CRM Governance and your ongoing CRM Strategy

CRM Governance and Interaction review represent ongoing work and the second part of a CRM Strategy implementation plan discussion.

The first part of this article is the creation of a CRM Strategy.

The approach here is to provide concrete academic examples to reinforce your arguments and approach to managing CRM in your organisation.

  • How we got here
  • CRM Governance
  • Interactions
  • Checklists
  • My personal take on it

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How we got here

To summarise the first article:

  1. The organisation must understand what CRM means to them
  2. The organisation recognises that CRM actually is meant for every department not just one.  Consequently what is the strategic implementation plan?
  3. Choosing outsource partners to help deliver elements of CRM Strategy can help.  Regardless of out sourcing or in-house management governance is required.

So there is a plan and players to deliver the plan.  Now how do we manage this?


CRM Governance

What is Governance?

Governance is defined as “the way that organizations or countries are managed at the highest level, and the systems for doing this. […]”

Jahner & Krcmar (2007) continue that at this stage of the process the strategy for CRM has been decided with a precise knowledge of what is being outsourced and why.

The extent of the relationship has been explored and the company doing the outsourcing is comfortable to what level they are ready to integrate with the outsourcing partner.

As a result the development of “checks and balances” to ensure smooth operation is required.  This is predominantly managed through contracts.


Collins dictionary defines a contract as “to enter into an agreement with (a person, company, etc) to deliver (goods or services) or to do (something) on mutually agreed and binding terms, often in writing”.

However as Papazoglou (2008) explores the challenges of service evolution are subject to constant change and variation.

There are many factors which contribute to change including structure change and policy and behaviour change.

The changes group into shallow or deep changes.  Whichever type of change happens they pose significant challenges to existing contracts.

Whilst the focus of Papazoglou’s research is on IS services the inter-operational exchange also applies to any two independent bodies who are interacting on a formal basis.


Moving the goal posts and the rules of the game

CRM Governance means change and evolution.  So our plans need to embrace change.

Firstly all the research recognises that environments change frequently.

Work by Arias-Arandaa et al (2010), identify that contracts should include not only the hierarchical elements but also psychological elements.

These elements would include both party’s mutual benefits and attitudes.

Considering again the challenges of the relationship architecture, this makes the drafting of long term broad contracts incredibly complex.


Lyons (2001) explores an empirical approach to quantifying incomplete contract theory (ICT).

The concepts are generic management science in nature.   As a result they closely reflect the challenges faced by any organisation looking to outsource any work.

Furthermore the work states that an efficient contract provides optimal incentives for both parties for investment and trade.

As a result however this immediately suggests that the contract itself cannot be specific.


Contract Development

CRM Governance will manage relationships through contracts.

Therefore the research provides two potential ways of approaching contract development.


Firstly the approach questions “what is the minimum that must be written into a contract that would allow it to achieve efficiency in a particular, well specified game, defined according to the types of investment, nature of uncertainty, ex post bargaining procedures, etc?

If a simple contract can fulfill this goal then it would not be considered incomplete.


In contrast the second approach is to question “why can no contract achieve efficiency in a particular situation?

This explores that every contract can fail to cover the requirements of both parties given particular sets of circumstances.

So we understand that no contract can be considered complete for every circumstance.


Therefore the defining of governance and monitoring mechanisms for the outsourcing of CRM services means to ensure that:

  • the primary strategic goals are met and
  • metrics identified to measure the key deliverables.

Ryan (2011) identifies that social media will feature heavily in the outsourcing of CRM.  It also identifies that a viable business model was not available making it a challenge for widespread adoption by CRM outsourcers.


Managing change

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So how does your CRM Governance change when things do change.

Bailor (2005) identifies that certain factors over the duration of the outsourcing contract need reviewing and refining.

Consequently how do we identify the appropriate metrics needed?


Clarke et al (1995) suggest an approach.  The approach used is one of a developing relationship with the two parties.

  1. Firstly acknowledge that key strategic goals are pervasive through the metrics.
  2. Next enhancements in the service and refinement of metrics is an evolutionary process.  Planning needs to incorporate new capabilities and technologies into the service.
  3. Subsequently wherever possible, ensuring continuity of staff needs to feature in the governance and monitoring mechanisms.
  4. Also planning for flexibility in the contract is eminently sensible.  In parallel contingency plans, available at a moment’s notice, need to be there should contracts become too inflexible.
  5. Finally communication is a must.  Constant involvement and operational participation interwoven throughout ensures understanding by all parties and reduces the risks for everyone.


Governance does help

We can’t ignore CRM Governance as it does help more than it harms.

Most noteworthy Chan (2012) explores what are the governance mechanisms that had a positive impact on IT outsourcing.

The findings conclude that fiscal commitment, where :

  • there is some form of dedicated asset-specific investment or
  •  attitudinal commitment

result in positives when outsourcing the activities.


Firstly dedicated asset-specific investment could mean trusting an entire departments operations to an outsource partner.

Also attitudinal commitment means the company being outsourced to has at its core outsourcing as a common agreeable ambition.  Similarly the activity is key to their future and business growth.


Show me the money!  (Quote from the movie Jerry Maguire)

When the business doing the outsourcing see results, either positive or negative, especially early in the relationship this tends to appropriately impact the perception of the adoption of outsourcing.  First impressions count.

The research highlights references numerous studies measuring the success of outsourcing.  Consequently the measures included satisfaction, cost saving and vendor performance.



Forces acting against each other

So the rules are in place and we have CRM Governance… what next?

When outsourcing contracts start relationships evolve.  The evolution of the relationship affects both parties.

Kern & Willcocks (2000) whilst  focusing on the IT outsourcing relationship, explore in-depth the aspects of the interactions identified as:

  • the interactions,
  • contract,
  • context,
  • structure and
  • behavioural dimensions.


Chan (2012) explores the challenges in ensuring on-going effective interactions.  Consequently the biggest challenge is when the chance to seize upon identified opportunities arises.

These opportunities can lead to difficulties if not originally managed in the existing contract.

When a business does not:

  • identify governance,
  • mutual communication and
  • there is no clear understanding of mutual ambitions identified,

the effect of interactions becomes a case of adversarial positioning.

Likewise Jahner & Krcmar (2007) identify in the research of Lacity et al. (2003). “a dollar out of the customer’s pocket is a dollar in the supplier’s pocket“. 

Similarly this sets the position of confrontational positioning.


A worked example

Knowledge can be categorised into technical knowledge and client knowledge as explored by Berbert et al (2003).

Knowledge transfer issues are pervasive with the introduction of CRM systems as explored by Finnegan and Willcocks (2005).

Consequently their research clarified that the private sector and the public sector have different approaches to CRM.

As a result this is reflected in the complications of potentially outsourcing the CRM activity for Birmingham City Council.


The project retained four consultants in total to develop the CRM.  So the full four stages of CRM development including CRM Governance.

One in house and three external.

Relevant area expertise, internally and externally proved a requirement for the effectiveness of interactions.

Also internal interactions between heavily structured organisations can prove challenging as existing communications may not be effective.

Drawing again on Ferrara & Nelson (2001) expression that CRM is an enterprise endeavour, the Finnegan and Willcocks (2005) research shows how each area of the enterprise internally needed to be included.


Off shoring

CRM Governance doesn’t just address “at home” challenges.  Even more where offshore outsourcing interactions exist, complications arise.

Huong et al (2011) observe that:

  • communications between two organisations can be a barrier,
  • cultural difference,
  • lack of equivalence in individual competence and
  • lack of common rules

slow down the knowledge transfer processes

They also suggest that a Bridge System Engineer (Bridge SE) is an effective way to address the gaps between the partners and improves the business relationship.

Their research shows that initial willingness and standing professional respect work together to improve the knowledge transfer process.



Barthélemy (2003) offers a suggestion that there are seven deadly sins for any consideration of outsourcing.

  1. Firstly, do not outsource activities that should not be outsourced.  Keep core services in house.  As discussed previously, CRM is a core service.  When outsourcing aspects of CRM these need close consideration.
  2. Next ensure selection of the most appropriate vendor.  Their influence is so critical no matter the type of engagement sought.
  3. Contracts need to be crafted mutually beneficially to both companies.  Too restrictive or too loose a contract will result in a poor relationship.
  4. Also personnel issues and retention of key skills is vital through the process.
  5. Losing control over the outsourced activity is dangerous.  It shows over dependence by one party or the other.  Also it shows a loss of internal knowledge.
  6. Furthermore an important check is the hidden costs of outsourcing.  Extra costs need extensive planning in the strategy and subsequent management through the contracts.
  7. Finally, the company performing the outsourcing need an exit strategy.   If unforeseen circumstances arise, managing the exit without lasting damage to the business is eminently sensible.


My personal take on it

Where do I stand?

There is extensive research into the area of outsourcing CRM with many areas of that research opening opportunities for further research.

CRM Governance is just one of the four aspects of CRMs in organisations.


Academic experts have examined overall strategic approaches and individual aspects of each stage of an outsourced CRM program.

CRM has a dynamic changing environment.  The broad spectrum of inclusion of the entire organisation is a significant challenge.  Identifying a step by step guide to outsourcing is no way universal.

I personally have found technology and systems the primary way to manage metrics and keep things objective whilst delivering metrics to contracts.

The diversity of skills, areas and expertise required in outsourcing CRM is testament to the complexity of the area.

Developed topologies serve as guidelines.  Topologies ensure due diligence and consideration for every aspect of the process.  It never hurts to sense check against appropriate models.


As a result a strong enterprise wide strategy and unified willingness to adopt CRM is a recurring theme.

The business must define and communicate the actual meaning of the term CRM to the organisation.  Simply put, there are tens of definitions for CRM readily available and each is applicable.  Lack of clarification will result in issues for your business.

CRM Governance having been through it from planning, introduction, ongoing implementation and through massive change is worth the pain in results and risk avoidance.

Above all clarity requires constant communication.  Where possible identifying key consultants or liaisons is helpful.  Use Bridge SEs to facilitate more effective relationships.


A future of change

Finally for CRM Governance and checklist whilst focused on the now, need an eye on the future.

The advent of the Internet and improved communications technologies.  Elements such as social media change the operating parameters of CRM and pose a significant challenge to metrics and modelling.

The dynamic nature of customer interaction ensures that each area of CRM and CRM outsourcing should be under constant review.

The international dimension included by the internet sees the legal aspects of outsourcing become an even bigger consideration.

The level of integration between the two parties is a significant and diverse area dependant on strategic vision and business requirements.

With no two situations exactly the same, it becomes increasingly challenging to provide exact steps and processes to establish an outsourcing arrangement.


Furthermore management science, psychology, law and technical expertise combine thoroughly with communications to make outsourcing CRM an extremely challenging area.

Yet an area with great fiscal benefits for both sides where the engagement is successful.

Flexibility is part of numerous aspects of the entire process.  Yet definition of processes and procedures by their very nature do not lend themselves to flexibility.

Strategic and managerial flexibility needs identification in conjunction with operational rigidity and measurement.

Expanding on the work of Jahner & Krcmar(2007), the inclusion of a legal dimension before attempting to outsource CRM should be considered as an area for practical future implementation, research and measurement.


Final thought

The challenges of outsourcing CRM are many and varied and an exciting area to work in and a rich source of topics for further research.

CRM Governance is a key component of risk management and ongoing success.

Whether in business or academically it never hurts to chat and gain different perspectives through critical thinking and counterpoint.

I can pop into any conversation and bring this research with me to help you in your planning.

Specifically If there’s anything in this article you’d like to chat to me about you can contact me here or on social media.



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