By Louis Columbus

Extroverted, loud and direct, your sales force is a living case study about whether CRM drives sales excellence or not.  The high achieving sales people - I like to think of them as sales warriors because the really do fight to win business in every day - are the lifeblood of any company.  They bring the voice of the customer into any company.

Conversely anyone who has ever been in engineering, marketing, product development or product management realizes that there is a constant tension between what sales wants and what any given company's products and strategies can deliver - obviously that's because no product or service can be all things to all people.  Sales warriors learn how to sell using the knowledge of the entire organizations and instead of whining about what a product is or isn't find creative ways to sell using all the knowledge in other teams.

To net out the pros and cons of sales, the best companies I have ever worked for or tracked for analysis are driven by sales and have a passion for measuring results.

CRM: Unfilled Promise or Over-promised solution?

With such a push to make their processes even more efficient, enterprise software vendors aim to sell the concept of giving everyone the chance to excel with their CRM systems.  Automating processes only goes so far however - and where the automation ends, the person's ambition, drive, intelligence and talent begins. 

In watching the best salespeople work, here is what becomes apparent:

• Relationships rule over process.  Call this heretical versus the latest push to make all things process-centric in enterprise software, yet it is very true.  Travel with your company's best salespersons and you'll not see rigorous effort at synchronizing with mountains of data in the CRM records but a genuine concern for their customers - the relationships they have are why they are successful.  So fundamental and so true - but so overlooked in the haste of making processes the core focus of re-engineering any company.

• The best salespeople have simple, manual systems that have relationships in the center, not just transactions.  Again, this is clear in the highest achieving sales people I've met.  They know how to track relationships already and don't need a state-of-the-art CRM system to do it.  They could use help with the drudgery of entering names, doing mailings and tracking changes electronically to customer status.  Enter integration.

• Integration rules. As you travel with any of the top salespersons the biggest complaint you constantly hear is being too disconnected from corporate.  In pricing, in customer shipment data, in backlog reports, in just about anything sales reps struggle to stay informed.  So instead of needing a CRM systems with enough features to land an astronaut on Mars they just need one simple to use that melds to their relationships instead of transactions.

Bottom line:  Salespeople who excel have found a passion in enriching their customers and the relationships they have with them.  They honestly care about the people they serve, and that is much more powerful than any compensation program.  If CRM systems are to grow sales warriors the systems have to find a way to engender trust and respect in selling relationships, not just pure efficiency of transactions.

By Louis Columbus

Home-grown ERP systems are the Oscar Madisons of the IT world.  Grizzled by years of service yet reluctant to change, set in their ways, and unwilling to embark on even a modest upgrade path, home-grown ERP systems are seldom changed by the revolving door of CIOs that look to attach their own legacies to these massive home-grown systems.  More often than not, the home-grown ERP system changes the CIO.  All the complexity and lack of clarity makes some CIOs yearn for hosted applications to increase responsiveness to prospects, channels, customers, and the precious installed base manufacturers are striving to capitalize on.  CIOs in search of closure are driving the adoption of hosted applications.

Hosted channel, CRM, analytics and OnDemand initiatives from Siebel and IBM are showing usability improvements, alignment of workflows to how companies work, decent analytics that actually tell you how your strategies are doing, and best of all, can be turned on and off like a utility.  Several of these applications have streamlined, efficient interfaces, forsaking the "more is better" mantra of previous CRM applications. The extreme make-over hosted CRM applications are getting would satisfy Felix Unger on even his most perfectionistic of days.

Hosted CRM and Legacy ERP: A Partnership Of Necessity

Legacy ERP systems change gradually over time, reflecting shifts in priorities at only the strategic level. There's no sudden and dramatic changes here; only a gradual shift, over time, as the company's business model requires extensions to support mergers & acquisitions, re-vamped production strategies, and getting back in touch with what is many times the forgotten installed base of customers.  In fact, so many people like to point out the war for ERP revenue raging between Oracle and SAP - but the alternative to do nothing at all and tweak the home-grown ERP system one more time is the most potent competitor of all.  Systems that have code structures that resemble the perfectly random and chaotic nature of the character Oscar Madison in The Odd Couple are all too commonplace. Spaghetti code with no comments saved more jobs from outsourcing in the last five years that any presidential candidate could ever promise to.

Countering this false sense of complacency brought on by "let's tweak the old system one more time" strategy is the fact that CIOs are now called upon to be part of revenue producing strategies.  It's becoming a higher priority than ever for CIOs to manage their organizations to goals that contribute to top-line revenue growth. The urgency to deliver results, over and above adding in new features to legacy ERP systems, pervades many industries today, manufacturing being the most prevalent. 

IT Is Creating More Oscar Madisons

Given increasing pressure CIOs are under to deliver results, a major ephinany is emerging: many customer-facing systems including CRM, quoting, pricing, and even call centers that are critical for top-line revenue growth are not integrated enough to deliver value - and worse yet, some are not working at all.  It's too strong of a trend to ignore. Systems installed in the 1995 - 2000 timeframe to streamline and strengthen being customer driven have outlived their usefulness - already.  It's because these customer-facing systems have slowly turned into Oscar Madisons. 

Sure, the vendor promised integration and best practices - but many companies were so quick to solve the pain they stopped short of the vision.  The result: more Oscar Madisons to take care of, which is job security for IT but crippling to top line revenue growth as executive management, sales, marketing, channel management and even operations scramble to overcome these weaknesses.

Hosted CRM Cleans Up

Too many CEOs and CIOs who just five years ago or less bought into a customer-facing sales and service applications have already seen their vendor of choice go bankrupt, be acquired, or both while at the same time discovering the systems that promised so much delivered too little.  These customer-facing system failures are making for a very fertile market for all types of customer-facing hosted applications, CRM included.

Hosted CRM is now getting used as a "clean up" strategy to get companies to the competitive position with customer-facing applications they had previously thought they had. 

Summary

Companies using legacy home-grown ERP systems continue to resist the most radical alternative of all, rip-and-replace to a vendor-based strategy.  Instead the costs of a periodic rejuvenation - a mild makeover of their ERP systems - are most cost effective and easiest to manage. 

It's the customer-facing systems that are in need of the biggest makeover of all.  Hosted CRM, quoting, pricing and services applications have proven that delivery method is incidental to value - and their predecessors are in many cases not delivering on the committed performance from even five years ago or less paving the way for hosted CRM applications to flourish as CIOs are asked to deliver support for top-line revenue growth now.

By Louis Columbus

The most dangerous aspect of commoditization is illusion companies and industries have that it could never happen to them.  Somehow companies reason, they will be different - their differentiation is solid and sustainable.  CRM appears ripe for this illusion mainly due to the self-important mantra of delivering a single view to the customer and uniting demand chains - all noble causes in the name of service to the customer - but all susceptible more than ever to falling into commodity hell.

The term "commodity hell" is attributed to a quote from GE's Chief Executive Jeffrey Immelt, who said that managing innovation better may be the only way out of the "abyss called commodity hell."  Mr. Immelts' quote is combustible enough to ignite more than enough arguments inside CRM vendors, system integrators and the manufacturers and service companies they hope to sell to. That quote must start more debates than any other, especially when roadmaps and future product plans are at stake.

Reality Check Please

Here's a reality check: commoditization happens everywhere, and if it didn't CRM would most likely not exist today.    So before you just toss aside the concept of commoditization happening to those other companies that don't have differentiated products, stop and really think:  if your company is a CRM vendor, are you really generating anything new or just recycling R & D paid for from the IPO from several years ago?  If you're a manufacturer, when was the last time you refreshed a product roadmap not just for the analyst and press tours but because you really had something new?  If you're basing your future on your past you're setting yourself to compete only on price.

Avoiding The Death Spiral

When pricing becomes the only differentiator any industry, including CRM, has entered a death spiral.  Ironically when you look across many industries, commoditization didn't have to happen so fast - look at the InnovCenter from Eli Lilly as a case in point, or the ability of Southwest Airlines to commoditize itself.

There's a group of researchers, analysts and authors doing some great work on how to avoid commodity hell.  One of note is Dr. Peter Keen, Professor at Technical University of Delft, University.  You can find his website here.  You'll definitely want to catch his next book, titled Let Go to Grow, Not Just Survive, now in press.  He's posted chapters here.   His insights into how to avoid commoditization are worth checking into.  I've read his latest book draft and it really got me thinking about how his concepts apply to CRM. 

CRM's Redemption From Commodity Hell

Clearly the path for many areas of CRM is precisely mapping to what Dr. Keen's research shows is a sure bet to bring on commoditization.  These include:

• Cost reduction has become the mantra of so many best-of-breed and platform vendors alike, hastening commoditization in the process.

• Protecting systems by making them more rigid and even proprietary-like.

• Resorting to price first and usability improvements last as a differentiator.

• Bloated, unresponsive applications that have lost touch with the business processes they were meant to streamline

Dr. Keen's research includes many other symptoms of commoditization that map to the CRM landscape.  The good news is that in his research he's found approaches that entire industries take to alleviate commoditization hell.  Here they are, and if you think about it, there are some aspects of CRM already on the path to these improvements:

• Commoditizing your company before the industry does it for you. Southwest Airlines is an example of this - where the company has standardized on the Boeing 737 so all training, maintenance, repair and overhaul, and pilot and crew rotation is commodity-like in approach.  The result: Southwest's market cap as of March 31, 2005 is $11B, leading all other airlines worldwide.  To see the magnitude of their market cap strength in that industry check out theYahoo Finance Industry Center for Airlines here. Exploiting standardization is the best defense to commoditization.

• Proprietary interfaces of all kinds kill companies.  This is one of the points that Dr. Keen excels at explaining in his book, showing the costs of being proprietary relative to open.  Examples include how GSM/SMS standards commoditized the European mobile phone industry, how USB is commoditizing the digital camera markets, and how 800 number standards have made global call center outsourcing possible.

• CRM must become a coordination technology, not just a reporting and analytical one to survive.  The starkest examples in Dr. Keens' work is that when IT infrastructure gets disconnected from business strategy - or worse when business strategy is only allowed to venture as far as IT lets it - commoditization happens fast. The implications for CRM are clear - without being a true coordination technology - commoditization is quickly around the corner.

• Componentizing CRM is critical for its future.  The era of composite applications and the platforms is already developing full-force, and it may be the best hedge to commoditization that CRM has. Siebel's UAN, SAP's NetWeaver, Microsoft's .NET and IBM's WebSphere platforms all point toward componentized applications that can resist commoditization through unique value as part of a broader value set.

Summary

It's not enough anymore to just have CRM systems align with your core processes - that is almost a path to commoditization in and of itself.  The fact is CRM is on a collision course with being commoditized - unless the coordination aspects of these applications get stressed more than their carrot-and-stick role in so many companies they get used for instead - and componentizing their functions to align with growing areas of a company instead of being perfect systems of record for the past.  In the end CRM will have to commoditize itself to survive.

By Louis Columbus

There's a major disconnect between the expectations and results companies are getting when they re-align processes aimed at serving their customers. Several manufacturers spoken with have bought into the process re-design vision, but report the effort to turn the benefits into reality is much more difficult to attain than originally believed. 

There are several reasons for these unrealistic expectations taking hold.  First, nearly every manufacturer that has complained about a lack of progress didn't really have a solid handle on the lost time, dollars and productivity attributed to a process being broken in the first place.  Take quote-to-order for example.  Manufacturers who have not seen re-designing this process take off didn't really have a handle on the cost per order to begin with, and in the rush to automate the process of creating quotes, just sped up the mistakes the company was making to begin with.  Without the metrics in place to measure it before the process redesign, the company didn't know where to start modifying the process to make it more efficient.  Second, many manufacturers get swept up in the tidal wave of process centric messaging, promises, and even case studies, but don't really ever get a roadmap defined of how they can accomplish the same result.  Third, companies are failing more than ever before despite the best-intentioned guidance about best practices being the path to profitability from vendor and system integrators.  What's missing is the concept of best practices being a benchmark instead of a roadmap that must be adhered to in lock-step precision.  There are many more failures out there of process redesign than anyone would care to admit.  Let's take a look at how you can sidestep this problem by learning from other's mistakes.

Culprit #1: Untrustworthy data kills every strategy it touches

Ever since line-of-business managers climbed into the driver's seat of IT spending, process-centric messaging spread faster than Google.  Today these companies are disillusioned after having spent in some cases over $3.5M in licenses and services for channel programs and have little if anything to show for it.   When line-of-business managers started dictating how much was being spent and on what, everyone else in both the companies looking to solve problems and the people selling to them couldn't get enough of metrics, analytics and performance management.  But in that rush to measure so many companies measured the wrong things and as a result build quoting, channel management and order management strategies on the shifting sand of incomplete and inaccurate data.   

Culprit #2: Don't buy the process-centric hype; any lasting result requires hard work

For companies facing a crisis on the customer side of their business there's a strong tendency to buy first and ask questions later.  The promises of quick returns from redefining processes is alluring to a company in trouble with its channels, customers and prospects.  What gets lost in the rush is the hard work of really understanding why quote-to-order is broken for example - and if the quoting process is even needed still in the order workflow.

Quickly layering on CRM, whether its hosted or licensed or both, without first cleaning up the many processes that touch a channel or customer, is a recipe for disaster.  The rationalization is that once the software is in, users will be weaned away from the manual process of entering orders, or that quotes and special pricing requests will be moved to the new system at the end of the quarter.  Too often the software is found to not be as efficient as the manual process in the first place, because the root cause of error-filled order entry or incomplete customer records never got addressed in the first place. So many companies find they do more orders, but just get to error counts earlier in the quarter.  That's a dubious accomplishment for a $1M+ investment in license and services in many instances. 

Culprit #3: Best practices is a benchmark not a roadmap

Now saying all this was driven by making a technology-centric purchase is a copout, what really happened is that these failed CRM, channel management and order management implementations are best-practices-gone-bad poster children.  No vendor will ever admit it, but a best practice for one vendor in a specific industry doesn't come close to fitting the requirements of the customers' competitor in the same industry.  The fact that applications are now more modular gives vendors the chance bring selective tools to the biggest pain points that manufacturers have.  Yet it's no excuse for selling a vision that best practices can be pumped out like Happy Meals when in fact each implementation needs the speed, strength and precision of a sushi chef.

Here's a reality check: best practices are far more valuable as a benchmark instead of a roadmap.  There is no such thing as one-size-fits-all best practices.  That has to be a core assumption about any strategy and ensuing software implementation before a dime is spent. One-size-fits-all best practices is an oxymoron.

Creating a process Roadmap

The following steps highlight what companies are doing that do get the highest potential returns from redesigning their customer-facing, order management, and quoting processes:

1. Prioritize the processes that touch your customers and channels the most. For larger manufacturers these will be in the thousands.  Typically order capture, order management, lead management and escalation, and pricing requests are the most costly processes and the ones where improvement is most needed. 

2. Spend time redefining the processes internally first.  Before ever meeting with a vendor, integrator or consultant see if you can fix the processes internally first.  Many times order capture for example can be fixed by re-defining roles in Sales Operations or even Sales management.

3. Processes that require automation need to be prioritized on a roadmap. If the customer- and channel-facing processes you have isolated need software to automate them, first create a roadmap.  Prioritize based on the financial pain of each process, estimating the lost revenue and increase in costs associated with each.

Which Processes Pay?

It's troubling to find so many companies not really getting the results they expected after spending so heavily on customer-facing strategies.  There are however processes that have proven themselves over years of research.  These include the following:

%B7        Automating special pricing requests.  There's ample evidence from the results of high-tech, financial services, and discrete manufacturing companies that automating special pricing requests pays off.  Of the manufacturers I have spoken to, taking this process from being manual to automated and adding rules to approve pricing requests by reseller level pays the highest dividends of all. 

%B7        Quote-to-Order Processes Integrated To Manufacturing And Supply Chain Systems. There are dozens of software companies that have come and gone that just offered one aspect of this equation: some have just offered the quoting system; some just the integration; and others, just the ERP or supply chain system.  But for the company using these, when all three work in synchronization with each other, more accurate quotes are produced and cost per order is reduced.

%B7        Cross-selling is more than jamming as many products as possible on a website.  Many manufacturers have learned this lesson the hard way, selling related products at a loss due to the blended margin being below their company's SG&A requirements.  Up-selling and cross-selling has everything to do with a deliberate strategy of managing margins and attach rates.

%B7        Service strategies are neglected yet have the greatest potential.  Get beyond the RMA process and the pile of returned products in the corner of your Operations Department.  Just getting RMAs automated has a proven payoff, and warranty reimbursements can make or break an entire channel strategy.  It's because warranties are often the cash that gives resellers the liquidity to re-invest in their businesses.

%B7        Order cycle times always have room for improvement.  Going through the steps in this article could show areas for improvement for order cycle times.  This is however not a quick fix when it comes to software.  Integration between order capture, order management, supply chain and fulfillment systems is a must-have to drive order cycle times down.

Bottom line:  Many CRM and sell-side implementations fail, and no one wants to ever admit they have them. It's because these companies have bought into a best practices vision that isn't accurate or that the processes that were broken to begin with have just been accelerated.  Stop and look at the processes first and be selective about applying software to your biggest CRM and customer-facing pain points. 

Summary

There's an undercurrent that's starting to tug at even the best manufacturer and distribution channel relationships.  It's the ability to set and manage expectations based on supply chain visibility.  Distributors, dealers and channel partners don't call it that, they call it vendor responsiveness when it happens, and being blown off when it doesn't.

The ironic aspect of this topic is that while many manufacturers insist they have the ability to make and keep commitments based on visibility into multiple layers of their supply chains, their dealers and distributors report just the opposite. 

Supply Chains and The Domino Effect

Visiting with auto dealers to gauge if Available-To-Promise (ATP) and Capable-To-Promis (CTP) was important to them on fleet sales proved positive: these dealers only order from manufacturers that can deliver ATP and execute to the date.  So fundamental but so true; dealers only trust manufacturers that have supply chains in focus, making and keeping commitments based on solid knowledge of their supply chains, production scheduling and order fulfillment. 

When these dealers sell fleet vehicles, mostly to small and medium businesses to either replace or grow their own fleets, the ATP date from the manufacturer is the same date often a small business gets to expand and grow.  The Domino Effect, if you will, of an accurate ATP date means the small business now has additional revenue generating assets on the road - a critical link to their future growth.

Conversely not delivering to an ATP date kills the pipeline of new revenue the small business was betting on and forces them to repair damaged trust with their customers.  This Domino Effect of commitments in fleet sales has a lasting effect.  One manufacturer wedged into a tight rural market by having superior knowledge of and control over their ATP dates versus entrenched competitors.  The result: 30% of sales are with the new manufacturer, from offshore, due to better supply chain visibility.

Don't be Afraid To Tell The Emperor He has No Clothes

For manufacturers that are getting beat in these fleet sales channels, the disconnect between corporate and the field is noticeable and significant.  C-level executives, insulated from the channels by consultants and system integrators that profit more when the world outside is seen as in OK shape but internal systems need massive re-working, are hesitant to tell the CEO that basically the emperor has no clothes.  Not wanting to tell them their channels are in complete disarray - or worse not knowing it - costs the companies millions in lost opportunity.  All because no one has the courage to say that for all the internal system spending the fundamental systems that matter to channels and customers are broken and need fixing now. 

Some manufacturers in this state, when you confront their C-level executives about how badly broken their supply chains really are, say "Our business model doesn't require use to deliver Available-To-Promise" and that the supply chain is not important to their channels.  In those words is the unraveling of a channel strategy. 

The reality is that for every manufacturer that relies on channels that ignores providing supply chain visibility on especially complex manufactured products, the greater probability their competitors are.  So it's the choice of each manufacturer, but given how small businesses purchasing fleet vehicles to grow their own businesses key off of ATP and other commitments from channel partners, manufacturers need to realize that by enriching the channel they are enriching their customers - and that being myopic and falsely secure in corporate, away from the channels, is an illusion.  The reality is in the channels.

Time To Make Your Channels Stronger

It used to be just a matter of margins and Market Development Funds or MDF for short, to keep a distributor, dealer or channel partner satisfied and selling your products.  No more.  Competitors want your channels and will deliver advanced systems that give dealer reps the assurance that ATP, CTP and other indicators of delivery dates from your supply chain are real, and can be counted on. 

If you have invested in delivering this to your channels, great.  You just made a massive debit in your credibility account with your channels.  If you're ignoring it, go visit your lowest performing dealers and see how many of your competitors' products are selling there and why.  Chances are it's because the dealers have learned to trust an emerging competitor's visibility into their supply chains and have the track record of making and keeping commitments to prove it.

By Louis Columbus

By Tom Nies

Burning ambition, that desire for the recognition of one's peers and the sense of accomplishment that comes along with it, is a driving force among almost all high achievers. Zealous souls usually want to make an impact and to be appreciated as being among those who truly do make a major difference. Recognition and appreciation are dear to almost everyone.

But, after all of this has been accomplished, motivations quite often change; or maybe better said, become more refined and sophisticated. After having achieved success, a sense of responsibility, of duty and of obligation to others usually increases. Full maturity typically brings with it an ever-increasing desire to assist others to accomplish their hopes and dreams too. "Doing Well By Doing Good" is an idea that never seems to go out of fashion.

Someone once told me that I seem to be "by profession a capitalist; by disposition a humanist." This may be a good synopsis. Of course, all of this means that I intend to continue to do all that can be done to help Cincomers all over the world to grow and be as successful as we are able. We've kept "the pedal to the metal" for 36+ years, and this approach has served us all very well. We don't expect to ease up in the future.

By Tom Nies

Entrepreneurs are a key driving force of our economy. They help to create the jobs that deliver value, that deliver paychecks to people to raise their families, send their kids to college, buy cars from the local car dealer, etc. Entrepreneurship, for many, has now become the new "Great American Dream" - that is, to become an owner, and so more able to shape and control one's own destiny in today's globalized world.

-- In the United States, about 600,000 to 800,000 new businesses are started each year.

-- Seven out of 10 new jobs are created by entrepreneurial businesses.

-- The National Science Foundation, U.S. Department of Commerce and others have reported that since World War II, "smaller entrepreneurial firms have been responsible for 67% of all inventions and innovations, and 95 percent of all radical innovation in the United States."

Three factors are among those that contribute to entrepreneurial success: passion, luck, and a willingness to risk everything.

How do I define passion? The willingness to suffer and endure pain for one's beliefs. Any business builder must possess passion for what he or she does if success is to be achieved. Without the willingness to endure very hard and uncertain times and to defer gratifications, there will be little chance of success, and little reason for others to follow.

Luck, I believe is everywhere, although not everyone sees luck when it beckons. But, an entrepreneur does recognize luck when it happens and seizes lucky moments to advance. The word entrepreneur means "to take an opening." And the word opportunity suggests an open port, or portal, for success.

One simply cannot overestimate the importance of being in the right place at the right time. But finally - and this is what separates an entrepreneur or job-creator from a job-seeker - is an entrepreneur's willingness to risk almost everything - comfort, income, home, health, and yes, even family involvement, to seek opportunities, to take openings, and to satisfy as yet unmet demands. Success demands action. The greater the success, the bolder the actions required. Courage, creativity and commitment are three essentials. While one must be willing to lay it all on the line, one must also have these latter-mentioned attributes as well as quite a few others.

Luckily, successful entrepreneurs quite often feel a responsibility to encourage entrepreneurship not only in the United States but also throughout the world.

That's why in 2004, Cincom launched its "Encouraging Entrepreneurship" program. Through this program, we've become a founding sponsor for the Global Initiative to Advance Entrepreneurship or GIVE. This is an organization that is focused on advancing society everywhere and on reducing global poverty in the developing world through entrepreneurship. In the United States, we've begun to sponsor programs at colleges and universities, such as business plan competitions and fellowships to further encourage entrepreneurship.

I came across this in a hospital in Concord, NH.

The tone of this sign really puts things in perspective when you consider the uphill battle we face as professional salespeople.  The hospital is the customer.  I believe they have a view of salespeople that many others have as well, but don't express it so openly.  Others may choose just not to buy from us.

Two questions: (1) How did things get to the state where salespeople, as 5% of the working population of the U.S., are categorized like this? (2) If we deserve this treatment, what can we do to change the view that many have of us?

Another thing to consider. A few months ago, I was honored to be a judge at the National Collegiate Sales Competition. I was awed by the professionalism and competence of the 100 or so college students who participated. There are apparently some 40 universities that have a course of study (or courses) in professional selling. But not enough. I quickly looked on the websites of the prestigious "B" schools. In fact I searched for the words "sale" and "selling" and only found those in the body of marketing courses. Graduates of most business programs these days have had not one minute of education or training on sales. Why is that?

We seek ways to differentiate ourselves from our competitors in the eyes of our customers.  Perhaps it's the basics on which we need to focus, with integrity and competence being at the top of the list.

By Louis Columbus

Every day, manufacturing companies write their own futures.  Many do this formally, creating strategic plans and aligning resources to these long-term efforts.  Yet in the many moments of truth with customers, resellers and channel partners, the future is indelibly written by the service, support and guidance customers receive every day. 

It is in these moments of truth with customers where truly great companies emerge.  Reaping the benefits of meeting and exceeding customer expectations is where sustainable growth comes from.  With that growth comes confidence, and a passion for service.  Managing customer expectations in these thousands of moments of truth each day gives companies freedom to excel in their core businesses even more.

If you're a publicly-traded company those expectations percolate to both investment and industry analysts, eventually influencing your stock price and valuation.  The best manufacturing companies look to these moments of truth as the building blocks of a strong reputation with the investment community and for future growth.

Expectations are a covenant with your customers

Changing a company's culture to give front-line employees the tools necessary for delivering excellent service and capitalizing on these moments of truth starts with these strategies: 

Invite your channel partners and top customers to the development table.  These forums are called Advisory Councils, and are very useful for validating product roadmaps, reviewing potential channel strategies and making complex product decisions based on how it will affect your channels and customers.  In one Advisory Council and entirely new software application and service strategy was created based on reseller and customer feedback.   

Don't ignore website-based e-mail and content from customers.  Don't ignore e-mails and content from your prospects and customers visiting your website.  At the very least get a list manager that can provide an automated response.  The goal is responsiveness and recognition that your company has received the message.  World-class manufacturers are also using linguistic models to look for patterns in the thousands of messages and comments in this data.  Consider unleashing your IT team on this task; there are several excellent companies offering software for this linguistic analysis of customer's unstructured data.

Be your own customer once every three months.  If you're a manufacturer selling to consumers, be a customer every three months.  See what they have to go through from an ordering perspective, and be sure to go back and check your orders' status, call and see if the same message comes from your call center - in short exercise your own systems as a customer would and look for areas of improvement.   

Get Impartial Win/Loss Reports.  Regardless if you have an indirect or direct channel strategy, selling to chains and distributors or directly to large accounts, you need to have impartial and honest win/loss reports to improve.  Too often manufacturers do these on their own and accounts lost to competitors either are too polite or just too busy to give the honest feedback needed to grow.  Get an outside firm that specializes in win/loss analysis to provide this information for you.  On the positive side, you'll see where you are excelling and may not have known in, and on the negative, places where you have fallen short of expectations.

Index bonuses and compensation to customer satisfaction.  You have your choice of a carrot or stick strategy when it comes to making the moment of truth with your prospects and customers.  Of the two, the carrot of excellent service as recorded in a customer satisfaction survey is longer lasting than any strategy of negative reinforcement.  Get this data monthly and make sure it's prominently displayed.  Set reasonable targets and index bonuses and salaries to customer satisfaction.

Grow Services Champions.  Practice these steps long enough and add your own, and soon you will have leaders emerge from Sales, Service, Support, Operations and nearly every other customer-facing organizations.  Turn these people into champions and make sure their exemplary performance to customers is visibly recognized. 

Bottom line: Manufacturing's greatest challenge is to link the myriad of activities today with the growth required in the future.  While strategic plans are useful roadmaps, it is in the many moments of truth every day where world-class manufacturing companies are built.

By Louis Columbus

In discussing weight or golf scores it's easier to exaggerate the positive than to openly share the truth.  The same holds true when it comes to sharing the truth about SAP ERP integrations.  Let's face it, integrating to any ERP system is hard work, but SAP integration around meaningful business processes can become much more challenging than integrating to even a back-office production scheduling system.

For one global aircraft manufacturer the promise of SAP integration turned into a nightmare - and from their pain some great lessons can be learned.  At the core of this manufacturer's problem is the need to integrate front office systems (quoting, proposals, pricing, order capture and front-end order management) by integrating to an SAP ERP system.  Big promises were made and not delivered on, leaving this manufacturer with re-work on over 70% of customized product builds.

Here are several key take-aways from this manufacturers' experience.   If you're looking at any front-office application that requires SAP integration, slow down and complete due diligence on these factors and then move ahead.  It's tempting to have such a high sense of urgency to get "done"; but as this manufacturer learned, "done" never happened because SAP integration was hyped and not delivered. 

Here's the checklist:

Qualifying SAP Integration Expertise

• SAP Internet Pricing and Configurator (IPC) Expertise Is Essential For Any Customer-Facing Strategy. Arguably the core of any complete CRM implementation on the SAP platform makes use of the IPC including mySAP.com deployment strategies in progress.  If you have IPC installed you need to ask for and get a demo with live data staged in a non-production instance of your SAP platform. 

• Create a replicated set of SAP data and qualify vendors with that test region. Replicate live SAP system data during final vendor qualifications and benchmark vendors on their ability to illustrate integration.  Manufacturers have found Gamma Enterprise Technologies' InfoShuttle product useful for this purpose.  Check them out if you are doing much testing of SAP integrations.

• SAP integration expertise must be global. Here's the challenge on this point: the manufacturer found their platform vendor had SAP integration references in just one country - just one - and the SAP instance did not serve business processes outside of that company.  Result: After further investigation when their own SAP integration didn't work they found that the customer had written the adapter themselves and resold it to the vendor.

• "How did you recruit your ABAP programmers?" Ask the CTO of any vendor who is pitching SAP integration to you this question and see what you get as a response. 

  India is snatching up ABAP programmers just as fast as signing bonuses can be EFT'd to signed candidates' checking accounts. 

• Visit the top three SAP integration references in person.  The reason you want to do this is to actually see the applications running, using SAP part numbers, interacting with SAP Bills of Materials, and most importantly, interacting with SAP's Internet Pricing and Configurator (IPC) module.   

• Balance of references on mySAP and legacy R/3 platforms.  When you are creating your short list of CRM, channel management, order management or pricing vendors to work with, this criteria will narrow the field fast.

Manufacturers from heavy equipment to consumer products face a daunting task of trying to find out which best-of-breed vendors have true SAP integration expertise.  Sure, the core functionality of these best-of-breed vendors sometimes can't be found in the ERP vendors' suites - but the Achilles heal of many of these companies is their ability to handle ERP integrations.  Be sure to qualify any vendor thoroughly on the claims of SAP integration especially before going forward.

By Louis Columbus

Summary

The move by database developers to include object-oriented programming languages has changed the scope of application development and is acting as a catalyst for Web Services development. Being able to define stored-procedures in object-oriented languages is leading to an entirely new approach to creating workflows and supporting transactions in manufacturing and services industries. Despite the availability of object-oriented programming languages however, many systems still rely on file server architecture, two-tier, or n-tier architectures. Web Services, many internally developed, show what object-oriented programming tools can deliver.

For many manufacturers this starts with tying together supply chains with more than the equivalent of hand-built adapters that cannot scale across all the transactions a manufacturer needs them to. Many manufacturers are holding onto their hand-built adapter strategies to integration, just as Web Services are starting to prove themselves. The bottom line however is the Web Services work for integration today - yet are still unproven for completely replacing ERP systems that include complex distributed order management, supply chain synchronization and customer fulfillment.

What's Really Happening In Web Services Today

Forget about the commercials and hype showing Web Services as an all-knowing and all-seeing platform that can tell any salesperson at any time, from anywhere the status of orders in a remote location of Europe for example - just the infrastructure investment to support this level of responsiveness would dwarf the entire IT budgets of many Fortune 1,000 companies.

The reality is that there is much more crawl-walk-run and testing going on than global best practices at mobilizing a single system of record for example. In the research completed for this article and in the multiple manufacturers spoken with, there's more of a focus on test-driving Web Services today than en masse development.

Several companies spoken with are concerned more with security than time and cost efficiency savings; the fact that according to AMR Research there is less than $100,000 spent on pilot projects underscores the fact that Web Services gets used more for integrating databases together and less for transactions outside an enterprise. Despite the hype surrounding Web Services as the Next Big Thing, it's clear from watching the adoption of companies using this approach to managing database integration that it takes on average 2 years to make Web Services fully operational, specifically including five Web Services or more.

Additional insights into the true adoption of Web Services are provided here:

• 75% of all Web Services projects are purpose-built for database and data warehouse integration projects.
• 65% are developed to support integration to legacy or mainframe applications.
• 60% are developed for internal portal integration efforts with legacy and typically three or less databases internal to the company.
• One manufacturer of complex pumps and valves focused on headcount reductions equally $500K the first year only to find that the two engineers that were going to be let go were actually needed for integration work for the Web Service aimed at streamlining complex order capture. The net result: the Web Service worked and another Application Server engineer needed to be added to the product.
• One manufacturer of computer equipment uses Web Services to integrate their order capture and pricing systems that are part of their SAP ERP instance - and the result is the ability to publish out price updates to worldwide channels within 48 hours. The Web Service will also add Oracle pricing integration - yet that will be over a year away and require months of internal development.

ROI for Web Services Is Still Elusive

Of the manufacturers who are using Web Services, ROI is proving elusive to quantify much less track over time. Because of the majority of companies developing Web Services do not do ROI analysis before starting development they often have high expectations that are often not met.

Because of the majority of Web Services adopters not defining ROI targets, the majority rely on headcount reductions for show ROI. This is clearly a cop-out because cost reductions and greater efficiencies taken together should deliver gains in revenue either directly as the result of serving customers more responsively or streamlining workflows.

Second to headcount reductions, companies are looking at reduction of the costs of integration, data entry, and reduction of Value-Added Network costs as the approaches to show positive ROI for internal Web Services developments.

Service-Oriented Architectures By Any Other Name

According to the vendor community today, their collective vision says that a grouping of Web Services actually creates a Services Oriented Architecture (SOA). Despite the fact that the concept of an SOA is met more with criticism and doubt than Web Services, it's becoming clear that Web Services as a database integration platform are starting to pay off.  That sets the stage of an SOA platform for the early adopters. The disparity however between the best practices and clarity of the EAI vendors including BEA, Siebel and platform vendors including SAP NetWeaver are portraying and the actual results of companies adopting SOA strategies is narrowing.

Especially in services industries there is a strong focus on creating five or more Web Services to streamline integration points in financial reporting and human resources applications. The fact is many IT organizations have an SOA and do not really know it. Abandoning the concept of using hand-built connectors and adapters for more scalable platform has delivered SOA years ahead of the hype.

Databases that have programming extensions for HTML, HTTP and XML extensions have been added to these company's platforms and today they are serving as the foundation of an SOA. Put aside the hype of SOA and start looking at your existing databases to bring in programming extensions and access points for web-based development languages. Manufacturers who have relied on ODBC either as a transport mechanism or for the basis of their adapter development, it's critical to remember that the convergence of object oriented programming languages to include C# and J2EE is making the storing of objects - not just data - the heart of what it takes to move into Web Services that matter.

Where SOA Is Working

Just forget about the hype of SOA and see it as a platform for ensuring integration with the many systems that are toggled together with hand-build adapters and connectors that don't scale. The IT organizations getting the best results today are doing the following:

1. Take order management trouble spots and apply integration to streamline these workflows. Web Services show the highest ROI when applied to transaction workflows - and thanks to the development of more object oriented programming tools - databases can handle this.

2. Look at how to use Web Services to create an order state engine. Being able to track an orders' state at any point in time makes more sense as a Web Service, especially if an organization relies extensively on precise delivery dates or high levels of customization in product designs.

3. Web Services starts with time savings not headcount reductions. The fact that so many early developers on Web Services are relying on headcount reductions to provide a positive ROI is a misnomer; better to trim time from any order management process over simply automating an internal function. Making order management and transactions the center of Web Services development shows ROI.

4. Security concerns addressed. The ACID-compliance test of any Web Service is the managing of a stream of transactions. It's not enough anymore to simply tie together content and present it in a portal; that is Web Services 101. The true test of Web Services is in automating order management and transactions.

Summary

To a large extent database architectures are additive. Don't however let the hype surrounding Web Services or even Service-Oriented Architectures (SOA) make the concept of fixing order management for example turn into an internal project - as many projects originally defined as Web Services turn out. Use the problem areas of order management as the basis for testing Web Services development in your own organization.

By Tom Nies

Some years ago, at a Cincom sales meeting, I happened by chance to find that one of our staff was a former Olympic swimmer. Of course I was interested in the Olympic swimming training. But, in our discussion, I was surprised when the Olympic swimmer told me that her training time and the emphasis spent in mental training exceeded her time spent in physical training and the time "in the pool" combined. When I expressed surprise at this, she told me that, "Like all sports at top levels, the differences in performance can become more mental than physical." She explained to me that the mental focus on each swimming stroke must be extremely precise because the slightest breakdown would cause a temporary delay, or inefficiency, which among the world's best swimmers could usually not be overcome.

Of course, we all know this to be so in many other sports. But never having been a swimmer, I was amazed that even here a sport that I had always thought was so much dependent on physical skill and technique demanded top mental conditioning, and the right mindset as well. So, I thought that this article might be especially interesting to you. What we believe determines what we will become; how we think determines how we will perform. That's the message we hear over and over again. And the greater the achievers are, the more those truly top-performing will stress these very same points. So, there must be validity in opinions so universally shared by great champions everywhere.

Recently I read a newsletter by Dr. John C. Maxwell that provided five thought-starters it would do well for us all to ponder over:

1. Everything begins with a thought. Every great invention, every technique, every conversation, every leadership practice and every bit of personal growth starts in someone's head.

2. What we think determines who we are, and who we are determines what we do. What kind of person do you want to be? What do you want to accomplish in your life and career? Are your thoughts paving the way for you to achieve those goals, or are they getting in the way?

3. Our thoughts determine our destiny, and our destiny determines our legacy. That's pretty sobering, especially for those of us who have already passed life's halfway point. The good news is that, no matter how old you are, it's not too late for good thinking to influence your legacy in a positive way. This quote by James Allen says it well: "You are today where your thoughts have brought you, and you will be tomorrow where your thoughts take you."

4. People who go to the top think differently than others. There are many reasons for this, but it's absolutely true. As William Arthur Ward said, "Nothing limits achievement like small thinking, and nothing expands possibilities like unleashed thinking."

5. We can change the way we think. This is a comforting thought, especially in light of the previous statement. One of the best ways to change the way we think is to invest in resources that help us improve our leadership methods, our relationships, our technical competencies, our time-management skills, our ability to handle conflict, and so on.

By Tom Nies

You cannot move forward without seeing where you are headed -- three to five years out. That's what all CEOs know of as "vision."  It is a basic of business, but one that is often ignored.

Cincom's vision is to grow our performance based on four foundations: higher value for the customer; low overall total cost; low risk on investment; and significant return on investment for the customer. We intend to accomplish these objectives by providing increasingly greater simplification through innovation.

From our standpoint, the vision for the company is to continue to deliver excellent return on invested capital that is among, or above, the very best rates achieved in our industry - or any industry. But to increase revenues at the same time we're increasing margins and return on invested capital is an ever increasing challenge as size and scale increase. But we believe we are doing a reasonably good job of balancing satisfaction of these conflicting demands.

Vision is not easy to arrive at. It demands a thorough understanding of your business, your customer needs, your industry and competition - all with a crystal ball looking into the future. It demands the CEO's personal time locked in a room where we can think without obstruction. Once the direction is sighted, then the CEO leads team building and confirmation around the vision and its implications.

By Tom Nies

Business growth is usually a key aim, with strategies and five year plans required by everyone from investors to staff. But should growth always be pursued? Or will unbridled growth and the proliferation of 'super companies' subsume the economy?

Ever since the industrial revolution, and never more than in the 1980s, "big is best" has been the mantra of the manufacturing industry. In the scramble for profit and power, in industry as in nature it often seems that bigger equals stronger.

Yet firms that are of mid- to intermediate-size tend to grow at faster rates, and add more employment faster, while also providing better possibilities for increased return on investment than do very large firms. Moreover, first principles of economics prove that there is always a point beyond which lie diminishing returns. Therefore, it can be argued that growth is not always the best policy - and indeed, is sometimes a negative strategy - both for individual businesses and for the economy at large.

Read further ... Download the_optimum_size_for_a_business.doc

By Louis Columbus

In good times marketing and sales get all the credit for increases in sales and profits, but in bad times, IT gets the brunt of the cost-cutting pressure. What have been missing are truer measures of Return on Investment (ROI) for companies adopting customer-facing strategies.  What's really needed is a more focused approach to quantifying the contribution of marketing, while at the same time questioning some long-held beliefs about ROI.

The best way to get started on truer ROI measures of performance is to start quantifying the performance of marketing - which in many companies is seeing rejuvenation in spending thanks to more targeted program focus and the ability to tie back results accomplished with sales, all underscored by a recovering global economy.  Today the better you can quantify your departments' contribution, the greater the chance you get to spend more on projects your department sees of value; the converse is also very true, where lack of measures quickly lead to a lack of funding.

Arm Yourself with Marketing Metrics First 

It's critical to get a solid return on customer-facing strategies - quite frankly if these strategies are fully automated and rely on CRM, order capture, or service-based applications or not isn't at the heart of this point - the ability to execute and accomplish the quantified goal is.

So before your company starts layering in technology for streamlining marketing and sales tasks, get a handle on the metrics listed here first.  Sure, there are many more, but it's better to have a solid handle on these to feed the knowledge in your company of just how effective you are being with customers.

The following metrics are a must-have list for any marketing organization:

1. Cost per lead.  This applies to every marketing activity, from advertising to direct mail and trade shows.  Be sure to capture this on each strategy you use for generating leads - one high tech manufacturer found the cost per lead from television was US$110, yet the close rate was the highest of any lead generation strategy.

2. Lead-to-close ratio.  This is a measure of how many leads in your pipeline have closed relative to the total leads generated.  From the leads that didn't turn into sales, consider doing a win/loss analysis.

3. Cost to fulfill an order.  There is a tough irony in this figure for many companies.  They find their average cost to fulfill an order is over $200 - especially those with disconnected, yet distributed order management systems - and find that their average order size from smaller customers is below $150.  So these companies have found they are actually losing $50 per order from their smallest and highest maintenance accounts.

4. Renewal rates by customer segment. Just classifying your customers and then capturing their renewal rates is easily enough done in a Microsoft Excel spreadsheet.  This can give you great insights into how to capture even greater business throughout your customer base.

5. Event-based ROI.  Trade shows, webinars, even regional sales events have many useful insights to be gained by measuring their ROI.  For many companies who have CRM systems they have the chance to see the history of the event coming together in the targeted prospects' histories - and can see which incentives worked and which didn't to bring prospects out to the event.  The bottom line is that event-based ROI has many surprises waiting to be discovered for the benefit of your company.  If you aren't doing this today get started.

Dispelling ROI Myths with Marketing Data

Once any company is armed with just the metrics above, they can better negotiate with CRM vendors, system integrators and consultants to get to the performance they want.  Let's take a look at many of the myths that start to fall apart when there's better metrics in place from marketing's contribution:

Myth: Various vendors' ROI assessments are useful for comparing their applications' contribution.  In reality, payback period is a much more effective relative measure of a given application's ability to deliver value.

Myth: Hard numbers are all that matters in defining ROI.  It's a safe assumption that 70 percent of the total cost of any CRM implementation is going to be training and assisting people to change how they work today.  For every dollar spent on CRM, at least two or more additional dollars needs to be spent on assisting the people who actually use the application change how they work.  It's the numbers spent on "soft" strategies like changing how people work where the true ROI gets earned - and when marketing has an idea of their performance on processes with the metrics above, this myth gets exposed quickly.

Myth:  You can predict ROI using industry-specific averages.  One company's best practices can be another's worst.  Too often companies buy into the vision of ROI by proxy instead of performance.  When a company is armed with marketing metrics, this is much easier to refute.

Myth: When all else fails, cost-reduce your way into a positive ROI. A hold-over strategy from the recession, this rarely works and as many have said, it's impossible to cost-reduce your way into market leadership.

Myth: Sustainable ROI is possible without integration.  The most dangerous of all myths, because there is evidence everywhere that the exact converse is true.  In the case of marketing, the more integrated the processes the higher the ROI of the systems added to automate the information required to complete the goals the processes were designed to achieve in the first place.

Myth: ROI on a per-project basis is always traceable. This is certainly not true, and only happens when a process is owned from start to finish, and has clear boundaries.  Cause-and-effect happens when processes change first and technology gets selectively applied. 

Bottom Line: As global economies recover its important for many marketing organizations to embrace metrics first, before spending on technology.  Don't let the budget for IT spending on customers force false urgency - stop and think about how you are doing on these strategies today first - and then make smart investments that get you to your marketing goals.