ProjectExpert). The product is suitable for a small business and for sales departments of medium companies.

All largest domestic producers of the accounting software and ERP systems (1C, Galaktika, Parus, etc.) included CRM modules in its software application packages.  These modules can be recommended (to a certain extent) to the current users of the corresponding systems with little need for CRM itself.  At this point it would be reasonable to warn once again: Ideology of ERP system as accounting systems prevents flexible implementation of CRM functionality as one pushing from the tasks of interaction channels in its growth.  

CRM implementers

The implementers of CRM in Russia can be divided into three main groups.

The first group includes big domestic integrators who developed their own CRM practices. By no means all current practices can be called successful, and some of them were quick to close inglorious.  You can choose CRM practices of the big integrator, which practices you already used successfully, for example ERP practice. If the level of the latter is high and stable, the chances that CRM will be implemented effectively are rather high.

The second group is represented by the specialized CRM consultants.  They are true business pioneers, enthusiastic people who matched visionary qualities (understood that CRM has prospects) and capabilities to translate ideas into actions. Their number is limited, but their projects are the most successful.  This is a so called “source of manpower” for bigger competitors and customers.   Sputnik Labs belongs to this group. Today such specialized consultants lead the market, and the last brilliant results of Sputnik Labs in tenders confirm this.

The cost of the main project consists of license fees for software, costs of implementation and support. Popular foreign software product per one workplace costs from 1000 dollars (for medium companies) to 5-6 thousand dollars (for large business); Russian product – from 200 dollars (for small business) to 500 dollars (for the lower segment of medium business). Project implementation cost keeps on rising. Compared to the costs of software the ratio varies from 1:3 to 1:5 in favor of implementation costs depending on the “gap” between standard and expected functionality as well as project size (in large projects in terms of workplaces implementation costs per one workplace reduce – an economy of scale).  

In absolute figures average cost of one day of a consultant work in the market is 800 dollars and more (for foreign solutions) and 500-600 dollars for Russian software.

Thus, implementation will cost about 200-400 thousand dollars to a medium company and 1.5 mln and more - to a large company.   It should be understood that underfinanced projects usually fail.

About CRM weaknesses

As any information system, improperly implemented CRM either “dies” (at best), or adds new operational problems leaving set tasks unsolved, and becomes another system, into which the staff "squeeze" something.

Besides, as CRM is implemented in a front office and is vulnerable to front office staff motivation, unsuccessful project can deteriorate performance and make sellers run out of the company (turnover in sales department).

And the last thing. Wrong access settings can lead to a theft of valuable contact and financial information of customers.

Here I would like to describe companies that had better not turn to CRM today: 

- companies in industries with underdeveloped competitive environment  (in Russia they are: public institutions, municipal facilities, health, and education. One of the industries that is nearly prepared is energy segment for civil services)

- companies, which state of readiness for implementation requires not fully functional CRM, but CDM system (Customer Data Management) – a system that automatically supports completeness and consistency of customer data and their use in all information systems of the company (e.g. the largest quasi-public banks and insurance companies)

- small and medium business: CRM solutions for this segment suggest high availability and real market pressure. Today there are no high-availability solutions for small Russian firms (they will appear in 2-2.5 years). Execution of full implementation projects for small and medium business is beyond the means.

About the company

Ilgiz Valinurov, CEO of Business Connection recruitment agency

According to a wide-spread opinion, CRM is a system of sales automation. However, it is primarily a business philosophy of long-term relationships with a customer.  The automation will be possible and will prove justified, only if company management places relationships with customers in the forefront.

Three main categories of company personnel can benefit from CRM as described below.  As for management, CRM improves control of a company, problem-solving, contribution of each employer, and storage of all corporate information.

The second group includes sales managers and is thought to be the main consumer of the product. Their primary tasks are transaction management, adding interactions with a customer to a customer’s history and control of work with customers, and CRM helps them to solve all these problems effectively.

The third group is represented by the rest of the company staff as CRM ensures easy intra-company communication and quick document circulation. In the case of indirect employer participation in sales transaction (accounting, logistics), it enables to get on-line information about the project status, and no briefings or personal communications are needed.

Federal companies with regional networks implement CRM more often and more eagerly than others. For them it is a guarantee of business control and control of sales in regions. Small companies sometimes do not get mature enough for business automation, though without it they grow slower.    

In recruitment business CRM is considered a standard and a sign of an industry leader. Business Connection repeatedly implemented CRM.  At first it was a development for a Russian company. 

Then we continued with an international product - LOTUS NOTES DOMINO. For a training line of Business Connection and conference department we implemented Terrasoft CRM. Now we are looking for a new product for the recruitment department. This is related to our large-scale plans of region development, which will require more expanded system functional.  

Olga Zlobina, Deputy Chairman of the Board of SDM-BANK

First of all let me note, that SAP BI and CRM are absolutely different modules with fundamentally different objectives.  SAP BI objective is a system of financial statements analysis, and CRM is a system of customer relationship management.  

SAP BI is an automated management system of company financial and other results. In essence it is a business intelligence that helps not only to prepare accurate and trustworthy financial statements on basis of available data, but also to make forecasts, plot graphs and find out dependences.    

Most companies prepare their financial statements in Excel. However as business grows this program merely do not cope with its tasks. For example, for Excel 60 thousand lines is a ceiling, though business specification requires much greater number of lines.  Besides, you need about 30 "aunties" to perform this task in Excel, while in our bank management accounting is prepared by only two people, and on the 10^th of each month we have reports of the head office, all departments, affiliates and also consolidated reports.  

Note that regional network of the bank includes 8 affiliates, it is one of the 30 largest Russian banks in total volume of operations, and it is one of 100 largest liabilities holders. At the moment the bank is serving 10 thousand business accounts and 100 thousand individual accounts.  With over 30 thousand operations per day on the 10^th of each month it does have a balance sheet, a profit and loss statement and a cash flow statement prepared for the head office as well as for all departments, divisions and affiliates. By the 25^th the management no only manages to study the report in detail, but also to get answers to any question.

Moreover, with SAP BI unlike with Excel you can select 13 types of specification with one click up to a concrete division, customer or even operation. Such transparent detailed report is a powerful internal control system of company finances.   

By the 25the of each month reports are available both from the financial responsibility center and from the costs centers. We get about 50 indicators of the bank performance in all aspects.  They include average rates, average commissions, and average labor intensity, etc.

Thus, in the shortest possible time we have a complete picture: unaccounted costs, overexpenditures, rate changes, etc. I have not seen a similar system in the market yet. The main benefit is that SAP BI immediately shows what is happening to finances and customer base, and with earlier information we are fully armed and ready to act to any changes in customer behavior.

We are able to assess the performance of each department, division, affiliate, income from one customer, from a group of customers, efficiency of the financial responsibility center, up to such figures as amount of fuel per kilometer traveled, amount of paper used per a number of operations.

We have access to a certain customer’s balance sheet, a profit and loss statement and a cash flow statement.  And all this is done only by two people.

Oracle Siebel 15-18%

SAP 9-11%

Sage SalesLogix 5-6%

Microsoft CRM 6-7%

Others – less than 4%