1. Marcus Kirchler, Dirk Manhart, Jörg Unger
Service with SAP CRM
®
Bonn � Boston
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2. Contents at a Glance
1 Introduction to CRM . .................................................. 19
2 Service with SAP CRM – Overview of Functions ......... 65
3 Service with SAP CRM – Processes and Customizing .. 121
4 Critical Success Factors for CRM Projects ................... 277
5 Example from the Automotive Industry ...................... 329
6 Summary ...................................................................... 357
A Operating a CRM System with ITIL ............................. 363
B References .................................................................... 371
C Authors . ....................................................................... 373
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3. Contents
Introduction................................................................................... 13
1 Introduction to CRM .................................................... 19
1.1 Key Concepts and Control Mechanisms in Customer
Relationship Management ............................................. 19
1.1.1 Customer Focus . ................................................. 20
1.1.2 Customer Satisfaction .......................................... 21
1.1.3 Customer Retention ............................................ 21
1.1.4 Customer Lifecycle .............................................. 22
1.1.5 Control Mechanisms in CRM ............................... 24
1.2 Service Management as Part of CRM ............................. 25
1.2.1 Service and Service Management ........................ 27
1.2.2 Service Portfolio as a Differentiation Factor ......... 28
1.2.3 Challenges in Service Management . .................... 29
1.3 Software Support for CRM ............................................. 31
1.3.1 The Future Significance of CRM Solutions . .......... 32
1.3.2 Benefits to Companies of Integrated CRM
Systems ............................................................... 32
1.4 Customer Relationship Management with SAP CRM ...... 35
1.4.1 SAP CRM Roadmap ............................................. 35
1.4.2 Overview of SAP CRM . ....................................... 37
1.5 Service Management with SAP CRM . ............................ 42
1.5.1 Service Sales and Marketing ................................ 44
1.5.2 Service Contract Management ............................. 45
1.5.3 Installed Base Management . ............................... 47
1.5.4 Customer Service and Support . ........................... 48
1.5.5 Field Service Management . ................................. 49
1.5.6 Depot Repair . ..................................................... 50
1.5.7 Warranty and Claim Management ....................... 51
1.5.8 Service Parts Management .................................. 52
1.6 Service with SAP CRM or SAP ERP CS – a Comparison ... 53
1.6.1 Service Operations .............................................. 54
1.6.2 Service Sales . ...................................................... 57
1.6.3 Other Functions and Processes ............................ 57
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4. Contents
1.6.4 Conclusion .......................................................... 61
1.7 Architecture of SAP CRM Systems . ................................ 61
1.8 Summary ....................................................................... 64
2 Service with SAP CRM – Overview of Functions . ........ 65
2.1 User Interface ................................................................ 65
2.1.1 UI Configuration Tool .......................................... 65
2.1.2 Component Enhancement ................................... 66
2.2 Master Data and Basic Functions ................................... 66
2.2.1 Master Data ........................................................ 67
2.2.2 Basic Functions . .................................................. 67
2.3 Service Order Management ........................................... 69
2.3.1 Process Flow ....................................................... 70
2.3.2 Service Quotations .............................................. 71
2.3.3 Service Orders ..................................................... 72
2.4 Warranty Processing ...................................................... 78
2.5 Complaint Processing .................................................... 80
2.5.1 Process Flow ....................................................... 81
2.5.2 Special Functions . ............................................... 83
2.5.3 Follow-Up Functions ........................................... 84
2.5.4 Supported Scenarios . .......................................... 86
2.5.5 Communication Channels .................................... 87
2.6 Product Service Letters and Recalls ................................ 88
2.6.1 Product Updates ................................................. 89
2.6.2 Recalls . ............................................................... 90
2.7 Service Contracts ........................................................... 92
2.7.1 Process Flow ....................................................... 93
2.7.2 Functions in SAP CRM . ....................................... 94
2.7.3 Functions Available Through Integration With
Other SAP Components ...................................... 96
2.8 Service Resource Planning ............................................. 97
2.8.1 Process Flow ....................................................... 98
2.8.2 Functions ............................................................ 99
2.9 Mobile Service . ............................................................. 104
2.9.1 Organizational Support . ...................................... 105
2.9.2 Service Order Processing ..................................... 106
2.9.3 Service Support Functions ................................... 108
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5. Contents
2.10 SAP Business Communication Management . ................. 109
2.10.1 Overview and Functionality . ............................. 109
2.10.2 Interaction Center ............................................. 111
2.10.3 Softphone ......................................................... 112
2.10.4 User Administration .......................................... 115
2.10.5 Routing Management . ...................................... 116
2.10.6 Organizational Tools . ........................................ 116
2.10.7 System Administration ...................................... 117
2.10.8 Monitoring and Analysis . .................................. 118
2.11 Summary ....................................................................... 120
3 Service with SAP CRM – Processes and Customizing ... 121
3.1 Basis Customizing .......................................................... 121
3.1.1 Organizational Plan ........................................... 121
3.1.2 User Role .......................................................... 127
3.1.3 Customer .......................................................... 135
3.1.4 Product ............................................................. 139
3.2 Service Order Management ........................................... 147
3.2.1 Process Display ................................................. 147
3.2.2 Customizing in the System ................................ 151
3.3 Service and Repairs Processing (In-House) ..................... 183
3.3.1 Process Display ................................................. 183
3.3.2 Customizing in the System ................................ 188
3.4 Service and Repairs Processing (Field Service) ................ 190
3.4.1 Process Display ................................................. 190
3.4.2 Customizing in the System ................................ 194
3.5 Reactive Complaints Management ................................. 195
3.5.1 Process Display ................................................. 196
3.5.2 Customizing in the System ................................ 199
3.5.3 Intelligent Solution Database ............................ 218
3.6 Proactive Complaints Management . .............................. 221
3.6.1 Process Display ................................................. 221
3.6.2 Customizing in the System ................................ 223
3.7 Service Case Management ............................................. 226
3.7.1 Process Display ................................................. 226
3.7.2 Customizing in the System ................................ 228
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6. Contents
3.8 Service Resource Planning ............................................. 235
3.8.1 Process Display . .................................................. 236
3.8.2 Customizing in the System . ................................. 238
3.9 Service Contract Management ....................................... 247
3.9.1 Process Display . .................................................. 248
3.9.2 Customizing in the System . ................................. 250
3.10 Warranty Management .................................................. 258
3.10.1 Process Display . .................................................. 259
3.10.2 Customizing in the System . ................................. 261
3.11 Summary ....................................................................... 276
4 Critical Success Factors for CRM Projects ................... 277
4.1 General Success Factors ................................................. 278
4.2 Critical Success Factor – Procedure Model ..................... 279
4.3 Critical Success Factor – Change Management ............... 284
4.3.1 Introduction to Change Management .................. 285
4.3.2 Reasons for Change Management . ...................... 289
4.3.3 Ideal Change Management Procedure Model ...... 292
4.4 Critical Success Factor – Data Quality . ........................... 299
4.4.1 Duplicate Handling in the Standard SAP System . .. 303
4.4.2 Integrating Address Management Software
into SAP Systems . ............................................... 305
4.4.3 Data Quality Activities in the CRM Project .......... 313
4.5 Critical Success Factor – Test Strategy . ........................... 320
4.5.1 Test Model .......................................................... 321
4.5.2 Test Phases .......................................................... 323
4.5.3 Test Preparation .................................................. 324
4.5.4 Test Implementation . .......................................... 325
4.6 Summary ....................................................................... 327
5 Example from the Automotive Industry . ..................... 329
5.1 Fundamentals of the Automotive Industry ..................... 329
5.2 Customer Interaction Center .......................................... 332
5.2.1 Overview ............................................................ 332
5.2.2 Functional Areas . ................................................ 332
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7. Contents
5.3 Complaints Management ............................................... 336
5.3.1 Customer Case/Task in Complaints
Management . ..................................................... 336
5.3.2 Creating a Case/Task ........................................... 337
5.3.3 Processing a Case/Task ........................................ 343
5.3.4 Closing a Case/Task ............................................. 344
5.3.5 Proactive Complaints Management ..................... 347
5.4 Recall Management ....................................................... 348
5.4.1 Preparing for a Recall .......................................... 350
5.4.2 Conducting a Recall . ........................................... 351
5.4.3 Recall Reports ..................................................... 355
5.5 Summary ....................................................................... 356
6 Summary ....................................................................... 357
Appendices ......................................................................... 361
A Operating a CRM System with ITIL . ........................................ 363
B References .............................................................................. 371
C Authors . ................................................................................. 373
Index.............................................................................................. 375
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8. This chapter explains the basic business concepts underpinning
CRM in the service area and provides initial insight into the func-
tions of SAP CRM.
1 Introduction to CRM
This chapter begins by providing a general introduction to the concepts
and control mechanisms of customer relationship management. It then
focuses specifically on the role of service management as part of cus-
tomer relationship management (CRM). After familiarizing you with
these basic business principles, this chapter turns its attention to the
ways in which CRM is supported by software solutions and, in particular,
by SAP CRM 2007. The range of options available is illustrated by a brief
introduction to the functions of this software and a comparison with the
Customer Service (CS) component in SAP ERP. Chapter 1 closes by taking
a look at the system architecture of SAP CRM.
1.1 Key Concepts and Control Mechanisms in
Customer Relationship Management
To help you understand the CRM approach, we will begin by explain- Key concepts and
ing the objectives behind CRM and a number of concepts that are fre- control
mechanisms in
quently discussed in relation to this concept. These include customer
CRM
focus, customer satisfaction, and customer retention. We will then provide
an overview of the customer lifecycle, which plays a particularly impor-
tant role in relation to a company’s service processes. In this section, we
also explain the basic mechanisms that a company can use to control
and improve customer relationship management within the individual
functional areas of the CRM approach, namely operational, strategic, and
analytical CRM.
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9. 1 Introduction to CRM
1.1.1 Customer Focus
A paradigm shift in The implementation of CRM leads to a significant paradigm shift in a
companies company’s focus. The transition from a sellers’ market to a buyers’ mar-
ket described in the introduction underlines the necessity of this para-
digm shift, which moves a company’s focus from the product to the cus-
tomer and to the customer’s current and potential future needs (Holland
2004). A customer focus at all employee levels is often accompanied by
a transformation of the corporate philosophy. In the automotive indus-
try, for example, presumed customer requirements were only taken into
account when designing vehicles in the past. Now, however, a new focus
on customer-related activities goes above and beyond product features,
to include, for example, customer-focused services.
The strategic level As part of strategic decision-making processes, the analytical function
of the company’s IT solutions are used to provide decision makers with
the information they need to make decisions based on the data stored
in the system. This data includes, in particular, information that is avail-
able in a data warehouse and can be evaluated using data mining analysis
techniques.
The operational The operational level of CRM encompasses both the supporting function
level of CRM information technology and the customer focus of the organiza-
tional processes and structural organization (Raab, Werner 2008). A com-
pany that places its customers center-stage must also strive to enhance
the expertise of its customer-facing employees so that these can fulfill
their tasks to the best of their abilities.
One way to do this is to give these employees greater decision-making
powers. In this way, process efficiency is no longer based on procedures
for dealing with and reaching agreement with levels that are higher up
in the hierarchy. Instead, it is ensured by giving individual employees
the ability to make customer-focused decisions at their own level (Link
2001). In addition to this decision-making authority, it is also essen-
tial to provide these employees with all of the information required to
reach their decisions. Employees can access this information by looking
through a complete history of interaction with a customer or using an
analytical CRM system.
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10. Key Concepts and Control Mechanisms in Customer Relationship Management 1.1
1.1.2 Customer Satisfaction
A high level of customer satisfaction, which means a high level of cus-
tomer loyalty, brings strategic benefits by raising the barriers to market
entry for any potential competitors. Customer satisfaction is the direct
result of customers’ subjective perceptions of the shortfall between
their expectations and the degree to which these expectations are met
by the company’s provision of services. A company must therefore
strive to ensure that their customers’ experience of the company’s ser-
vices exceeds their expectations and leaves the customer with a positive
impression. If we apply the CRM approach to this concept, the objectives
in relation to customer satisfaction become, first, to pinpoint customer
expectations and the underlying level of customer requirements, and,
second, to determine the level of customer satisfaction in relation to the
services provided.
1.1.3 Customer Retention
We can distinguish between two fundamental types of customer reten-
tion, namely, customer attachment and customer binding. In this context,
attachment refers to a voluntary attachment of customers to a brand or
company that is not bound by practical constraints. Binding, meanwhile,
means that circumstances “bind” the customer to a company in a way
that is no longer voluntary. Customer binding may be based on contrac-
tual, economic, or technical or functional constraints. Examples include
long-term cooperation agreements, contractually agreed sales quantities,
or a current lack of alternatives. In the case of customer attachment, the
connection is predominantly a psychological one, and is based on cus-
tomer satisfaction, personal relationships, habits, or even tradition.
The benefits of customer retention are largely economic, and are par- Three key benefits
ticularly evident in long-term customer relationships. We can identify
three key benefits to a company of a high level of customer retention
(Homburg, Krohner 2003):
EE Sales-related benefits
These result from a potential increase in the volume of sales to a
customer. Companies who maintain long-term relationships with
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11. 1 Introduction to CRM
their customers can become ever better at meeting customer-specific
requirements and, in this way, reduce the likelihood of customer
defection, as well as make their own range of services more attractive
than the competition. In addition to acquiring knowledge of the cus-
tomer as part of the customer relationship, long-term business rela-
tionships also allow companies to achieve greater success in terms of
cross-selling.
EE Cost-related benefits
These result from a reduction in transaction costs and coordination
costs as the customer relationship develops. The alternative costs of
acquiring new customers are also reduced.
EE Stability-related benefits
These benefits are achieved if negative market influences on the com-
pany can be offset by long-term customer relationships.
1.1.4 Customer Lifecycle
One focal point for the CRM approach is a holistic view of the customer
lifecycle. This enables a clear vision of the phases during which a com-
pany must apply certain CRM instruments to their relationship with a
customer (see Figure 1.1). The customer lifecycle also demonstrates the
economic potential that can be achieved through long-term customer
retention (Müller 2004). Customer retention starts in the initiation phase
with the first contact between the company and the customer. The objec-
tive of using a CRM system must be to support the relationship with the
customer through information analysis and control to enable long-term,
profitable customer retention.
Overcoming Throughout the customer lifecycle, the relationship with the customer
periods of risk progresses through various phases in terms of the intensity of the cus-
tomer’s loyalty. Each of these risk phases involves a threat to the company
of losing the customer.
However, the overall benefit to the company of customer retention
increases the longer the customer can be retained. Within this lifecycle,
CRM therefore plays a decisive role in helping companies overcome these
periods of risk and prevent a potential loss of the customer’s loyalty.
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12. Key Concepts and Control Mechanisms in Customer Relationship Management 1.1
Intensity of Relationship
(e.g. Customer Value)
Potential Existing Former
Customer Customer Customer
Degeneration
Phase
Revitali-
zation-
Phase
Initiation Sociali- Risk Growth Risk Maturity Risk Cancell- Abstinence Time
Phase zation Phase Phase Phase Phase Phase ation Phase
Phase Phase
Develop
Customer Utilize Customer Potentials
Potentials
Regaining Customers,
Customer Customer Retention: Termination of
Acquisition Retention and Penetration Customer Relationships
Figure 1.1 Customer Lifecycle Management (from Stadelmann et al. 2003, S. 35)
It also provides a basis for the efforts of a company to retain customer Extending the
loyalty at a late stage in a relationship with a customer. This is particu- customer
relationship
larly useful because, when we weigh up the costs and benefits, maintain-
ing an ongoing relationship with the customer is much more efficient
than trying to win the customer back at a later stage or trying to acquire
new customers to maintain business volumes. An extension of the cus-
tomer relationship, which is often very beneficial for companies, is only
possible if the effective benefits of a continued business relationship can
be clearly demonstrated to the customer even at a late stage in the rela-
tionship. The services a company can offer its customers therefore take
on a special significance.
Service is a key factor that enables companies to effectively extend the Service as a key
customer lifecycle and to increase the profitability of their customer rela- factor
tionships. Therefore, customer relationship management must also seek
to enable a quality of service that delivers added value to the customer
based on the continued business relationship. Within a company’s CRM
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13. 1 Introduction to CRM
process, it is of key importance to the service area that the CRM IT solu-
tions allow the company to achieve the desired level of service quality.
1.1.5 Control Mechanisms in CRM
The overall CRM process in a company can be divided into various func-
tional areas, listed below:
1. Analytical CRM
2. Strategic CRM
3. Operational CRM
The complex relationships between these functional areas and their con-
trol mechanisms in customer relationship management are shown in
Figure 1.2.
Analytical CRM: Reporting and Analysis Methods:
Helps to enter customer data and Support the transparency and analy-
to integrate the data into a 360- Data sis of customer relationships
degree view of the customer
Knowledge
ge
led
Actions
ow
Kn
Relationship Optimization Relationship Planning:
in operational CRM: Supports the coordination of ac-
Knowledge gained from analy- Goals tions and leads employees to focus
ses can help to initiate personal- on universal goals
ized actions
Figure 1.2 Functional Areas and Control Mechanisms in CRM
1 Based on the current situation, the details of which can be deduced
from the existing data by means of analysis (analytical CRM). 2 Knowl-
edge can be gained that can be used for the strategic planning (strategic
CRM) of goals. These goals, together with the findings of the analysis,
produce 3 specific actions and measures, for example, for optimizing cus-
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14. Service Management as Part of CRM 1.2
tomer relationships (operational CRM). The effects of these actions have
an impact on the data basis, which, if the company takes a 360-degree
view of the customer, will ideally result in renewed optimization of the
corporate strategy in relation to customer relationships. In this way,
these control mechanisms enable ongoing improvement of customer
relationship management in a company.
To ensure that these complex interactions of information and control
mechanisms can be implemented in companies in practice, a compre-
hensive and flexible system is essential to provide support for CRM pro-
cesses. This system must provide a sufficiently broad view of all cus-
tomer-relevant information, enable strategic and timely implementation
of measures, and allow the effects of these measures to be monitored
directly.
1.2 Service Management as Part of CRM
Customer satisfaction is considered to be a decisive factor in determin-
ing customer loyalty to a company. An active influence is exerted on
customer satisfaction during each phase of contact. An analysis of the
customer lifecycle clearly shows that various measures allow a company
to come into direct contact with a customer in the after-sales phase. In
this context, the sales area is particularly effective in exercising a positive
influence on customer satisfaction.
Up to this point, we have looked at the management of customer rela-
tionships from a generic perspective. Taking a 360-degree view of a
customer and taking account of the entire customer lifecycle are two
approaches that are particularly effective ways for companies to create a
sound basis for embedding the service area within customer relationship
management (see Figure 1.3).
The services and service management offered must always be economi-
cally efficient and must not be at odds with the profitability criteria for
the provision of services.
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15. 1 Introduction to CRM
Internal Fields of Competence Affected by CRM External
System in an Enterprise System
Stake- Compe-
holders Vision/Mission tition
Strategic
Goals
Strategic Planning
Marketing Sales After-Sales/
Service
Structural Organization
Process Organization
Technology
Figure 1.3 Service as Part of Customer Relationship Management
Target criteria for At this point, it should be pointed out once again that a service does not
the “service” area represent an end in itself. Rather, it must help the company achieve the
following goals:
EE Quantitative goals
EE Revenue target
EE Profitability target
EE Qualitative goals
EE Increased customer satisfaction
EE Increased customer loyalty
These generally applicable goal criteria overlap with some of the goal cri-
teria for customer relationship management as a whole. In many phases
of a customer relationship where sales transactions are placed center-
stage, the term service can be applied to additional services relating to the
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16. Service Management as Part of CRM 1.2
product itself. Here, however, the focus is on the services that become
relevant after the product is sold, that is, at the after-sales stage, even if
services that go above and beyond the mere provision of a product may
also be offered at the pre-sales and sales stages (see Figure 1.4).
Focus on Service
Pre-Sales Sales After-Sales
Service Service Offerings
Figure 1.4 Focus on After-Sales Service
Examples of the services that a company may offer its customers before Services before,
or during the sale of a product include sending information material during, and after
the sale of a
and flyers, product samples, and a hotline to handle customer inquiries.
product
Services offered after the sale of a product relate in particular to the fol-
lowing areas:
EE Complaint handling
EE Maintenance and installation
EE Provision of product add-ons
EE User helpdesks
EE Service centers
EE Field service employees
1.2.1 Service and Service Management
The concept of “service” was a hot topic at the end of the 1980s and the
start of the 1990s in the context of the “service wave.” Back then, initial
considerations regarding the introduction of service concepts provided
an important starting point for recognizing the necessity of providing
customers with services. Services were already being identified as an
important distinguishing feature of companies, and nothing has changed
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17. 1 Introduction to CRM
in this regard since then. For example, Samuel J. Palmisano, CEO of IBM,
described the service area as the most important area in his company in
2003.
In 2006, services earned companies in the mechanical engineering indus-
try approximately 43.3 billion euros. More than one-third of all services
relate to after-sales service offerings. The most profitable after-sales areas
in this context are service parts, which account for about 18% of com-
panies’ EBIT (earnings before interest and taxes), consulting and value-
added services (around 16%), and repair and maintenance (about 12%)
(Mercer Management Consulting 2006).
1.2.2 Service Portfolio as a Differentiation Factor
The services provided by a company have various benefits, both for cus-
tomers and for the company itself. The benefits to the customer are
based on the following factors:
EE Breadth and depth of services offered compared with customer
ex­ ec­ ations
p t
EE Accessibility of services
EE Service prices
EE Degree of performance of services
EE Short waiting times
EE Completeness
The service portfolio can be divided into three areas, namely, Must have,
Need to have, and Nice to have (see Figure 1.5). It is impossible to make
generalizations about which specific services will fall into which of these
areas at any given time because this depends on various developments:
EE Technological developments
EE Standardization developments
EE Consolidation of services in the market due to the adaptation of all
competitors
EE Consumer habits
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18. Service Management as Part of CRM 1.2
Customer Satisfaction Differentiation Range
Service Offerings
Must have: rudimentary services
Need to have: services geared toward competition
Nice to have: services differentiating from the competition
Figure 1.5 Differentiation Range of Customer Satisfaction
The Must have area includes service offerings that customers expect at Must have
all events and therefore must be offered. These include legally binding
warranties or the availability of replacement parts for repair.
The Need to have area includes all services that are offered by competitors Need to have
and can therefore be regarded as a necessity. Customers often assume
that the same services will be offered by direct competitors, and the
only factor that impacts on their satisfaction in many cases is the non-
existence of these expected services.
The Nice to have area is of particular significance in relation to differentia- Nice to have
tion. Companies can exercise a positive effect on customer satisfaction
by offering services in this area. If they succeed, they will create a unique
selling point that will set them apart from the competition.
1.2.3 Challenges in Service Management
Up to this point, we have described how services can increase customer Competition in the
satisfaction and improve customer retention by serving as a differentia- service area
tion factor that gives companies a competitive edge. However, in this
role as a key differentiation factor, both the services themselves and
how they are perceived by customers are particularly sensitive to mar-
ket dynamics and increasing customer requirements. Competitors will
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19. 1 Introduction to CRM
also take advantage of any opportunities to gain an edge in the market
through the provision of services. This means that companies are con-
stantly competing for customers by continuously improving the scope
and quality of their services. If a company is to survive in the market
and hold on to its customers, it must continually improve its services and
adapt to market conditions.
As shown in Figure 1.6, the opportunities for differentiation decrease
over time as competitors adapt to the higher service level and customer
expectations continue to rise.
Decreasing opportunities for
differentiation
Diminution of - Cause:
old
differentiation range a) Adaption of service offerings by the
new in terms of time competition
Customer Satisfaction
b) Increasing customer expectations
Challenges derived
- Identify new differentiation features
- Optimize existing differentiation features
(quality, responsiveness)
- Instruments:
a) Technology
b) Process Optimization
Service Offerings c) …
Figure 1.6 Market Dynamics – Decreasing Opportunities for Differentiation
A company must be able to respond to this change by identifying new
differentiation features and incorporating these into their service portfo-
lio, or by improving the quality of their existing differentiation features
to gain a fresh competitive edge.
Three main instruments can be used for this purpose:
EE Technology and systems
EE Service processes
EE Service employees
Interplay between However, none of these can be examined in isolation. To establish a cer-
the three tain level of quality in terms of service processes and to improve this on
instruments
an ongoing basis, you first require technologies and systems that enable
a very high level of process quality. In addition, service employees not
only require adequate education, training, and motivation to carry out
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20. Software Support for CRM 1.3
their duties, but also rely on process quality and on optimized technolo-
gies and system design.
In this context, the choice of supporting technology and systems is criti- Critical role of
cal to the company because it has a direct effect on the other instruments technology and
systems
of processes and employees. One thing a company must be able to do to
withstand the competition for customers in the service area is to select
the right technology and systems that can create the conditions neces-
sary for establishing an excellent quality of services compared with the
competition and retaining this leading edge. In the following sections,
we demonstrate how CRM systems and their service functions can help
a company to do just that.
1.3 Software Support for CRM
In the market for systems that support business processes, the develop- Dynamic
ment of CRM solutions has become very dynamic only recently, com- development
pared with generic enterprise resource planning (ERP) or supply chain man-
agement (SCM). Systems referred to as sales force automation (SFA) systems
or, in Europe, as computer aided selling (CAS) systems, became established
in the early days as a primary support for sales. These were primarily
intended to help sales employees complete the following key tasks:
EE Manage customer contacts
EE Organize sales activities
EE Classify sales opportunities
EE Analyze developments in sales
EE Collect information about customers and products
However, as part of this dynamic development, customer requirements
arose that could not be met by these early systems, for example, the
need to access all previous outcomes of contact with a customer any
time that communication with this customer is required. More complex,
integrated systems were needed to enable the newer CRM strategies.
To practice successful and far-reaching customer relationship manage-
ment, systems are now required that enable a process-oriented view of
the customer. This can only be realized if large volumes of data can be
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21. 1 Introduction to CRM
structured and processed and if the systems can be tightly integrated
with the systems used in other areas of the company, such as logistics
and finance.
1.3.1 The Future Significance of CRM Solutions
In many cases, the level of development that allows processes to be sys-
tematically mapped in integrated IT systems, which is already complete,
or at least at an advanced stage in the area of ERP and SCM solutions,
is yet to come for customer relationship management. Many companies
have, by now, acknowledged the importance of CRM to their future
survival and, taking a medium-term view, are aware of the necessary
investment in IT solutions that will fulfill the company’s requirements
in terms of implementing and supporting CRM processes. In many cases,
one of the key tasks for IT in a company is to offer business departments
a modern, highly integrated IT solution for CRM.
This trend is well documented, for example, by a study by the Economist
Intelligence Unit (2005). This revealed that customer relationships and
customer service was by far the number 1 business area (62%) where IT
is to play a decisive role in the medium term. This was followed by sales
and marketing (34%) and new product and service development (31%).
1.3.2 Benefits to Companies of Integrated CRM Systems
Customer relationship management is a complex, holistic approach that
strives to enhance a company’s profitability by improving its relation-
ships with its customers. Individual, preliminary objectives and methods
can be identified, which together allow this overall goal to be achieved.
The implementation of an integrated CRM solution requires an invest-
ment by a company that must yield a range of additional benefits that
go above and beyond the company’s basic requirements in terms of a
CRM strategy and CRM processes. In this way, companies can benefit
from the overall added value of a modern CRM system, in addition to its
basic operational functions.
360-degree view of Customer data provides a starting point for any CRM activity. If a signifi-
the customer cant improvement is to be made in customer relationship management,
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22. Software Support for CRM 1.3
it is not sufficient to manage only some of this customer data. Rather,
a complete, holistic view of all available customer data and the rela-
tionships between this data, in other words, a 360-degree customer view,
serves as an essential starting point. This can incorporate the following
features:
EE Transparency of all customers and customer requirements
EE A unified picture of complex customer and object structures in a cen-
tral, universal model (and therefore system)
EE A complete history of interactions with the customer across all busi-
ness departments
EE Documentation and retention of important customer knowledge
from customer-facing processes (for example, price agreements or
call reports)
EE Assessment of the success of customer care measures (for example,
acquisition, campaigns, contact intensities, lead times for customer
complaints)
EE A feedback system, whereby knowledge about a customer gleaned
from past interactions with that customer is fed into current or future
interactions (for example, reasons for rejecting past offers are taken
into account when determining future interaction)
The complexity reflected by this type of 360-degree view of the customer
can only be mapped by IT using the latest CRM software solutions. The
design of the solutions is therefore of particular importance in determin-
ing whether a company is in a position to use this type of holistic view
of its customers to achieve its CRM objectives.
Increasing customer loyalty is another goal for CRM. Customer loyalty is Increasing
another important factor in the overall profitability of the lifecycle of a customer loyalty
customer relationship (see Section 1.1.4 Customer Lifecycle). The follow-
ing tools are particularly effective in enhancing customer loyalty:
EE Personalized contact and personalized services based on a complete
interaction and information basis
EE Unified, strategic communication (one face to the customer) across all
departments
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23. 1 Introduction to CRM
EE A constant presence and constant availability (24/7) to customers
using all communication channels
Importance of an In relation to these measures for increasing customer loyalty, it also
integrated CRM becomes clear that these can only achieve a corresponding process qual-
system
ity if an integrated CRM system allows the company to integrate all rel-
evant information, technologies and functional areas so that information
is exchanged and all subprocesses are linked in virtual real-time.
Additional This type of system support for processes also allows companies to lever-
potential for age additional potential to increase sales or reduce costs:
increased sales
EE Faster, more streamlined customer-facing processes thanks to
greater efficiency, for example, by establishing customer self-service
processes
EE Performance differentiation (prices, discounts, advertising mate-
rial, and so on) or a cost-efficient enhancement of customer care (for
example, call centers)
EE Increased sales through cross- or up-selling
EE Reduced costs through the use of new contact channels
EE Reduced costs through the transfer of functions from the company
itself to customers, partners, or vendors
EE Reduced costs in outbound campaigns thanks to suitable target
groups
EE Reduced costs in the supply chain due to a clearer focus of investment
in the most profitable customers
EE Strategic analysis and development of potential by linking customer
and market data (lead management and opportunity management)
EE Increased customer lifetime values thanks to greater customer loyalty
EE Integration of partners into the process chain, for example, as part of
sales promotions campaigns (channel integration)
In addition to the benefits for the company itself, account must also be
taken of the fact that customers should benefit from the company’s use
of a CRM solution. This is essential to the establishment of sustainable,
stable, and mutually beneficial business relationships.
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24. Customer Relationship Management with SAP CRM 1.4
1.4 Customer Relationship
Management with SAP CRM
Section 1.4.2 Overview of SAP CRM, provides an overview of the func-
tions provided by an SAP CRM system. First, however, we provide a
short introduction to SAP’s CRM Roadmap to briefly explain the recent
development of the various releases.
1.4.1 SAP CRM Roadmap
Figure 1.7 shows the current situation with regard to the individual
releases of the SAP CRM system.
The SAP CRM 2005 system was released in 2005. SAP CRM 2005,
together with its predecessor, SAP CRM 4.0, currently represents by far
the greatest number of SAP CRM live installations.
SAP CRM Product Release Roadmap
2005 2006 2007 2008 2009
SAP CRM
2005
RAMP-UP UNRESTRICTED SHIPMENT
SAP CRM SAP CRM SAP CRM
2006s/1 2006s/2 2007
PHASED RAMP-UP RAMP-UP UNRESTRICTED SHIPMENT
INTRODUCTION
SAP CRM 7.0
UNRESTRICTED
RAMP-UP
SHIPMENT
Figure 1.7 SAP CRM Roadmap
The subsequently developed 2006s/1 and 2006s/2 systems were pre-
paratory releases, which a limited number of customers used to jointly
develop Release 2007 with SAP. Starting in early 2008, SAP CRM 2007
was available to a broad range of customers as part of a ramp-up phase.
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25. 1 Introduction to CRM
Since the middle of 2008, customers have been able to use this release
without any restrictions, and the introduction of release 7.0 is planned
for 2008/2009.
Developmental Overall, the development from Release 2005 to Release 2007 can be
leap regarded as the greatest progress made in the recent history of SAP CRM
systems. The most obvious change is undoubtedly the new user interface
(UI), which is based on web standards and is easily personalized by the
user and more user-friendly than any previous SAP CRM system. With
this new UI, it is very easy to integrate external Web services, such as
news feeds, and so on. Many functions are integrated into the interface
as web client popups.
With the new-look interface (see Figure 1.8) and the high level of usability,
SAP has made a decisive leap forward in the area of CRM systems. Back in
the days of Release 2005, the main argument in favor of using SAP CRM
was its high level of integration with the SAP ERP system. With Release
2007, however, the SAP CRM system can now also hold its own in the
market in terms of both usability and functional scope. Meanwhile, this
integration has also been enhanced. (For more details, refer to Section 1.7
Architecture of SAP CRM Systems.) As a result, the need for users from
the marketing and sales areas to weigh integration against usability will
soon be a thing of the past because the new CRM release offers both.
Figure 1.8 The New Look of SAP CRM 2007
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26. Customer Relationship Management with SAP CRM 1.4
1.4.2 Overview of SAP CRM
The SAP Customer Relationship Management (CRM) solution offers an end-
to-end range of functions to cover the entire lifecycle of customer rela-
tionship management, as well as instruments for analysis and planning.
Customer relationship management can be roughly divided into the fol- Phases of CRM
lowing phases:
1. Engagement
This phase involves identifying possible customers and acquiring
them for an initial sale.
2. Transaction
This phase involves establishing business agreements and processing
sales.
3. Fulfillment
This phase involves delivering the promised services to customers
and billing for services rendered.
4. Service
This phase involves offering and delivering additional, product-based
after-sales services.
Various functions are also available across all four phases, which allow
the phases to be planned (analysis and planning) and help the business
departments and management make decisions affecting customer rela-
tionship management.
This book focuses on the service area, which we introduce in Section
1.5 Service Management with SAP CRM, and discuss in more detail in
subsequent sections. First, however, we will briefly introduce the first
three CRM phases and the more important functions assigned to these
in the SAP CRM system. This introduction is by no means exhaustive,
and we will limit ourselves to just some of the functions provided as
part of the very extensive functional scope. We will then move on with
a more detailed and comprehensive discussion of the topic of this book,
that is, service.
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27. 1 Introduction to CRM
Engagement
The engagement area largely covers the following functions: marketing,
lead management, customer segmentation, quantity assignment, product
proposals, and communication.
Marketing The Marketing Planner is a particularly useful tool for marketing. This
maps and hierarchically structures a company’s marketing activities in
the form of corresponding plans, organized, for example, by customer
categories, countries, or products. It supports the exchange of data both
within the CRM system and between the CRM system and external appli-
cations such as Microsoft Outlook or Project. Marketing campaigns can
also be planned in SAP NetWeaver Business Intelligence (BI), if it is used,
which means that corresponding key figures are generated there also.
Lead management Lead management allows you to identify and classify sales opportunities
with a view to tracking down market opportunities and sales oppor-
tunities. The SAP CRM system allows you to manage all relevant data,
manage the development of the sales opportunity into a customer, and
transform a lead into a customer in the system directly, together with all
of the assigned information.
Segment Builder Another key function in this area is the Segment Builder, which supports
customer segmentation. This allows activities and campaigns to be aimed
directly at customers that are likely to respond positively to these, based
on specific characteristics, such as product preferences in the past. As a
result, campaigns can be designed in a more strategic and cost-effective
manner.
Quantity Quantity assignment allows for the distribution of a possibly limited prod-
assignment uct capacity among various customers. For example, a company can
allocate the largest available quantities of a product that is to be newly
launched in the market to the customer that generated the greatest rev-
enue in the past because this customer is also more likely than others to
want to buy large quantities of this product.
Product proposals An extensive product proposals function is also provided, which uses
product association rules to generate product proposals from the data
stored about a customer’s past transaction behavior. These proposals are
particularly likely to lead to a sale to the customer in question. This sup-
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28. Customer Relationship Management with SAP CRM 1.4
ports the conventional tools used to boost revenue with customer cross-
selling and up- and down-selling.
Finally, the functions provided for communication are also worthy of a Communication
mention. In the past, a major shift took place in marketing from generic
mass communication to increasingly individual and personalized com-
munication with customers. This personalization or individualization
of customer communication would be impossible without a CRM sys-
tem that can offer the relevant capabilities, because these processes fre-
quently require a high degree of automation, a large data volume, and a
correspondingly high level of data quality if the time and effort involved
are to be kept within reasonable limits. SAP CRM provides the user with
support in relation to all relevant communication channels.
Transaction
In this area of customer relationship management, tools are provided
to support the organization of sales, for example, tools to manage sales
territories or sales activities. In addition, this CRM phase maps the sales
activity cycle, which includes the planning and management of business
partners and sales opportunities, order acquisition, and the analysis of
sales key figures.
The organizational elements of this functionality (territory management and Territory and
activity management) support the modeling of organizational structures activity
management
and corresponding functions, such as reporting, and the management
of specific sales activities, such as the scheduling of sales negotiations
and the allocation of sales resources. For example, all customer-specific
activities, such as on-site sales negotiations and telephone inquiries, are
recorded. As a result, the latest status of interaction in a customer rela-
tionship is transparent to all sales employees. This makes it easier for a
sales employee to work temporarily on a customer account that is nor-
mally the responsibility of another sales employee, for example.
If used in conjunction with SAP NetWeaver Business Intelligence, these
sales activities can also be analytically evaluated. This creates transpar-
ency regarding which sales activities were particularly efficient and which
did not succeed in meeting the target set. This allows the company to
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29. 1 Introduction to CRM
optimize its sales activities over time and to develop greater efficiency
of sales.
Business partner Business Partner and Opportunity Management enables the management
and opportunity of information about business partners and about sales opportunities.
management
Whereas the business partner cockpit provides a comprehensive view of
business partners and all data relating to them, Opportunity Management
records sales opportunities and helps sales employees convert these
opportunities into real sales. For example, it allows sales opportunities
to be compared on the basis of their expected likelihood of success or
their expected volume, which allows sales efforts to be focused on the
most promising and profitable sales opportunities.
Order acquisition Order Acquisition represents the next phase, in which a sales opportunity
has been turned into an actual sale, and sales documents such as requests
for quotation, quotations, and orders are created, which can be managed
as part the order acquisition process. Functions that may be familiar to
you from the Sales and Distribution (SD) SAP ERP model are also inte-
grated into order acquisition to enable efficient order processing. These
include the preparation of organizational data, partner determination in
the relevant partner roles, product determination and selection, pricing,
availability check, and date management.
In the order document flow, the individual sales documents can be con-
verted into other sales documents in accordance with the predefined
sequence (for example, a quotation is converted into an order) to reduce
unnecessary additional effort, such as duplicate entry of document data.
Extensive copy functions are available for this purpose if similar sales
transactions are to be initiated.
The transaction area also includes functions for managing contracts
and business agreements, which define specific pricing and conditions
between two business partners, and which can then be copied into the
relevant orders between the partners.
Fulfillment
Once the sales transaction is confirmed and the order created, this order
must be fulfilled by the provision of the corresponding service. SAP CRM
helps companies do this with functions for checking availability, billing
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30. Customer Relationship Management with SAP CRM 1.4
(including credit management and payment processing), and shipping
and transportation.
First, an Availability Check (also known as the Available-to-Promise [ATP] Availability check
check) allows you to schedule the order quantity based on the defined
dates and planned capacities. This function can also be used as a simu-
lation, for example, to agree on delivery dates with the customer in
advance. If the desired delivery date cannot be met with backward
scheduling, forward scheduling is used to give alternative target dates.
The aspects of shipping and transportation can be integrated into the
date calculation, and can take account of other customer preferences,
such as partial or full deliveries.
For Billing and Payment Management, SAP CRM supports a very wide Billing and
range of payment methods, from conventional billing to billing based payment
management
on agreed payment terms, and electronic payment forms, which are pri-
marily used in business-to-customer (B2C) scenarios involving a large
number of mostly unknown business partners. Payment processing also
includes credit management, which allows customers to be granted cer-
tain lines of credit or customer classification to be used to influence the
sales transaction so that, if customers exceed defined credit lines, warn-
ings are displayed (depending on the customer classification) or sales
documents (such as orders or deliveries) are locked and can only be
released by employees with sufficient authorization.
All processes through which a product passes from finishing to goods Shipping
issue are mapped in shipping. These include the creation of deliveries
with the corresponding delivery documents (delivery notes and so on)
and, where relevant, the necessary foreign trade documents, as well as
picking, packing, and goods issue. If an SAP CRM system is also used,
these functions are enhanced with an extensively automated shipping
process, which also enables deadline monitoring and the integration of
storage capacities, for example. When the goods issue is posted at the
end of the shipping process, the product leaves the company. At this
point, the necessary stock postings, including all value changes, are made
in the company’s accounting system.
An extensive range of functions is provided in relation to transportation. Transportation
These allow you to group the various deliveries together in shipments,
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31. 1 Introduction to CRM
select the best transportation service provider and routes, and create the
necessary shipment documents. Also included are functions to calculate
the transportation and shipment costs, taking account of the product
and packing information in the delivery documents (for example, weight
and size).
Global functions: The next phase of customer relationship management, namely, service,
analysis and is discussed in Section 1.5 Service Management with SAP CRM, in more
planning
detail than the previous phases described here. First, however, we take
a look at the global aspects of customer relationship management, that
is, Analysis and Planning.
To monitor order processing and services, and to provide starting points
for possible improvements, SAP CRM includes a range of reports and
analyses that can indicate process quality and efficiency in this area. In
this context, a range of key figures can be generated (for example, for
delivery reliability or the occurrence of returns). Thanks to the consider-
able flexibility of these potential reports, each company can define its
own key figures for its own analyses and reports.
1.5 Service Management with SAP CRM
As illustrated in the SAP CRM Roadmap in Section 1.4.1 SAP CRM Road-
map, the enhanced functions in SAP CRM Release 2007 make it perfectly
equipped to cover the service area. We examine these functions in detail
with specific reference to the system in Chapter 2, Service with SAP CRM
– Overview of Functions, before explaining the options these provide in
terms of process design in Chapter 3, Service with SAP CRM – Processes
and Customizing. In the next section, we start by providing an initial
overview of the service areas in a company that are supported in terms
of the structuring and fulfillment of tasks in SAP CRM Release 2007.
Putting service Figure 1.9 provides an overview of how the topic of service fits into the
into an overall overall context of customer relationship management. Here, service is
CRM context
shown on the same level as the other two major process categories in CRM.
Like sales and marketing, service is connected to the customer through
various communication channels, such as the Internet or call centers.
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32. Service Management with SAP CRM 1.5
As shown in Figure 1.10, the functional service areas in a company can
be divided into the following three categories, which make up a service
management cycle:
EE Collaborate
EE Analyze
EE Optimize
These three categories, in turn, are composed of a total of eight different
service segments, which are described in detail in the sections below.
We also describe how these service areas are implemented in SAP CRM
2007.
Customer
Partner
Mobile
Channel
Internet Call Center
MARKETING SERVICE
Sales
ANALYTICS
End-to-end,
Industry-specific
Processes
Powered by
SAP NetWeaver ®
Figure 1.9 Service as Part of the Portfolio of the SAP CRM Solution
The following sections provide an initial overview of the business
requirements for service in the various areas of the service management
cycle, and explain how these requirements are addressed in SAP CRM
Release 2007.
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33. 1 Introduction to CRM
Collaborate
Service Service
Parts Sales &
Management Marketing
Warranty Service
& Claim Contract
Management Management
CUSTOMER
Depot Installed
Repair Base
Management
e
Field Customer
yz
O
Service Service &
al
pt
Management Support
An
im
iz
e
Figure 1.10 Service Management Cycle
1.5.1 Service Sales and Marketing
Services also need to be advertised in the market using marketing and
turned into revenue through sales. SAP CRM 2007 supports these busi-
ness functions for service management in a similar way as the higher-
level areas of sales and marketing.
The following aspects are mapped as part of the sales and marketing of
a company’s services:
EE Service marketing and campaign management
EE Service lead and opportunity management
EE Service quotation management
EE Service solution sales: order, contract, and bundling of products and
services
We can essentially distinguish between three different types of service
based on their characteristics and objectives. Each of these three ser-
vice types have different goals and use different tools supported by SAP
CRM.
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