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Remember all the talk two or three years ago about how everyone would love broadband? At the time, the industry churned out marketing material gushing about a new technology capable of delivering a whole raft of new and exciting applications that would radically change the way small companies operated.

In many respects broadband has lived up to its promise, but things didn’t quite work out service providers planned.

On the one hand, they actually underestimated small businesses’ appetite for fast Internet. On the other hand, while broadband had changed the way companies operate, they’ve not been as quick to adopt new applications.

Pacific Internet managing director Dennis Muscat says that by July of this year 52 percent or slightly more than half of all Internet-connected companies in Australia had broadband access. Two years ago the number was around 20 percent.

These numbers come from research conducted for Pacific Internet by ACNielsen Consult and published in the company’s Broadband Barometer.

Muscat, who heads the local operation of a regional telecommunications service provider, says many small businesses have purchased residential broadband packages aimed primarily at consumers. This makes sense because many smaller companies operate directly from people’s homes.

Jason Juma-Ross, principal analyst with AMR Interactive says that for small businesses the practical reality of broadband Internet is not that it enables new applications such as video conferencing or voice over IP, but that it allows users to do more of the things they did with dial-up. He says that for many users the always-on nature of broadband is possibly more important than its speed.

Muscat echoes this. He says, “They’re doing much the same as before, but with more intensity.” That means sending and receiving more email, increasing the amount of web browsing for information and doing more with their own web sites. At the same time, companies with broadband links are far more likely to use Internet banking and pay their bills online.

For example, Muscat says people are now sending large complex documents via email that they might have previously couriered or sent via fax. “Broadband increases efficiency and reduces costs. At the end of the day these are what small businesses want from any technology.”

One area that has changed dramatically is remote working. Companies that operate at multiple locations or who employ out-of-town teleworking staff can now give their remote users full, real-time access to internal computer systems.

Muscat says this has had a huge impact on some industries. “In the past if, say, a travel company employee got an out of hours call from a customer who needed to change his itinerary, that employee would have to physically go to the office in order to change the booking. Now they can take the call at home and log on to the travel systems.”

For now, more glamorous broadband applications such as videoconferencing remain well outside the business mainstream. This is despite the increased reluctance for long-distance travel now that airports have additional security procedures.

Likewise, there’s been no rush to voice over IP technology, which allows businesses to cut telephone toll budgets by enabling calls over the Internet. And software companies that have repackaged their applications as pay per use online services are still not getting much traction in the small business sector.

One reason for the slow move to new applications is that companies don’t necessarily see them as relevant. For example, videoconferencing adds little value for many companies, who could just as well get by with ordinary telephone calls.

But there another factor that can be sheeted back to Muscat’s observation about Australian small business using broadband products and services designed for residential customers. These consumer offerings tend to be significantly cheaper, but they are also generally much slower than business services – in most overseas markets anything less than 1.5 Mbps isn’t regarded as true broadband and certainly not adequate for advanced applications involving video or voice.

Moreover, residential broadband doesn’t offer the same service guarantees as commercial products. In other words, it’s not generally as reliable as business-class broadband and that extra consistency is essential for more sophisticate applications.

So what broadband applications are small businesses using? Muscat says that for the moment tools that increase data integrity dominate the market. He says there’s a huge demand for managed firewalls, spam filters, content filtering and other security products and services. “They’re concerned about viruses and hackers and being flooded with spam”.

Muscat says that as they gain experience and confidence with the technology, companies will move beyond what he describes as online hygiene factors and seek a higher grade of data network. “Small businesses know they have to deal with these issues before they can move on to the highfaluting applications.”

First published in The Australian Financial Review 2004

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When software giant Oracle set out to build its internal eCRM system, the implementation team quickly ran into problems. Like any multinational, Oracle comprises many smaller business units each with its own agenda — and not every division was keen to work with a centralised eCRM system.

James Finlay the CRM marketing manager for Oracle Australia says, “Our implementation team suffered a large amount of pain”. He says the pockets of resistance didn’t crumble until Chairman Larry Ellison took control of the project and cracked a few heads. “In order to get it implemented around the world, it had to be pushed personally by Larry. Along the way a couple of senior people in the organisation had to be dealt with”.

Oracle’s experience underlines the single most important challenge facing organisations wishing to implement Customer Relationship Management systems. Although CRM is often sold by technology companies and regarded as a technical solution, its scope goes way beyond the nuts and bolts of hardware, networks and software. All these components play a role, but at its core, CRM is a business strategy or even a philosophy.

Given the complex technology embedded in CRM systems, it’s easy to lose sight of why an organisation might want to install such a system in the first place.

This story first appeared in Fairfax’s Business Online magazine

Overcoming the main CRM challenges

  • Find a high profile, top-level sponsor – preferably your CEO or Managing Director.
  • Maintain a focus on the strategic goals of eCRM; don’t get bogged down with technical considerations.
  • Show users the practical benefits – address their fears and deal with any aspect that threatens them.
  • Develop the right management infrastructure – make sure it meshes with your strategic CRM goals rather than operational issues.
  • Create a customer-focused culture so that CRM technology doesn’t exist in a vacuum.
  • Build an integrated technical infrastructure so that your CRM components work seamlessly with each other.

Technology trap

Terry Gatward, e-business manager of Fuji Xerox Australia admits that in the earlier stages, his company fell into the trap of viewing CRM from a technology perspective. He says, “It became too much of an IT project and not enough of a business strategy. Things got back on track when we got the sales managers and our managing director behind it.”

This involved showing sales managers and sales staff the practical benefits of CRM. “Frankly, most of them were frightened that CRM was going to be used as a stick to beat them when they stepped out of line. We also found sales people were happy to use it to extract information, but they wouldn’t put any data in.”

Fuji-Xerox identified sales commission as the key issue. Employees were concerned that by sharing information they would be passing their commission over to other sales offices. Gatward says the company got around this problem by developing a set of rules to determine who gets commission for various sales. “More importantly, we got the sales managers to enforce the rules.”

Management structure

Putting the right management infrastructure in place is crucial. At Fuji-Xerox the CRM application support team is now part of the marketing department – which reflects its strategic role within the organisation. The infrastructure is still supported by the IS department.

London-based Michael Barnes, a senior program director with the Meta Group agrees that dealing with issues of corporate culture and internal politics is vital. “Mitigating the cultural and political challenges of implementing an enterprise CRM strategy is as important as dealing with technical issues. Our research reveals roughly half of the Global 2000 organizations have or plan to establish a CRM Program Management Office (PMO) this year.”

Barnes says that companies that already have a unified global view of CRM are twice as likely to establishing a PMO as companies who have a tactical approach to CRM. He regards this structure as an important indicator of eventual success. Establishing a PMO is “clearly a realization of the business complexity of getting CRM right.”

Experience gained from working in the banking industry gives Ralph Tomerlin a perspective on the relationship between company culture and CRM. Tomerlin, who is now managing director of eCRM vendor Delano Asia Pacific says that historically many organisations, including banks, offered customers a fixed set of products and had a take-it-or-leave attitude.

Knowing customers

He says, “In the past your customers would know far more about you than you knew about them. Nowadays you have to compete and your mentality has to change. You can put in a system which lets you know the value of your customers – but it’s what you do with this information once you have it that really matters.”

Tomerlin argues that to make CRM effective companies need to re-educate their staff to be more aware of customer needs and organisational goals. “You need to get into the mind of your employee how to sell, how to upsell and to constantly seek ways of increasing the value of each customer”.

The rational behind this is simple arithmetic. In a bank or a brokerage firm it typically costs $400 to acquire a new customer. This relationship can take years to reach a pay off. Because CRM generally allows companies to focus on selling more to existing customers by meeting their needs, rather than acquiring new ones, it can have a dramatic impact on the bottom line – but for that to happen employees have to be looking at shifting customers to more profitable lines of business.

However, Oracle’s Finlay says it is important not to confuse being customer focused with having a eCRM system. “The two are linked but they are not the same – you can’t have one without the other.” Finlay also believes that a company-wide customer-focus culture has to come from the top. “It’s determined by the CEO, no-one else.”

Culture

Gatward says Fuji-Xerox’s cultural experience is that some sales people take to CRM immediately, while others are far more cautious. He says, “we’ve got some sales people who love it, they exploit it, using it all the time and they like to talk to you about how it improves their productivity. This is good, we’ve found it really helps to have CRM champions.”

Putting the right technical infrastructure in place is important. Michael Barnes says most companies fail to create a CRM technology ecosystem that includes operational, collaborative and analytical CRM components. “Instead they are purchasing disparate eCommerce and CRM products, services and solutions that do not play well together. For example, e-mail response and Web click-through data collection systems are not integrating into analytical marketing applications”.

Barnes says eCRM remains essentially a misnomer. “Except for a minority of regular Web users and the more significant business-to-business segment, the e-customer is missing in action. To date, most companies have found that the Internet remains most useful for generating sales leads that can be pursued via more traditional channels. This is changing – but slowly.”

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Canadian public relations practitioner Dave Fleet says Twitter has moved through the Gartner Hype Cycle. It is now at the point where it could quickly become unfashionable. In his  Five Potential Effects Of Twitter’s Shift To The Trough Of Disillusionment.  Fleet charts the technology’s progress and predicts what will happen next.

At first sight, Fleet’s analysis seems to be on the money. But there’s something else going on with Twitter. After a period of stability, the service is changing. Earlier this week the company altered the way users propagate messages. This changes the process known as retweeting.

In other words, Twitter is still evolving. It will probably be a different beast by the time it resumes its progress through the later stages of the Gartner Hype Cycle. Or maybe something else will replace it.

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When they want to create something that looks like a grass-roots campaign, but isn’t, big companies use astroturfing.

The Drop the Rate campaign that began yesterday with support from Consumer, Tuanz and 2degrees is a classic example.

At first sight it’s aims are laudable. Lord knows we pay way over the odds for mobile phone services. The campaign aims to put pressure on Vodafone and Telecom to cut the mobile termination rate or MTR. This is the amount one phone company has to pay another when customers call between networks.

Drop the rate mate campaign website

There’s no question New Zealand’s MTRs are high by international standards. That’s only part of the reason mobile phones are far more expensive to run here than in Australia – or just about anywhere else. It is also a major brake on the economy – calls that could be made, possibly should be made, are going unmade because of the high costs involved.

Yet despite it being worthy in principle, there’s something phony (or should that be phoney?) about the Drop the Rate campaign.

For a start, there’s an expensive PR company behind it.

Who is paying Matthew Hooton’s fee? Good on him for getting the job, but you can be sure Exceltium isn’t collecting money from cake stands and sausage sizzles for this work.

Second, 2degrees doesn’t want to talk about the MTRs it pays to Vodafone and Telecom and has gone to extraordinary lengths to make sure grass roots, that’s real grass, not astroturf, New Zealanders don’t get to know the rate.

Of course no-one can blame 2degrees for taking part in this kind of stunt. Telecom and Vodafone play hardball. And both are less than snow-white in their marketing and political lobbying.

Campaign gets wide media coverage

Hooton certainly proved his PR skills. The Kiwi specialist press was full of the story. At The National Business Review Chris Keall expressed some weariness about the campaign in 2degrees again a little sneaky on MTRs at the National Business Review. The story got a good run in the New Zealand Herald and the Dominion Post.

At Computerworld Rob O’Neill seems more willing to take the campaign at face value. His Drop the rate mate’ campaign targets MTRs offers no comment. Paul Clearwater at The Line reports that Vodafone disputes the information on the campaign’s web site in ‘Drop the rate mate’ campaign begins.

Update: Computerworld reports on Hooton’s attack on Telecom and Vodafone in Mobile termination row goes nuclear. The story finishes;

Hooton has words for Telecom, too, as the MTR debate goes white hot.
“Telecom now seems to be saying that it needs to rip off mobile consumers in order to fund more investment in the industry,” he said. “Good luck to Telecom arguing that a cosy duopoly leads to more investment in services and coverage than a more competitive environment.”

My opinion: Hooton proves he is a worthy campaigner against the arrogance of Telecom and Vodafone – clearly he was the right man for the campaign. Despite this, I’m still not comfortable with the astroturfing.