More than a decade ago, we saw the advent of customer relationship management in the client-server enterprise. The genesis was merely phone call tracking for customer call centers.
Now, driven by the demands of e-commerce, such tools are being transformed into online customer communication solutions, often referred to as eCRM. With these solutions, companies are creating a more personal customer experience and thus are increasing sales and retaining customers.
These interactive solutions are implemented through one of two methods. The first is a traditional licensed method, under which a company buys the product and the vendor sends the company the software for full payment. Afterward, the company pays an annual maintenance fee. In this method, the company takes care of the infrastructure; although, the consultants may assist with the implementation.
The second deployment method, gaining greater popularity among Fortune 2000 and dot-com companies, is hosted services. Acting in the role of an application service provider, the vendor provides the contact center with service to the company from a remote location.
Essentially, the vendor sets up the application and gets it running. The user has to provide only the business parameters, such as the number of users and the amount of e-mail to be processed. If the services involve a live interaction product, such as chat or voice over Internet protocol, the user would provide the number of sessions expected at any moment. This information is used to determine the sizes of the database and processor that are required. The vendor acquires the necessary hardware, loads up the software, installs the system at the hosting location and connects it to the Internet.
The eCRM vendor focuses on three operational areas: overall performance of the end-to-end solution, active monitoring and quick response.
Sophisticated tools and skilled people are necessary to manage a high level of performance throughout the network so that the company receives a reasonable response.
Secondly, active monitoring is vital because the business environment is constantly changing. A thousand e-mails per week quickly become a thousand e-mails per day. The vendor must monitor a company’s implementation, closely observe operations and take evasive action before there is a problem.
When a problem occurs, the third operational aspect of quick response is triggered. The vendor should respond fast to get companies back into operation.
Three primary reasons that companies opt for the hosted services model are cost-effectiveness, faster implementation and the absence of information technology staff requirements.
There is no large up-front payment, and the user moves straight into a monthly payment plan, which varies based on volumes of traffic — the amount of e-mail handled, for example. The user pays accordingly per month for the length of the contract term. Some users have agreements of less than a year. Others may stretch three years. The average is about 18 months.
The user doesn’t have to organize a project team or put expensive resources in place. The hardware would already be in place at the vendor-hosted sites. All that’s needed is to input new data into those existing systems. The vendor deploys its experienced teams to shorten implementation time to a few days. That implementation time will soon be reduced to a few hours, thanks to upcoming new technology.
Companies eliminate costly IT resources to manage these new services. Companies that buy licensed software, on the other hand, usually have their own data centers, hardware, IT experts and networking infrastructure. All these resources and professional skills incur considerable expense. Further, it is difficult in most U.S. regions to find and hire professionals with this experience and skill set. By using the hosted model, the companies can use their IT staff for other tasks.
Companies are more comfortable and confident with the application service provider model and are having eCRM solutions hosted. The paranoia associated with outsiders running critical applications is quickly waning.
The vendor takes care of such issues as viruses and denial of service attacks, as well as physical and logical security. Password management is maintained to keep unauthorized personnel away. Therefore, companies can have confidence that their intellectual property is safeguarded and secure at these hosted sites.
As for control, companies loosen the reins because they are aware that the vendor and its technical staff are knowledgeable and competent.
Some companies initially decide on the hosting option to start their operations with the intention of licensing the software at a later date. The vendor contract is developed accordingly. But in many cases, companies never license the software. Instead, they find hosting to be ideal.
Other companies start with licensed software and later ask for hosted services.
The marketplace now is asking for a new hybrid method, “licensed-monitored,” whereby licensed users can have the vendor professionals involved for a period of time in their operations. Technologies are being developed that permit vendors to access a licensed user’s system and perform a comprehensive diagnostics check to verify that the installation is sound and healthy.
Challenges remain in eliminating paranoia over security. To do this work effectively for a company, the vendor must have adequate access to a company’s infrastructure. However, the vendor must do this in a way comfortable to the company.
The three deployment methods of licensed, hosted and hybrid licensed-monitored allow each eCRM user to choose the best option for its needs. It behooves the user to select an eCRM vendor that offers all these deployment methods.