Organizations rely on various IT systems to manage customer engagement, facilitate their operations, organize knowledge, deliver projects and drive decision-making. Systems like Customer Relationship Management (CRM), Enterprise Resource Planning (ERP), and Content Management Systems (CMS) play a crucial role in capturing valuable data that supports these business processes. However, the true potential of these systems is unlocked only when their capabilities and the data they create are fully understood and effectively integrated into the organization’s overall data strategy. In this article, we’ll explore how analyzing the features and capabilities of systems and the data created through their use can enhance organizational effectiveness, using CRM systems as an example to illustrate these concepts.

The Role of IT Systems in Data Creation

The primary function of IT systems in an organization is to support specific business processes. Whether it's managing customer relationships, organizing and reporting on business finances, facilitating content distribution, or managing product inventory, each system is designed with a set of capabilities and features that determine the type of data captured. It is possible to read a system manual or look at a database schema and anticipate the set of data items that might be present; however, only through a deep understanding of the business processes supported by the system is the data given its meaning. Furthermore, this understanding also highlights the limitations of the data. For example, if customer details are only entered into a CRM at the point of attending a sales event, then a tally of all these customer names is not a true representation of all customers being prospected if sales staff use informal systems (e.g. a spreadsheet) containing lists of phone numbers and email addresses containing cold leads.

Understanding Capabilities and Processes Supported by IT Systems

Every IT system within an organization serves specific functions that align with broader business objectives. For example, a CRM system supports Sales, Marketing, and Customer Service functions by capturing customer interactions (such as phone calls and emails), tracking sales pipelines, and storing customer feedback. Senior management within an organization should be concerned with the performance of each of these functions and using the business data generated through the execution of underlying processes to measure the success of each. Therefore, it should be possible to measure the performance of a business function by leveraging the data created in its execution. By extension, any business process NOT delivered through the capability set of a given IT System cannot be formally measured. The misalignment of IT System capabilities to business processes is very commonly experienced in the real world. If you have worked in an environment where this is the case, you will have experienced the use of informal systems (spreadsheet lists and tracking systems, word processed ‘case files’, physical diaries and notepads to capture customer interactions, and so on) and repurposed functionality (using a text box in a form designed for miscellaneous ‘notes’ to capture key customer information, such as ‘last contact date’, ‘social media handle’, or ‘customer preferred product/service’).

Illustrative Example: CRM Systems

CRM systems are designed to help businesses manage relationships with customers by capturing data such as contact details, interaction histories, sales activities, and customer feedback. The functional capabilities of CRMs—like lead tracking, sales forecasting, and customer segmentation—are directly linked to the related, underlying business processes (which, if formally captured, might be called 'onboard new client’, ‘record phone contact’, ‘record attendance at sales meeting’, ‘enter customer sales forecast’, ‘record customer complaint’ and so on).

As explored above, the alignment of Business Function (Sales & Marketing), with System Capabilities (Lead Tracking, Sales Forecasting, Segmentation) and Business Process (Onboard Client, Manage Sales Forecast, Manage Client Attributes) enables the effective management of the business function through the creation and measurement of data encompassing the full range of business processes, supported by the capabilities of the systems used by the organization. In other words, the systems used by the organization should be capable of delivering the full range of required business processes to make the organization function. Any process which falls outside of these system capabilities, or is poorly delivered by the given system, is not captured and measured and so cannot feature in a description of business activity.

Analyzing the alignment of these three tiers then becomes a useful activity in identifying where poor alignment exists within the business. Where good alignment is established, it can be said that the business processes delivered by the system (and its data) are a good representation of business activity. Where this is true, the data the organization has is of particular value in recognising its strengths, weaknesses, opportunities and threats (SWOT). An organization empowered with this insight is one better able to make good decisions and operate at a high level.

A tabular analysis of a typical CRM system may look like the following:

The capabilities described above enable the Sales & Marketing function to execute its role within the organization. If the chosen CRM system is able to support every business process undertaken by staff within the function, there is good alignment between system and function and the data captured by the system will be representative of the organizations activity.

A business analyst within the organization would be able to dive deeper and expand the analysis of the set of business processes to a more granular level, to include the data items (e.g. customer first name, preferred contact method, last purchase date) themselves.

• Customer Profiling:
  • Description: Collects and organizes detailed information about customers, including demographics, purchase history, preferences, and behaviors, to build a comprehensive profile that helps tailor interactions and strategies.
  • Data Captured: Date Of Birth, Postal/Zip Code, Telephone Number, Email Address
  • Data Derived: Age, Age Group, Sales Region, Last Purchase Date
  • Behavioral Insights: Preferred Contact Method, Most Effective Contact Method (based on highest response rate), Purchase Frequency

The analysis might also identify misalignments that inform the value of the data:

• Missing Data: Preferred Name (a customer may prefer an alias, the use of which might foster greater engagement with marketing communications), Social Media Handle (a traditional CRM with a more antiquated data model may not have anticipated the value of social media in marketing efforts - if social media details are captured in a text box, they cannot be used systematically)
• Poorly Defined Data: Age Group (CRM-defined bandings are very large [under 18, 19-30, 31-45, 46-60, over 60] and not particularly useful in segmenting marketing efforts stylistically. We are having to group customers offline and perform segmented communications using an output from the data warehouse)

By understanding these capabilities, organizations can better evaluate the data generated by CRMs and its potential use in strategic decision-making.

Mapping Capabilities and Processes to Evaluate the Data Estate

Mapping out the capabilities and processes of IT systems is a valuable exercise that goes beyond simply cataloging data. It involves analyzing how these systems interact with each other and how their data flows through the organization. A piece of information captured at customer onboarding may be propagated across all business systems from CRM to logistics and fulfilment systems (including any typos!). This mapping exercise helps to identify data silos, gaps in data coverage, and opportunities for integrating data from multiple sources to provide a more comprehensive view of business operations.

The Value of Mapping IT System Capabilities

• Identifying Key Data Sources: Mapping helps identify which systems are the primary sources of critical data, such as customer details, financial transactions (e.g. customer payments on account, refunds or commissions), or operational metrics (customer deliveries, distribution center inventory levels, manufacturing WIP levels, etc). This understanding is crucial for building a data strategy that aligns with business goals.
• Evaluating Data Flow and Integration: By mapping how data flows between systems, organizations can identify potential bottlenecks or inefficiencies. For instance, if CRM data is not integrated with ERP data, sales forecasts may not fully account for supply chain constraints, leading to inaccurate predictions. The inability to deliver promised stock to a key customer account directly affects customer satisfaction and the likelihood for repeat business. A valuable customer may even move to a competitor.
• Enhancing Data Governance: Mapping also plays a vital role in data governance by clarifying data ownership, quality standards, and access controls across the organization. This ensures that data is managed consistently and complies with relevant regulations.

Where this exercise is not undertaken, there are multiple business risks:

• Multiple Sources Of The Truth: if a system containing customer address is not identified as the master for this piece of information, there is no explicit authority on where the customer is believed to live. This can lead to ineffective communication. If two ERP systems coexist following the acquisition of a competitor and not effectively rationalised, which contains accurate information about stock levels in branch?
• Poorly Integrated Systems: even if there is an understanding as to which system is the authority for a given data item, if there is a poor understanding of which systems also use this data, then there cannot be effective systematic integration of these systems. For example, a CRM may be the authoritative source of customer address details and any changes here are propagated overnight by the IT department to update the ERP system to keep them aligned. If a customer support system is NOT identified as also using this data item, then it is possible for any customer support processes, designed to improve customer satisfaction, may actually frustrate the customer with key correspondence being sent to a previous address.
• Poorly Defined Data: where data ownership is not correctly owned, standards and definitions can drift, degrading data quality and value. For example, if [Last Purchase Date] is believed by one department to mean the date upon which the customer paid for their most recent receipt of goods whereas another department believes it to mean the date upon which the customer raised a new purchase order for goods yet to be delivered, the two departments will never be able to effectively communicate about customer purchases, or agree on the monthly sales figures produced by analysts. Furthermore, an international organization with sales offices around the world must be able to agree upon standards for dates. Where the systems themselves are unable to validate dates to conform to a standard such as YYYY-MM-DD, the possibility for misrecorded dates between US and European sites is significant!

The value of performing - and the risk of not performing - this is exercise is great and there are more benefits and costs than those listed above!

Conclusion

Understanding the capabilities of IT systems, the business processes they are designed to capture and, therefore, the data they generate is crucial for enhancing organizational effectiveness. By mapping out these capabilities and processes, businesses can evaluate their data estate more effectively and identify opportunities for improvement. However, the value of these data assets depends heavily on the quality of data governance, the maturity of data processes, and the integration of related systems. Adopting a holistic approach to IT systems and data management can unlock significant business value, driving better decisions, streamlined operations, and a more comprehensive understanding of the business.

To explore how other key IT systems like ERP and CMS (and many more) contribute to organizational effectiveness and learn strategies for developing a holistic understanding of your data landscape, check out my latest book, "Data: Principles To Practice – Volume 1: Foundations." The first chapter dives deeper into the critical role of IT systems in modern organizations and offers practical insights for leveraging data to drive business success.

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