The 'e' changes everything - CRM market in state of flux

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The ubiquity of the Internet and its spectacular emergence as a tool for business transactions are redefining the relationship between enterprises and their customers.

The holistic approach to all customer touchpoints and new Internet channels and the need for integrating and synchronising all outward facing customer processes, is hailed as a watershed for CRM applications.

Considering that millions of customers are migrating to the Internet for everything from enquiries to commerce, a robust and scaleable system to strengthen customer satisfaction and, more importantly, brand loyalty is vital. This is one of the key factors thrusting electronic customer relationship management (eCRM) into the spotlight.

A study by the international marketing consulting company, Frost & Sullivan, reveals that companies have so far failed to exploit the full potential of eCRM and vendors face incredible challenges in a market that has yet to fully prove itself.

"Tainted by early implementation projects and software that failed to provide the disciplines and processes that would enable a company to manage its business based on customer economics, established vendors and start-ups are now having to deliver faster deployments, faster return on investments, quantifiable results and sound customer references," said F&S research analyst Guy Chaigneau.

The CRM arena faces a shake-out with the market contracting and consolidating, leading to a convergence of eCRM and CRM initiatives. As the number of businesses embracing e-enablement is poised for rapid expansion, the distinction between eCRM and CRM will become increasingly blurred and irrelevant.

Chaigneau emphasises that eCRM is not a technology but a strategy. "Helping companies refocus their eCRM efforts, not only technically but, more importantly, organisationally, will ensure higher success rates. Clients need to concentrate on board level education to understand that eCRM is not a project of a quick fix but a mapped-out organisational endeavour that wil last many years and needs to be implemented in stages," he continues.

Frost & Sullivan believes that eCRM is more than a passing fad and recommends vendors to help their clients refocus on looking beyond eCRM as a software application. The greatest misconception is to associate customer satisfaction maximisation with a short-term technology installation project, the study warns.

New channels, improved customer touchpoints and the complexities of integrating and synchronising all of these, has lured new entrants into the market. Although most of the new eCRM specialists are US players, a number of European start-ups are bursting onto the scene, seeking to captitalise on the growing appetite for new wireless technology.

In the wake of last year's launch of solutions designed to address specific areas of functionality, including partner relationship management (PRM), personalisation and eCRM-centric analytic, many European eCRM suppliers have already integrated support for WAP into their products.

In light of the accelerated pace of mobile telephony technology evolution, the notion of giving consumers access to services and goods anytime, anywhere is becoming reality. Wireless CRM is yet to kick in, but the development of applications is gaining momentum with critical user mass expected to be achieved in Europe first, despite that fact that the region is lagging the US by 18 months in eCRM adoption.

Some recent entrants to the market have been able to offer architectures designed specifically around mobile devices. The provision of sophisticated multilingual functionality and penetration of discrete, often geographic, segments of the market, will sharpen many European firms' competitive edge in this region.

While industry titan Siebel, along with the most prominent vendors - Oracle, SAP and PeopleSoft - will maintain their stranglehold in the European eCRM market; Amacis, Selligent, eWare, Altitude and AIMS Software have secured a foothold in the market and are increasingly gaining mindshare through their thought leadership.

Chaigneau adds: "The emerging crop of companies realise that European eCRM vendors enjoy a competitive advantage in the largely untapped mid-market segment as the are more sensitive to the unique needs of the European enterprise and offer localised solutions. They will most likely represent fierce competition through their pursuit of increased share of the European mid-market segment. European suppliers need to build upon their competitive advantage in understanding local business conduct and by offering multilingual and multicultural functionalities."

Application service providers and hosted services will form an increasingly important part of eCRM and other e-business solutions while the large vendors see eCRM as part of a broader move towards end-to-end e-business.

Frost & Sullivan

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