CRM and the Internet challenge

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Rapid growth of the market in both Europe and the US

A survey on CRM enterprise confirms that that the number of large European and US enterprises equipped with CRM solutions will double within the next two years.

The survey*, jointly prepared by Cap Gemini Ernst & Young and IDC, was conducted on the basis of in-depth interviews with 500 large European and US companies.

It found that the development of the Internet will strongly contribute to CRM’s market growth as companies are going to increase their use of Internet technology for customer support and transactions.

Current investments in CRM solutions, and the future sales pipeline of them, will lead to a rapid increase in the adoption of these applications.

The number of implementations is increasing rapidly. Large European and US companies are at various stages of investment in CRM solutions. Survey results show that 44% of the enterprises interviewed already have CRM programs in an operational or production phase, 33% are in a planing or implementation phase, and 23% are in a study or evaluation phase of the project. These results confirm that twice as many enterprises will use CRM within the next two years.

Progressive investments
CRM initiatives show an extreme diversity in budgets invested and indicate that enterprises have adopted a step by step approach and are implementing CRM applications progressively.

Survey results reveal a wide variety of situations in terms of budgets invested in CRM projects. The investment scale is very large and covers budgets going from some hundreds of thousands of dollars to more than $10 million. Meanwhile, many CRM initiatives consist of small-scale project; survey results indicate that nearly two out of three of the annual budgets allocated to CRM programs are lower than $1 million.

The results suggest the situation of a market previously undergoing a phase of significant change in both Europe and the US.

Impact of the Internet on current CRM vision
The current generation of CRM applications has helped companies gain better understanding of their customers via traditional selling and marketing channels. However, the popularity of the Internet presents a new set of challenges for companies trying to generate prospects and retain existing customers.

While Internet technologies are widely spread within enterprises, they are evolving more and more to integrate CRM functions. Survey results reveal that two our of three enterprises consider the Internet a key issue for a company’s CRM strategy: 40% of companies envisaged CRM applications in a new way, centred on the Internet while 27% declare that the Internet is driving the decision to start a CRM implementation. Thus, the move towards the integration of Internet technologies with CRM solutions is underway. By way of illustration, 56% of the enterprises surveyed have already integrated interactive customers’ support into their CRM strategy.

A CRM project integrates a number of different and complementary channels. Far from considering them as competitors, large European and US companies clearly perceive the complementarily of the Internet with call centres, points-of-sale and field sales forces. While the Internet decreases the costs of interaction, call centres and traditional channels enable more intimate relationships with customers. The association of different technologies optimises the quality of customer relationships. It also improves the capacity to answer customers’ requests in a personalised way and with a superior level of service.

Key success factors
Change management and the weight of legacy systems are the major challenges to the success of a CRM program. In this context, the challenge for a CRM project is to benefit from the support of top level company management in order for it to be perceived as a strategic initiative.

Change management and the integration of legacy data into the new work model are the most significant obstacles in starting and developing a CRM strategy. Clear definitions of strategy, employee resistance and size of budget are not perceived as major difficulties by most enterprises. This suggests that a CRM initiative should be more often perceived in long-term strategic terms rather than as a single project.

The challenge for a CRM project, therefore, is for it to be perceived as a strategic initiative and supported by the company’s top management of enterprise. Survey results show that top-level management plays the leading role in initiating a CRM project (46% of the projects).

* ‘Customer Relationship Management and the Internet challenge’ is a White Paper jointly prepared by Cap Gemini Ernst & Young and IDC. Its main objective is to assess and measure the corporate awareness and strategies large accounts in Europe and the US regarding CRM, and to provide an understanding of the impact of the Internet opportunity on the enterprise’s current vision of CRM.

IDC surveyed over 700 large corporations in April and May 2000. In-depth interviews were carried out with 500 companies which had effectively engaged in a CRM project, whether at the planning, implementation or operational stage. Statistics and figures published in the report refer to these 500 companies only, including 300 in Western Europe (Benelux, France, Germany, Scandinavia, Spain, UK and Ireland), and 200 in the US.

The companies surveyed all have a minimum of 500 employees., and operate in high industry sectors: life sciences, high-tech, banking, automotive, utilities, retail, insurance, and telecommunications.
www.idc.com

Cap Gemini Ernst & Young

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