Importance of TOM for CRM implementation

If we look at some general parameters or indicators regarding implementation projects, we realize that:

• According to Gartner: 80% of IT projects are considered failures by the company.
• 75% of ERP projects fail, as well as CRM and Big Data projects.
• And 90% of IT projects fail to deliver measurable ROI.
• According to Clayton Christensen: 95% of product innovation projects fail.
• And according to McKinsey: Only 30% of Digital Transformation projects improve corporate performance.
  
  Likewise, the 7 most common causes of failures are:

1. Poor change management (90%)
2. Lack of alignment with business objectives (80%)
3. Training and support issues (80%)
4. Unrealistic expectations (80%)
5. Resistance to change (70%)
6. Interoperability and compatibility issues (70%)
7. Lack of adequate resources (70%)

From these observations, numerous studies have concluded that having a clear and consensus-based Business Model and Operating Model is indispensable to increase the chances of success when implementing any digital transformation initiative, and its importance for the successful implementation of a CRM is no exception to this rule.

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The Business Model and the Operating Model, whether it's the Current Operating Model or the Target Operating Model, are two closely related concepts that serve different purposes within an organization. Both are critical for the effective execution of the business strategy, and alignment is crucial for long-term success.

The Business Model sets the vision and direction, while the Operating Model provides the operational mechanism to realize that vision. Effective alignment between the two ensures that the organization not only has a solid strategy but also the operational capacity to execute it.

Operating Model

The Operating Model should be seen as the unique set of capabilities aligned with the company's strategy, trained leadership teams, tailored metrics, unique investment profiles, and close coordination throughout the value chain.

An organization is much more likely to succeed when its Operating Model, or how the organization creates value, is aligned with its strategy. And this means that for transformations to succeed, leadership teams must examine and possibly update their organization's Operating Model to ensure they are consistent and aligned with the purpose that updates the corporate strategy.

Successfully driving these changes, however, depends on executives addressing a series of organizational barriers and risks beforehand, especially functional silos, updating incomplete business data, and adopting a value creation philosophy centered around the product and/or service delivered to the customer and their experience (rather than solely focusing on the market).

A well-designed and concurrently executed business Operating Model with a purpose can help companies balance growth with risk and overcome organizational barriers.

In fact, successful transformations realign the organization towards a unified vision; unsuccessful efforts often do not. And nowhere is this more true than with Customer Relationship Management (CRM) Implementation Initiatives.

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What work needs to be done?

To move forward with a CRM initiative, the first step is to identify the holistic set of capabilities required to meet the company's strategic ambition. This set of capabilities should include (as needed) both existing and new capabilities addressing front office, mid-office, and back-office functions across all product and/or service lines for each customer archetype.

For example: Product and/or service strategy is a capability that creates product roadmaps to meet CUSTOMER requirements and their EXPERIENCE;

Campaign management is a capability that launches, measures, and reports on the success of marketing campaigns. When brought together, the capabilities comprise a capability map, representing the collective set to execute the required strategy and Business Model.

A capability map provides a basis upon which organizations can build their Target Operating Model (TOM). It can be used to determine skill requirements, hire talent, establish performance metrics, build teams, and identify collaboration opportunities.

Where is the work performed?

Once leaders have established the capability map, the next step is capability acquisition. Several capabilities will likely already exist, some mature or fit for purpose, others newly arrived. This step is often the most challenging to execute, as companies may resist changing their existing ways of working when they could seize the opportunity to break away from legacy processes and technologies.

Companies typically have 4 sources of capabilities:

1. Organizations can develop, transform, or mature capabilities internally (using them as they are)
2. they can acquire capabilities through mergers and acquisitions
3. they can partner to access them;
4. or they can outsource capabilities and receive them as a service. The decision to develop, acquire, partner, or outsource is critical, as each lever provides organizations with unique advantages.

• Speed: How urgently do we need this capability?
• Control: How important is it for us to internally control the outcomes?
• Specificity: To what extent do we need to tailor this capability to our business?
• Competitive advantage: To what extent does this capability provide us with an advantage over competitors?
• Operational leverage: How much do we want to take on in fixed commitments/on the balance sheet?

Who does the work?

The next step involves assigning the work to the most efficient parts of the organization.

Capabilities typically provide two types of value: demand or supply. Demand-side advantages drive greater attention to a company's offerings, increasing prices, revenues, and margins. These include capabilities such as sales, product engineering, recruitment, branding, and corporate strategy, where processes and skills are less repeatable, and where talent is a significant driver of value.

Supply-side advantages allow a company to operate more effectively and make the most of resources. These often include areas where value is related to scale, such as sales-quoting capabilities, self-service, accounting, and manufacturing.

Similarly, the relationship with the business is twofold. Capabilities significantly linked to the business line often rely on some expert skill such as localization, research and development, product marketing, or technical sales.

Those capabilities with limited business relationships, such as mergers and acquisitions, e-commerce, and supply chain management, rely on generalist skill sets and operate across the enterprise.

Each capability has a different place within the operating model, and companies can choose different ways to deliver similar capabilities. Those decisions should be closely linked to strategy.

How can organizations achieve better outcomes?

Operating models are constantly evolving, driven by employee and customer feedback, the effectiveness of business processes, and evolving competitive landscapes. Leading organizations enhance their capabilities through simple, cross-cutting processes, hyper-focused incentives, and cutting-edge tools to drive simplicity, clarity, and speed in execution.

Our research points to at least 6 ways to potentially increase the chances of building a model that can help guide a successful CRM Implementation Initiative:

1. Early naming and empowering of functional and business leaders to drive the required cultural change throughout the organization.
2. Define clear roles and responsibilities in business, regions, and functional support groups.
3. Create complementary incentives and goals for businesses and functions to reduce conflicts and optimize resource allocation.
4. Establish cross-functional analytics to keep relevant parties informed and appoint a responsible party to manage the early process.
5. Institute a governance model with clear KPIs for each management team, one that supports fast and independent decision-making.
6. Standardize the exchange of resources and knowledge to ensure that skill sets are cultivated and spread.

Transformation requires leaders to develop a clear sense of their strategic ambitions — namely: where to play and how to win — and the business models they wish to employ, including target customer segments, channels, pricing, and delivery models.

There are obviously many other questions to answer, but it is clear that:

Both strategy and business model directly influence the design of the operating model. And at the end of the day, it all comes down to the processes within the Operating Model...

Organizations that try to shortcut their way (looking for a shortcut or unwilling to do the work...) to a new set of processes may find that the resulting design is ineffective and that CRM implementation fails to gain traction among employees, or worse, dilutes the value of the effort for both collaborators and customers.

More critically, processes must be inextricably linked to corporate and business unit strategies and different Business Models.

Processes are the anchor of the company and are fundamental to the effectiveness and longevity of the strategy. And understanding how your organization is assigned to Processes is key to effective digital transformation.