IBM's ECRM Initiatives
IBM's ECRM Initiatives
IBM's ECRM Initiatives
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This case was written by K. Prashanth, under the direction of Vivek Gupta, IBS Center for Management Research. It was
compiled from published sources, and is intended to be used as a basis for class discussion rather than to illustrate either
effective or ineffective handling of a management situation.
www.icmrindia.org
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Our goal is to be viewed as one IBM by our customers and to work as one IBM internally. Were
aiming to make IBM best of class in its industry for sales, marketing and customer service
excellence. We believe we can achieve this goal by using Siebel applications to leverage our
existing strengths as a market-intelligent enterprise. Were transforming our business to take
speed, responsiveness and efficiency to a whole new level.1
- Vince Ostrosky, Vice- President, Customer Relationship Management at IBM.
This is one of the biggest implementations we have ever done. So customers always ask us, how
did we do it, and what did we learn?2
- Cher De Rossiter, Program Director for IBMs CRM Project.
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INTRODUCTION
In January 2000, IBM, the $86 billion IT company, embarked on the largest Customer
Relationship Management (CRM) project known at that time. Termed CRM 2000, the project
aimed at ensuring that any point of interface between the customer and IBM, through any of its
channels, in any country, was dealt with uniformly, providing the same service level, applying the
same tools and information. In other words, IBM wanted to present a unified interface to its
customers across the world. In 2004, four years after the project, the company was well on its way
towards fulfilling its objective, reporting significant improvement in customer satisfaction levels.
IBM had always been known for its emphasis on customer service. It had its sales personnel clad
in blue suits attending clients calls and explaining to them how they could transform their
business through various IBM products and services. IBM recognized that proper CRM
implementation was possible by the integration of three elements people, process and
technology. Until the late 1990s, it addressed the issue of integration of people and processes. The
third part, technology, was dealt with in 1999, when the company started focusing on this aspect.
Commenting on this, Cher De Rossiter (Rossiter), IBMs Global Services and Program Director
for its internal CRM project said, In 1999, there was a shift in the technology side of the project.
We started working on a new go-to-market strategy in which we would redefine the way we set up
our internal customer service organization.3
IBM went about implementing CRM in phases, addressing sub-divisions such as change
management and training successfully. Commenting, Steve Wright, Vice-President, Worldwide
Customer Relationship Management Deployment, IBM said, By getting to know our customers
better and enabling more effective collaboration around the customer and among multiple IBM
organizations involving sales, marketing and support, we can significantly enhance the value we
bring to our customers, while generating additional revenues and cost efficiencies for our
company. The concept of One IBM is a cornerstone for the way we serve customers.4
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BACKGROUND NOTE
IBM was incorporated in 1911 as the Computing Tabulating Recording Corporation (CTR), which
manufactured punch card data processing equipment. On February 14, 1924, CTR changed its
name to International Business Machines Corporation. The companys founder and President,
Thomas J Watson, believed that the new name was more in keeping with its growing business
portfolio and wider range of business-related products.
IBM set up its first research facility called IBM Research in 1945 in Manhattan. Over the years,
IBM Research invented products that became the IT industrys foundation. FORTRAN, Reduced
Instruction Set Computer (RISC) architectures, relational databases, token-ring networking, the
cursor and magnetic disk storage were all developed at IBM Research. However, IBM marketed
very few of these products.
In 1969, the US government started an anti-trust enquiry on allegations that IBM was trying to
monopolize the market for general-purpose electronic digital computer systems and specifically,
the market for computers designed for business. The enquiry, which lasted until 1983, hampered
IBMs growth.
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In the 1980s, IBMs culture was bureaucratic and rigid. The company took a very limited view of
its market and business activities and operated within this narrow sphere. There was also lack of
communication and understanding between the research and business divisions of the company.
Owing to this, IBM lost a number of opportunities and failed to commercialize many inventions.
The 1980s was a period of decline and by the early 1990s; analysts began writing off any chances
of IBMs revival. In the fiscal 1992-93, IBM posted a loss of $4.97 billion, which was the largest
single-year corporate loss in US history.
In 1993, Gerstner took over as CEO from John Akers (Akers). Gerstner introduced a number of
changes in IBMs business operations and culture. Specifically, the company shifted focus from
components and hardware to services and software. It also ensured a greater degree of
communication between product development and marketing departments. Gerstner brought about
a radical change in IBMs work culture. Employees were no longer required to adhere to a formal
dress code. Gerstner believed that employees should first try to solve customers problems, instead
of just focusing on selling IBMs products. Gerstner wanted to foster a performance driven culture
at IBM and insisted on results.
Under the new CEO, IBM was back into profits. By the late 1990s, the company emerged as the
largest IT services company, with operations in over 160 countries in the world. Its diverse
portfolio of products and services was grouped into seven segments Technology, Personal
Systems, Servers (Hardware); Global Services, Software, Global Financing and Enterprise
Investments (Refer Exhibit I for an overview of IBMs business segments) and were sold through
a large number of semi-autonomous entities (Refer Table I for IBMs business segment financials).
The company had a matrix organization structure where the entire business was divided into six
product groups, further grouped into five geographic regions (Americas, Europe, Middle East,
Africa and the Asia Pacific) and serving three categories of customers Enterprise, Global MidMarket and Global Small.
Table I
IBM Business Segment Financials (1997-98)
Business Segments
Revenues
(1998)
Profits
(1998)
Percent of
Total
Revenues
Revenues
(1997)
Profits
(1997)
Percent
of Total
Sales
Hardware Segments
35,419
1,205
43.4%
36,630
13,157
46.7%
Global Service
Segments
28,916
7,791
35.4%
25,166
6,702
32.1%
Revenues
(1998)
Business Segments
Software Segments
Profits
(1998)
Percent of
Total
Revenues
Revenues
(1997)
Profits
(1997)
Percent
of Total
Sales
11,863
9,603
14.5%
11,164
8,379
14.2%
Global Financing
Segments
2,877
1,383
3.5%
2,806
1,358
3.6%
Enterprise Investments
Segments/Others
2,592
890
3.2%
2,742
1,013
3.4%
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The huge size of operations and complex organizational structure made it difficult for IBM to
obtain a complete view of the customer. The company aimed at achieving synergies within its
various product and service divisions to provide end-to-end solutions to its customers. Similar was
the case from the customers point of view. They were dealing with IBM through its various
channels including sales executives, business partners, its website (www.ibm.com) and through its
call centres. The common perception among customers was that they were not dealing with a
unified IBM. Commenting on the problem, Dong Maine, General Manager of IBM said, We did
not have a complete view of what a given customer was doing across the entire IBM Company at a
particular point of time.5
To make matters worse, IBM had deployed around 1000 CRM applications in its operations across
the globe, each of which was confined to a single business entity. They were effective as stand
alone applications, but not as joint applications. The result was low customer satisfaction and
several revenue generating opportunities being missed. Realizing the critical nature of the problem,
in 1999, IBM decided to embark on a major enterprise-wide CRM implementation effort to deploy
a system, which combined all IBMs customer-facing applications. The project was named IBM
CRM 2000.
The leading CRM vendor, Siebel Systems,6 was chosen for the project after IBM studied all major
CRM software vendors, applying over 1400 business capabilities and 400 architectural criteria.
Giving the rationale for choosing Siebel, Vince Ostrosky, Vice-President, Customer Relationship
Management at IBM said, When you look out in the market today, you wont find another
solution that comes close to what Siebel Systems offers in the CRM space. We recognize Siebel
reflects a thorough understanding of todays best practices for sales, services and marketing. 7
Thomas M. Siebel, IBM: Customer-Focused e-Business Enables Integrated Solutions for Customers,
Taking Care of E-Business, Doubleday Publications, 2001.
Siebel Systems is a leading provider of business applications software, enabling corporations to sell to,
market to, and serve customers across multiple channels and lines of business. The company provides
organizations with a set of industry-specific CRM applications, analytics products, and business
processes, empowering them to deliver superior customer experiences and establish better customer
relationships.
IBM takes customer service to the next level, www.ibm.com.
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executive investment review board comprising top management, which clearly laid out the
strategic vision and handled spending across the portfolio. The second tier comprised a
management team of business leaders and IT leaders, whose task was to review the progress of the
project as per plan and that it was addressing the requirements of each functional group involved.
Finally came the CRM project team, which was responsible for day- to- day implementation,
which involved mapping business processes, managing organizational change, specifying the
requirements of the system and allotting resources. The project team was composed of 200
employees. Within the project team, there was an architecture team, who had the job of integrating
the existing IBM systems with the new CRM applications and handling data modelling.8 Siebel
staff supported this team. While setting up processes and establishing interfaces, IBM employees
developed a good understanding of Siebel technologies and became Siebel-certified architects and
configuration experts.
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Even before starting implementation of the CRM solution, the project team developed a detailed
implementation methodology, comprising tasks to be done during the initial stages. This included
specifying the system requirements for other steps such as prioritization (which systems to be
deployed first), generation of code, testing after installation, full-fledged launch of the system,
managing change from existing processes to new processes and monitoring future progress. This
uniform methodology was followed at any place where the system was deployed, making
integration of applications easier and speeding up deployment in different geographical locations
and units. Once the methodology was specified, the actual process of deployment began.
The team embarked on the Phase I of the CRM project in which the software application a
combined Tele Web channel comprising websites and call centres was deployed at ibm.com.
Two Siebel solutions Siebel Sales and Siebel Call Centre (Refer Exhibit IV) were installed at 26
ibm.com call centres across the world, an effort requiring 7000 IBM personnel. It could be used by
4800 IBM employees. Elaborating on the importance of call centres, Rossiter, IBM Global
Services and Program Director for its internal CRM project said, We knew our call centres would
be where we would go first because they are the foundation of our CRM strategy.9
The Tele-Web call centres handled inward as well as outward sales, service and other related
activities over the phone and the Web. Ibm.com was chosen as the first point of deploying the
CRM solution because, most often, the call centres were the first point for collecting, analyzing
and supplying customer data to the rest of the firm. This made them the preferred testing platform
for implementing the new CRM solution.
After the installation, the staff had a wide variety of information on products and customers on
their fingertips. They could view all past dealings of a particular IBM customer, like purchases
made, services asked for and so on. This enabled them to develop a quick understanding of
customer requirements and plan the conversation with the customer. They could deliver quick and
accurate response to queries. Access to customers past records was also very useful to staff while
making sales calls. They could learn what products or services the customers had rejected in the
past and ensure that they did not offer similar products in the future.
The ibm.com contact centres, which were initially accessible by the companys employees, were
made available to IBMs business partners, such as software vendors, system integrators and
consulting partners in due course. To start with, their access was limited to sharing leads. The
association was further expanded to share other critical information, reflecting the seriousness of
IBMs channel integration efforts.
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The task in which data models are developed. Usually both the IT people and the data users from the
business work jointly on this task. This ensures that the users perception and needs are appropriately
understood and accounted for within the data models.
Erika Morphy, IBM Deploys Siebel: An Enterprise-Level CRM Rollout, crm-daily.newsfactor.com,
February 20, 2002.
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While Phase I of the deployment was underway, IBM commenced Phase II, which catered to presales and post-sales technical service and support. This too was critical, as the companys technical
service and support team was one of the largest in the world, numbering 3200. The various entities
served included Tech-Line, Sales Productivity Centres and the Personal Computers Division
(PCD) in the US and Sales Support Centres in Europe. The project team installed Siebel Services
and Siebel eService solutions. The pre-sales units included Tech Line and Sales Support centres.
They offered technical assistance to the IBM sales team by providing information on product
pricing, product configurations and other technical information. The post- sales units included
post- sales support centres and the PCD. The solution enabled PCD employees to address customer
service requests and respond to technical queries more effectively. The solution also assisted
customers in getting most information themselves, through e-support. The customers could enter
their service requests, track them and modify them online.
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Business partners had an important role to play in IBMs activities. Therefore, IBM implemented
CRM solutions for them as well. IBM implemented Partner World Lead Management (PWLM),
developed on the basis of Siebel Partner Relationship Management (PRM), in thousands of partner
companies in the US and Europe. This enabled IBM to strengthen its ties with business partners.
Partners, who signed up for the PWLM solution received direct leads from IBMs contact centre.
Sales leads could be allotted instantly, depending on the ability of the business partner in
successfully converting them into business for the company. The partners had to either take the
lead or reject it within a specified period. Further, if they accepted it, they had to follow it up
within some hours or days, as determined by IBM.
By December 2002, over 8,000 IBM employees and thousands of business partners in 43 countries
across the world were using CRM applications. In 2003, the CRM application, which was until
then confined to contact centres, technical support centres and business partners, was extended to
the field sales force. This saw a quantum leap in the number of users of the system from 8,000 to
60,000 worldwide. The CRM applications were installed in a wide variety of languages English,
French, Japanese and so on. It was extended to Chinese and Korean in 2004. This facilitated easier
and quicker understanding of applications by employees and integrated the diverse sales force,
irrespective of location, currency or language.
IMPLEMENTATION ISSUES
Installation of eCRM systems was only a part of the implementation process of CRM solutions at
IBM. A more important task was to manage internal business process changes following the
installation. The various tasks involved making call centre agents accustomed to the new
solution, transferring massive volumes of customer data scattered across different locations into a
single database, sales process reengineering and more.
The primary challenge of the project team was to garner support from those who would be using
the system. For this, the team ensured that the end-users were actively involved in every phase of
deployment, from preparing requirement documentation to final testing and validation. This made
them feel to a part of entire activity, and at the same time, develop better understanding of the
systems they would be using in future.
Another key element in gaining user confidence and support was training. This helped overcome
resistance among employees to use the new system. Commenting on the importance of training,
Vince Ostrosky, Vice- President, Customer Relationship Management at IBM said, If our users
dont have sufficient education or help-desk support, theyll view the new system as a productivity
detractor instead of an enhancer.10
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The training was imparted by the IBM Application Management Services (AMS) Learning
Development Division, which created and distributed all end-user education material in association
with the Siebel End User education team. Training was conducted using a combination of
classroom sessions and e-learning. The latter reduced overall training costs by a significant 67%.
Interactive e-learning ensured that all concerned were exposed to the same content and could reach
the same level of understanding training content. Another advantage was that they could take the
course according to their own convenience. This was especially useful to field sales executives.
THE BENEFITS
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The deployment of the CRM solution led to significant productivity improvement at various IBM
units within a year of implementation. Without increasing the number of staff manning call
centres, more number of calls could be dealt with and more leads generated. The implementation
enabled employees in the pre-sales and post-sales service and support areas to improve their ability
to deal with customer calls. Many of them surpassed set targets. Similar was the case with business
partners. On the whole, implementation of the CRM solution enabled IBM to enhance interaction
with customers and develop better understanding about how customer service could be improved.
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As far as quantifiable results were concerned, IBM gained significant benefit. As on June 2003, it
was believed that ibm.com, its tele-web channel, was accounting for 11% of its overall revenues of
$86 bn. Productivity improvements were reported at each of the 26 centres across the world. The
improvements ranged from 1% to 7%, based on the location. With the addition of field sales
personnel to the list of beneficiaries, productivity improvement was expected to rise.
Another benefit was cost savings. Between 1999 and 2001, IBM dispensed with over 177 legacy
CRM applications of the 1000 existing applications. This reduced maintenance costs and enabled
IBM to take advantage of cost synergies resulting from the integration of processes and
implementing one uniform eCRM solution for similar processes.
IBM did not rest on its laurels. IBM was always conscious that CRM was a continuous process,
which had to be tackled with a lot of seriousness. Commenting on this, Rossiter said, In a
company as large as IBM, CRM is not the destination, but the journey.12
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Exhibit I
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The Server Segment produced powerful multi-purpose computer systems that operated many
open-network based applications, which could be accessed by multiple users simultaneously.
They performed high-volume transaction processing and served data to personal systems and
other end-user devices. The servers were the engines behind the bulk of electronic business
transactions, including e-commerce. Major brands included S/390, AS/400 and RS/6000. The
segments products were sold directly by the company and through business- partner
relationships.
The Global Services Segment had emerged as the worlds largest and most versatile
information technology (IT) services provider, which offered computer hardware and software
products and professional services including business and IT consulting to customers. The
segment also provided business transformational services like ERP solutions, e-business
services and full scope services like strategic outsourcing or Total Systems Management
services. The Global Services segment attempted to integrate the full range of IBMs
capabilities, including hardware, software and research, to provide value to clients.
The Software Segment delivered operating systems for the companys servers and middleware
for IBM and non-IBM platforms. Middleware included application development, data
management, networking, systems management, transaction processing, and messaging. In
addition to its own product development and marketing efforts, the segment supported more
than 29,000 independent software vendors. This ensured that IBMs software and hardware
offerings were also included in these vendors solutions.
The Global Financing Segment provided a broad array of financial services for IBMs
customers and its business partners. The primary focus was to leverage its financial structuring
and portfolio management skills to expand the companys customer and partner base.
The Enterprise Investments Segment provided a broad spectrum of initiatives in IT solutions,
supporting IBMs hardware, software and services segments. The segment developed unique
products designed to meet specific marketplace requirements and to complement IBMs overall
portfolio of products.
Source: IBM Annual Report, 1999-2000.
Exhibit II
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The system was developed on an XML-based messaging architecture, which connected the
Siebel applications to nearly 50 data sources and interfaces across IBM as well as its partner
organizations. In order to establish proper links to facilitate flow of data between Siebel
applications and IBMs applications, IBM used Oasis standard messages. The messages moved
through a middleware infrastructure which included various IBM WebSphere product
components. The presence of the MQ Series middleware component ensured that the messages
could be transferred in a secure and reliable manner. This was further strengthened by the MQ
Systems Integrator (MQSI), which was used for implementing the message broker, a part of the
CRM solution. The message broker ensured that the messages heading for different legacy
applications were formatted and sent in a proper manner. The XML-based messages were key
components in the IBMs eCRM solution, as they enabled its employees responsible for
delivering messages to perform their tasks efficiently. The XML-messages could also be used to
add new applications into the system, by using a system adapter, which communicated with the
legacy applications through XML messages.
Apart from middleware, the CRM solution also employed other products like DB2 UDM which
rested on AIX13 which had in it all databases employed by IBM CRM solution. The solution
also employed the WebSphere IBM HTTP Server (IHS), web servers along with WebSphere
Network Dispatcher to properly support the client network linked to the Siebel solutions.
Adapted from IBM takes customer service to the next level, www.ibm.com.
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Abbreviation for Advanced Interactive Executive, IBMs licensed version of UNIX operating system.
AIX is particularly suited to support technical computing applications, including high function graphics
and floating point computations.
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Exhibit III
Systems Architecture Diagram of IBMs eCRM Solution
Web
browser
BPS
Customers
Front end
RS/60000
Back end
SP2
WTE
ND
Rev Proxy
RS/60000
Systems
SP2
Systems
Siebel
application
MQSeries
HACMP
Tivoli
WebSphere
IHS
MQSeries
HACMP
LDAP
External
systems
DCE
DFS
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Siebel DB
DB2 UDB
HACMP
Credit Card
authorization
DCE
DFS Cache
Source: www.ibm.com.
Legacy
systems
IBM @server
pSeries 680s
Shadow DB
DB2 UDB
Firewall
IBM Intranet
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Internet
Enterprise
storage
subsystem
Web browser
Post-Siebel
Firewall 7 Internal
Users
Exhibit IV
2001
2002
2003
Siebel Sales
Siebel Partner
Relationship
Management
Siebel Partner
Relationship
Management
Siebel Marketing
Opportunity
management
Leads
processing and
integration with
IBM Sales
Comprehensive
marketing
automation
Account
management
Activity
management
Activity
management
Integrated database
marketing and
campaignmanagem
ent
Contact
management
Service request
management
Lead management
Configurable routing
tables
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Opportunity
management
Full marketing
communicationssu
pport
Measure, monitor
and track
marketing
strategies
Siebel eService
Siebel Sales
Partner
administration
Service request
management
Campaign
management
Dynamic agent
desktop via
intelligent call
scripting
FAQ support
Proposal generation
Powerful computer
telephony
integration (CTI)
Customer profile
system
Target account
selling
Data-driven
workflow
for
routing,
authorizations and
escalations
Web collaboration
Sales analysis
Integrated telesales,
telemarketing and
customer service
solution
Contd...
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Siebel Service
General e-Business
Data-driven
workflow for
routing,
authorizations and
escalations
Siebel eService
E-mail response
management
Request tracking
Assignment
manager
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Creation of service
request
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Source: www.ibm.com.
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10. Karpinski, Richard, Inside IBM's CRM Play, www.Internetweek.com, October 04, 2001.
11. Reiners, David, Finish Fast by Starting Smart, Customer Interface, October 2001
12. McCartney, Laton, The New Benchmarks, www.eweek.com, November 5, 2001
13. Morphy, Erika, IBM Deploys Siebel: An Enterprise-Level CRM Rollout, crmdaily.newsfactor.com, February 20, 2002.
14. Picarille, Lisa, Equal In The Eyes Of CRM, CRM Magazine June 2002.
15. Building The Right Partnerships, Sidebar: TeleWeb Gives IBM Wider Reach,
www.optimizemag.com, January 17, 2003.
16. Strout, Erin, Blue Skies Ahead?, Sales & Marketing Management, March 2003.
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