CRM has come under fire from numerous fronts over the past year and reports of failure are common. Yet the fundamental strategy of CRM is sound, and organizations continue to strive to achieve it. Obviously, however, something is wrong. What if the ability to execute strategy is more important than the strategy itself? This is the question raised by Drs. Robert Kaplan and David Norton. (The pair detail their theory in The Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment, published last year by Harvard Business School Press.)

No company with a successful implementation would tell you that CRM is anything less than revolutionary. Ask any change-management expert about implementing enterprise-wide change and you'll hear about the need for accountability, integration and the communication of a shared vision. Enterprise-performance management, or EPM, may provide the tools necessary to meet these needs and, thus, to make change happen.

EPM involves measuring and analyzing key performance indicators (KPIs) to plan and manage business processes and strategy. This category includes such tools as management by exception (MBE), total-quality management (TQM), activity-based management, economic value added (EVA), value-based management (VBM) and the balanced scorecard. It is this last strategy that Kaplan and Norton espouse as a key to successful CRM.

Tracking the Enterprise

The balanced scorecard is a set of regularly tracked measures directly linked to a company's overall goals. It formalizes the measurement process and gets managers across the organization focused on the same issues and processes, by putting measures and targets from across the enterprise on a single page, segmented into one of four categories: financial, customer, internal and learning and growth.

Each segment contains measures critical to effective management, and each are intricately linked to one another and to the overall strategy. The scorecarding process is top down; it starts with senior executives articulating specific strategic objectives.

Once financial and customer objectives have been set, management must define what internal processes it should excel at for the company to meet or exceed customer expectations. This perspective forces the company to look internally at all new and existing processes that impact the client experience.

The scorecard also encourages organizational learning, because it provides a feedback mechanism. There is a clear cause-and-effect relationship between the measures and the overall strategy. No measure is included that does not have a direct relationship to the stated corporate goals. It also provides a single view that aligns disparate divisions and activities. It looks at how all activities relate to one another and to the end goal. To be effective, the measures on the scorecard must be consistent and mutually reinforcing.

Mobilizing the Workforce

Norton, who serves as president of the Balanced Scorecard Collaborative (a professional-services firm dedicated to the promotion of the scorecard), says that the scorecard helps the entire enterprise "mobilize around the strategy," rather than around the software. Mobilizing an enterprise means a new way of working for all employees. Implementing significant changes in employee behavior requires the ability to measure performance and reward appropriate actions through incentives and compensation. Often, what has been measured in the past is at odds with the new corporate strategy.

Some companies build one scorecard for the organization; others cascade this process down, creating individual scorecards and setting goals and objectives for each employee. In either case, the scorecard is designed to provide a direct link between the company's mission statement and the actions employees take every day.

At Hilton Hotels, for example, a security director may find a measure such as "number of guest losses per 10,000 rooms" on his scorecard. Dennis Koci, senior VP of operations support says, "everyone has things [on their scorecard] that they can directly control -- that have an impact on the hotel's overall scorecard."

While they have had the HHonours loyalty program for some time, Hilton is just embarking on its CRM initiative. The scorecard and this new strategy are closely linked. "CRM will be the missing piece to help us drive customer-loyalty numbers," says Koci. "It will be the mechanism to help us move these loyalty measures for all customers." The scorecard will also be critical in helping Hilton understand whether "all the activities are actually paying off." Koci believes that "CRM will not be the program of the hour, because it has a real connection to key-performance indicators, and hence to people's bonuses."

Tools of the Trade

Today's data warehouses have revolutionized a company's ability to track metrics from disparate places. Now, scorecarding is more effective than ever due to developments in the ability to track, report on and allow managers to drill down into the causes of change. Web- and intranet-based tools support the scorecarding process. They are enabling up-to-the minute decision making through the calculation of metrics on a real-time -- or near real-time basis -- as well as drilling down behind the aggregate measures, to better understand the causes.

In an effort to provide some consistency to the terminology, the Balanced Scorecard Collaborative assesses scorecard software for its compliance with Balanced Scorecard Functional Standards. Those applications that are deemed consistent with the standards are given a "Balanced Scorecard Collaborative Certified" mark.

To date, 15 products have been certified; many of these come from traditional CRM- or ERP-solutions vendors, such as PeopleSoft, Oracle, SAP and SAS. Other providers, like CorVu and Hyperion, make enterprise-performance management their primary business. Many applications link directly into existing solutions, creating one unified platform, while some tools only operate on the vendor's proprietary databases.

It's difficult to estimate the cost of this software implementation. Most companies charge per seat, so it will vary widely, based on how deeply the organization intends to disseminate the information. Norton estimates that software from a major vendor starts in the $100,000 range.

Humble Beginnings

While a large number of applications do exist, many of the companies contacted for this article have not implemented any of them. In fact, the majority of balanced-scorecard users began with a simple desktop tool -- Microsoft Excel. This can be a good starting point, and useful in assessing required functionality and establishing metrics.

Advertising conglomerate Saatchi & Saatchi began developing its scorecard in 1997 in Excel, and still uses the platform augmented through Visual Basic. Since its scorecard is shared with its global agency offices, the universality of Excel has been a huge factor in its ability to disseminate information across the enterprise. However, Paul Melter, director of Compass, (the name of the company's balanced-scorecard initiative), admits that it's time-consuming and cumbersome to operate this way. In fact, the company has considered software from SAS, Hyperion and CorVu to replace its spreadsheet application.

"Software is ultimately critical, but to get started, companies should keep it simple," says Norton. "Huge databases are not needed initially; the real value is on focusing everyone on the same goals." However, as companies go further, information systems will need to catch up, he says.

Norton and Kaplan, in their earlier book, The Balanced Scorecard: Translating Strategy into Action, say that, "The balanced scorecard has its greatest impact when it is deployed to drive organizational change." CRM is about change, long-term. Companies that establish measurement targets for their scorecards three to five years out, the authors say, will achieve the greatest success.

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