CRM?-SRM? How about BRM Business relationship management - bridging the relationship divide

There can be few working in organisations large or small that have not suffered at some point with the internal conflicts that detract from the outward facing relationships whether they be with customers or suppliers. The perennial contest between what has been sold and the ability of the organisation to deliver has blighted many a good strategy. The case for looking holistically at Business Relationship Management is strong.

This potential area of conflict has been accentuated in recent years by the crystallisation of external relationships between Customer Relationship Management (CRM) and Supplier Relationship Management (SRM). Companies have made significant investments in recent years in technology systems promising greater visibility and profitability. The reality of these major programmes and the return on investment has frequently fallen well short of expectations.

It is no surprise to those of us involved with business relationship management and knowledge creation that technology will seldom bridge the gap in peoples minds. These systems are fundamentally information gathers and as such depend on the desire and discipline of those required to feed them. This reality is being further reinforced by current Knowledge Management thinking, which follows the same assumption that people are willing and enthusiastic about sharing what they know.

The concept of Knowledge management is frequently challenged on the basis that knowledge exists only in people’s minds and that information and data are not in themselves knowledge. Experience, skills, information and data blend into a collective knowledge portfolio that is the backbone of innovation and competitive edge. Knowledge Creation comes from the interaction of these elements and it is clear that the key ingredient for effective development is the interaction between people rather than machines.

The exploitation of knowledge creates a dilemma for organisations in terms of extracting value from CRM or SRM and poses the question can the investment ever pay off if the fundamental relationship environment is not in place first?. Organisations are fundamentally about people and the flow through from customer to supplier and back is a crucial part of effective operations. If the internal links are not effective then it might be considered that expensive external management is futile. The concept of BRM must then provide for a more holistic approach.

This becomes even more critical when considering the growth in Outsourcing and Off-shoring, which raises the spectre of ‘The Outside in Theory’. The importance of relationships in business is a fundamental belief of PSL. Each time one discusses the subject or relationships with organisations there is a ready acknowledgement of the principle. Yet frequently for many organisations the issue of Business Relationship Management is low on their development programmes.

This is perplexing particularly when you consider the growth of Insourcing, Outsourcing and Off-shoring where the interfaces between organisations are always a point of vulnerability and risk. Often the assumption is made that managing relationships is just a normal part of business life and thus low on the needs development profile. Yet expenditure on KM, CRM and SRM are still attracting attention and high investment

This dilemma prompts consideration of the nature of how organisations look at themselves in the context of the impact of how their relationships are perceived. Many traditional organisations have developed under a command and control structure that looked from the inside out to the market place and controlled through arms length contracts with either customers or supplier. This approach assumed that they would operate within known rules and behaviours and in the context it is relatively easy to manage relationships and behaviours as a factor of location.

The trend towards outsourcing, alliances and networks means that the external organisation are in reality moving inside another organisations virtual boundaries or firewalls to become an integral part of the overall delivery process. However their remote location means that they are not physically absorbing the ethos or culture of the host client. In some cases they may be operating with a completely different set of conflicting values. Thus the outside is coming inside but is frequently still evaluated on the basis of traditional command and control thinking.

The Outside in Theory poses the question when assessing the importance and value of relationships should we be evaluating from another perspective. If organisations look at their operations from the perspective of outside in they may realise that BRM is a more complex and crucial ingredient for these diverse business models. Assessing this against the profile of functional approaches such as CRM and SRM and the questioning of value and focus may be more trigger a more robust evaluation.

In developing the CRAFT maturity assessment programme (MAP) the challenge was to identify traits and indicators that reflect an organisations ability to collaborate. One aspect of the assessment is the requirement not only to look at the operation but also to interview customers and suppliers. The aim being to see if the desire and ethos of collaboration actually spans all the internal functions of the organisation.

It will come as little surprise that in many businesses the persona they present to a customer as being a collaborative potential partner is frequently not reflected by other actions due to the internal silo mentality and/or their approach to suppliers. It is not hard to appreciate that with suppliers representing a major part of the delivery process and internal divisions absorb energy then the performance for the client will be affected.

In recent discussions with a BSi study group on the potential for a Customer Service standard this breakdown of cultural pass through came quickly to the fore. However much a company invests in establishing a customer-focused face the reality is that without the integrated support of the internal functions the impact is diluted or fails completely.

From personal experience in procurement endeavouring to improve our game and performance by working with suppliers even strategic relationships came under pressure when other internal functions failed to support the relationship effectively. For example when a supplier pushes out all the stops to help and then payment is delayed, this quickly deflates commitment.

Over the past few years PSL has advocated considering the supply chain as a value chain, activities or processes that are two or more steps away from the client focus may impact real value creation. In the same way we should consider the validation of the relationships that connect these activities. This becomes even more crucial when considering the move towards Outsourcing and Off-shoring where these external players are a key part of the overall delivery process, thus significantly influencing the customer relationship.

The point, which many will recognise, is that the thread of effective relationships should be consistently woven internally throughout the organisation and not localised simply to external interfaces. More importantly the investment in CRM and SRM will not return value unless the network of integrated relationships is in place and effective first.

Bridging the relationship divide should be a key focus throughout every organisation that wants to improve performance. BRM represents both the basics fundamentals of business and the crucial ingredient for effective operations. Externally focused systems that are not connected can do little but force up technology investment and create false hopes in the process.

Dave Hawkins