Enterprise Relationship Management
Encyclopedia
Enterprise relationship management or ERM is a business method in relationship management beyond customer relationship management
.
), that focuses on improving top-line growth by maximizing an organization's ability to identify sales and business opportunities with its customers. CRM's little brother PRM
(partner relationship management (PRM)
), focuses on optimizing opportunity and downstream order management for an organization's channel partners (e.g. CISCO and its partner lead and referral management process) On the back end, we have ERP (enterprise resource planning
) to manage internal operations including manufacturing, finance, HR, sales and distribution, etc. Specialized HRM (human resource management
) solutions exist to manage employee benefits, collective agreements, performance reviews and so forth. And lastly, SCM (supply chain management
, either as an ERP module or as a stand-alone application) to manage the product flow, up and down a firm's value chain, with external partners/suppliers.
However, according to Galbreath (2002), "for the most part CRM, human resources management (HRM), enterprise resource planning (ERP), supply chain management (SCM), partner relationship management (PRM) and similar programs have paid very little attention to the relationships that underpin those processes, or to the intangible – relationship – assets embedded in them."
Norman and Ramirez (1993) state, "One of the chief strategic challenges of the new economy is to integrate knowledge and relationships – devise a good fit between competencies (Competencies are the technologies, specialized expertise, business processes and techniques that a company has accumulated over time and packages in its offering) and customers and keep that fit current." Galbraeth (2002) adds that "success in the relationship age requires a deliberate process of creating intangible, relationship assets, growing them and monetizing them".
Galbreath (2002) suggests Enterprise Relationship Management as a process or approach to harmonize and synergize the different types of relationships that a firm engages in order to realize targeted business benefits, for significant benefits. Harbison et al. (2000)did some research on the performance of alliances and cited the following statisitics in their study:
In a similar study conducted for the supplier side (results of efficiently run supply chains based on electronic integration and quality processes) by Solomon Smith Barney Analyst Report, Teagarden (2000) presents the following statistics for suppliers:
When looking at these numbers, collaboration with outside firms becomes very attractive. But success in business, as in many other pursuits, is dependent on motivation, investment, trust, discipline and repeatability.
With statistics like these, the need to improve relationship success rates seems quite obvious. Many authors have addressed these issues from varying perspectives, including technology enabling a firm, reviewing or re-designing operational & administrative processes, and transforming the culture to one that is more adapted to collaboration. As Galbreath (2002) and Norman & Ramirez (1993) state, collaboration or rather the effective leveraging of relationship resources to create new sources of value, is a process of learning and developing new mental models and competencies (Senge, 1991) as well as obtaining resources through new means/sources.
ERM is still a relatively new field and few players stand-out with a complete ERM methodology and tools. Nevertheless a host of best of breed tools and methodologies exist to carry out an ERM implementation, unfortunately they are not integrated and focus on very specialized problem areas. ERM tools can be viewed as enablers of an ERM methodology.
Fundamentally adopting ERM is a cultural and change management issue more than a technology or process one. Therefore regardless of the methodology or tools that one may elect to use when integrating with outside firms, they must maintain a focus on the human side of the equations. The figure below illustrates the benefits of focusing on the human, cultural and change aspect of a project, notably deploying ERM in this case.
, process re-design, IS/IT strategy, change management
, supplier relationship management
, customer relationship management
, and risk and business continuity management into a comprehensive and simple framework that supports people and organizations in repeatably/consistently:
Also available in a searchable knowledge base tool that supports managers and business professionals to effectively understand and use collaborative best practices and accelerate the adoption of ERM.
Customer relationship management
Customer relationship management is a widely implemented strategy for managing a company’s interactions with customers, clients and sales prospects. It involves using technology to organize, automate, and synchronize business processes—principally sales activities, but also those for marketing,...
.
Overview
The art of relationship management is not an entirely new one. In fact, it has taken on many forms, addressing specific organizational constituencies (customers, channel partners, specialized service providers, employees, suppliers, etc.). The most obvious being CRM (customer relationship managementCustomer relationship management
Customer relationship management is a widely implemented strategy for managing a company’s interactions with customers, clients and sales prospects. It involves using technology to organize, automate, and synchronize business processes—principally sales activities, but also those for marketing,...
), that focuses on improving top-line growth by maximizing an organization's ability to identify sales and business opportunities with its customers. CRM's little brother PRM
PRM
-Government:* Bureau of Population, Refugees, and Migration * Partido de la Revolución Mexicana ; a Mexican political party, successor to the PNR and immediate precedent of the PRI...
(partner relationship management (PRM)
Partner Relationship Management (PRM)
Partner relationship management is a system of methodologies, strategies, software, and web-based capabilities that help a vendor to manage partner relationships...
), focuses on optimizing opportunity and downstream order management for an organization's channel partners (e.g. CISCO and its partner lead and referral management process) On the back end, we have ERP (enterprise resource planning
Enterprise resource planning
Enterprise resource planning systems integrate internal and external management information across an entire organization, embracing finance/accounting, manufacturing, sales and service, customer relationship management, etc. ERP systems automate this activity with an integrated software application...
) to manage internal operations including manufacturing, finance, HR, sales and distribution, etc. Specialized HRM (human resource management
Human resource management
Human Resource Management is the management of an organization's employees. While human resource management is sometimes referred to as a "soft" management skill, effective practice within an organization requires a strategic focus to ensure that people resources can facilitate the achievement of...
) solutions exist to manage employee benefits, collective agreements, performance reviews and so forth. And lastly, SCM (supply chain management
Supply chain management
Supply chain management is the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers...
, either as an ERP module or as a stand-alone application) to manage the product flow, up and down a firm's value chain, with external partners/suppliers.
Norman and Ramirez (1993) state, "One of the chief strategic challenges of the new economy is to integrate knowledge and relationships – devise a good fit between competencies (Competencies are the technologies, specialized expertise, business processes and techniques that a company has accumulated over time and packages in its offering) and customers and keep that fit current." Galbraeth (2002) adds that "success in the relationship age requires a deliberate process of creating intangible, relationship assets, growing them and monetizing them".
Galbreath (2002) suggests Enterprise Relationship Management as a process or approach to harmonize and synergize the different types of relationships that a firm engages in order to realize targeted business benefits, for significant benefits. Harbison et al. (2000)did some research on the performance of alliances and cited the following statisitics in their study:
- "Strategic alliances have consistently produced a return on investment of nearly 17 percent among the top 2,000 companies in the world for nearly a decade. This return is 50 percent more than the average return on investment that the companies produced overall." Harbison et al. (2000)
- "The 25 companies most active in alliances achieved a 17.2 percent return on equity - 40 percent more than the average return on equity of the Fortune 500." - Harbison et al. (2000)
- "The 25 companies least active in alliances lagged the Fortune 500, with an average return on equity of only 10.1 percent." - Harbison et al. (2000)
- "Successful alliances recognize 20 percent profitability improvements as compared to only 11 percent for the less successful companies." - Harbison et al. (2000)
- "Revenue generation from highly successful alliances equates to 21 percent of overall firm sales as compared to 14 percent for less successful alliances." - Harbison et al. (2000)
In a similar study conducted for the supplier side (results of efficiently run supply chains based on electronic integration and quality processes) by Solomon Smith Barney Analyst Report, Teagarden (2000) presents the following statistics for suppliers:
- Inventory levels reduced by as much as 50 percent.
- Inventory turns doubled.
- Stock outs reduced ninefold.
- On-time deliveries increased by as much as 40 percent.
- Cycle times decreased by as much as 27 percent overall.
- Supply chain costs reduced by as much as 20 percent.
- Revenues increased by as much as 17 percent.
When looking at these numbers, collaboration with outside firms becomes very attractive. But success in business, as in many other pursuits, is dependent on motivation, investment, trust, discipline and repeatability.
Tools and methodologies
Why do we need an Enterprise Relationship Management framework? Simply put, because relationships are becoming more and more prevalent and more integral to an organization's success. Although establishing inter-enterprise links is far from a new science, Klambach and Roussel (1999) affirm that nearly 60% of business alliances do not deliver anticipated benefits while Lovallo & Kahneman (2003) and Selden & Colvin (2003) estimate M&A ( Mergers & Acquisitions) failures range between 70% and 80%.With statistics like these, the need to improve relationship success rates seems quite obvious. Many authors have addressed these issues from varying perspectives, including technology enabling a firm, reviewing or re-designing operational & administrative processes, and transforming the culture to one that is more adapted to collaboration. As Galbreath (2002) and Norman & Ramirez (1993) state, collaboration or rather the effective leveraging of relationship resources to create new sources of value, is a process of learning and developing new mental models and competencies (Senge, 1991) as well as obtaining resources through new means/sources.
ERM is still a relatively new field and few players stand-out with a complete ERM methodology and tools. Nevertheless a host of best of breed tools and methodologies exist to carry out an ERM implementation, unfortunately they are not integrated and focus on very specialized problem areas. ERM tools can be viewed as enablers of an ERM methodology.
Fundamentally adopting ERM is a cultural and change management issue more than a technology or process one. Therefore regardless of the methodology or tools that one may elect to use when integrating with outside firms, they must maintain a focus on the human side of the equations. The figure below illustrates the benefits of focusing on the human, cultural and change aspect of a project, notably deploying ERM in this case.
Velox framework
Velox ERM is a product of Technology Partnerz. It integrates ONA - organizational network analysisOrganizational network analysis
Organizational network analysis is a method for studying communication and socio-technical networks within a formal organization.It is a quantitative descriptive technique for creating statistical and graphical models of the people, tasks, groups, knowledge and resources of organizational systems....
, process re-design, IS/IT strategy, change management
Change management
Change management is a structured approach to shifting/transitioning individuals, teams, and organizations from a current state to a desired future state. It is an organizational process aimed at helping employees to accept and embrace changes in their current business environment....
, supplier relationship management
Supplier relationship management
“SRM is a discipline of working collaboratively with those suppliers that are vital to the success of your organisation to maximise the potential value of those relationships.” - Reference - Overview :...
, customer relationship management
Customer relationship management
Customer relationship management is a widely implemented strategy for managing a company’s interactions with customers, clients and sales prospects. It involves using technology to organize, automate, and synchronize business processes—principally sales activities, but also those for marketing,...
, and risk and business continuity management into a comprehensive and simple framework that supports people and organizations in repeatably/consistently:
- Mapping and understanding collaborative processes and networks within and across organizational boundaries
- Benchmarking collaborative capability
- Identifying and selecting the best partners and collaborators to minimize risk and improve agility of the business network
- Understanding and deploying collaborative best practices
- Aligning and leveraging new and existing business relationships to business objectives
- Accelerating/Facilitating the adoption of business change related to processes, policies, systems and culture changes.
- Accelerating decision making resulting in improved corporate responsiveness to changing market conditions
Also available in a searchable knowledge base tool that supports managers and business professionals to effectively understand and use collaborative best practices and accelerate the adoption of ERM.
See also
- Enterprise Feedback ManagementEnterprise Feedback ManagementEnterprise feedback management is a system of processes and software that enables organizations to centrally manage deployment of surveys while dispersing authoring and analysis throughout an organization...
(EFM) - Business Relationship ManagementBusiness relationship managementBusiness relationship management is a formal approach to understanding, defining, and supporting a broad spectrum of inter-business activities related to providing and consuming knowledge and services via networks, with an emphasis on the emergence of online networks as a primary medium through...
(BRM) - Extended Relationship Management (XRM)
- Enterprise planning systems
Primary sources
- Galbreath, Jeremy (2002). "Success in the Relationship Age: building quality relationship assets for market value creation". The TQM Magazine 14(1).
- Inmon, W. H., et al. (2001). Data Warehousing for E-business. John Wiley & Sons, New York, NY
- Kalmbach, Charles, Jr., and Charles Roussel (1999). "Outlook by Issue: 1999, Special Edition: Dispelling the Myths of Alliances". Accenture.com
- Lovallo, Dan, and Daniel Kahneman (2003). "Delusions of Success". Harvard Business Review, Vol. 81, No. 7, p. 56–63.
- Normann, Richard, and Rafael Ramirez (1993). "From Value Chain, to Value Constellation: Designing Interactive Strategy". Harvard Business Review on Managing the Value Chain. Harvard Business School Press, 2000, 185–220.
- Torkia, Eric (2005). "Velox ERM: Building an Enterprise Relationship Management Framework". Montreal: UQAM (Université du Québec à MontréalUniversité du Québec à MontréalThe Université du Québec à Montréal is one of four universities in Montreal, Quebec, Canada.-Basic facts:The UQAM is the largest constituent element of the Université du Québec , a public university system with other branches in Gatineau , Rimouski, Rouyn-Noranda, Quebec City, Chicoutimi, and...
). - Harbison, J.R., Pekar, P.jr., Viscio, A. and Moloney, D. (2000) The Allianced Enterprise: Breakout Strategy for the New Millennium, BoozAllen & Hamilton.
- Gretchen Teagarden, Solomon Smith Barney, 2000
ERM and "Relationship Age" white papers
- "Managing the Connected Organization" at Orgnet.com