Google, IBM, LinkedIn: Are these firms the future of CRM?

 

 

 

 

The CRM market has proven to be impervious to the global financial storms of the last three years.

 

The global CRM applications market experienced year-over-year growth of 6.2% to a revenue of $16.5 billion in 2010, according to the Worldwide Semiannual Customer Relationship Management Applications Tracker by IDC. And IDC expects the CRM applications market to continue to grow this year with revenue hitting $18 billion (7.6% year-over-year growth).

 

All of which makes CRM a very attractive market in these troubled times – and keeps us on our toes as to which business may decide to make a CRM play in the future.

 

And some major names have been mentioned in the same breath as CRM in the past year.

 

Take for instance Google. Last year Google’s Enterprise Blog indicated that 'CRM' was the top search term for installable apps within the Google Apps Marketplace, something that has some to speculate that Google could make the move into CRM in the future.

 

Elsewhere, after IBM’s numerous analytics acquisitions were followed by the purchase of Unica, thereby moving them into the marketing automation business, there has been debate whether this indicates that Big Blue could be plotting an attack on the CRM space.

 

And most recently, LinkedIn found itself…erm, linked, to the CRM market after acquiring contact management firms Connected and CardMuch.

 

So there is no shortage of speculation surrounding CRM – but does any of it have any substance?

 

 

“I just don’t think that LinkedIn and Google are going to do it,” says Kate Leggett, senior analyst, customer service and cell centre processes at Forrester Research. “How are they going to monetise the CRM application? What is the impetus? Why would they ever want to go into the CRM market?

 

“Even with all the acquisitions that LinkedIn has made, all these acquisitions are doing is just giving them a better way to bookmark and organise their contacts. LinkedIn is closer than Google - they have a huge database of contacts; they have forums; you could think that they could create or buy some type of marketing application to be able to do more organised enterprise marketing a la Unica to these contacts; they already are able to do a little bit of marketing through their forums; they do have mobility. But that is a far cry from managing cases and having the analytics to do so and being able to associate products and services. I think it is too far away from their DNA to think they would move away from the CRM space.”

 

She continues: “[IBM] would be the most likely of all of them. They already have marketing. They already have analytics. In terms of customer service case management I don’t really see a lot there. They would be the most likely of them, but it is a very crowded market at the moment.”

 

Dr Katy Ring of K2 Advisory, is similarly sceptical about the rumoured businesses launching a serious assault on the CRM market.

 

“IBM may offer some social CRM capabilities via the development of its business analytics business and the Unica acquisition makes sense in this context, but it is highly unlikely to move into the traditional CRM software market because it took the strategic decision years ago to withdraw from the business application market,” she predicts. “LinkedIn may develop a very simple CRM solution for sole traders and micro businesses but I don’t see its current acquisitions stacking up to a serious CRM play in the business software market. Google could make a move, but it is more likely to simply keep offering third party solution Google Apps and pumping investment into the Android platform.”

 

“Google you could possibly see some kind of lightweight contact management CRM platform possibly coming in. Something pretty basic,” agrees Richard Boardman, founder of Mareeba CRM Consulting.”But I couldn’t really see a more sophisticated offering than that because it would change the way that Google interacts with the world rather fundamentally. They would have to start building the infrastructure of support teams and supporting an implementation network and all those disciplines which I can’t really see. It’s quite a shift away from where they are at the moment.”

 

He continues: “LinkedIn - I could sort of see an application around that. It would be interesting to see some extension of the LinkedIn environment with viable CRM features. I’m not sure I could envisage how it would look but I could certainly see something like that happening. Whether it would have a huge effect on CRM I’m not sure, though.

 

“If you look at the CRM marketplace at the moment in the mid-market space, it is pretty much Salesforce.com and Microsoft and they are well set in that marketplace. It would be difficult for anybody to come in and compete directly with them. Suffice to say I couldn’t see IBM coming in and saying ‘OK we’re now in the CRM midmarket space’. I think it would take a huge investment of time and resources and a lot of patience to try and peg away at Microsoft and Salesforce.com now.”

 

 

And this appears to be the issue for firms such as Google, LinkedIn and IBM – even if they have the inclination to enter the CRM market, they face extremely stiff competition from established players.

 

Leggett says: “I could see IBM moving more into [the enterprise] space than anywhere else because that is their DNA – they have already got sales, they have already got professional services, they have got the maturity of business processes to be able to support organisations selling, implementing, deploying and maintaining the software. But they would compete against very mature systems from SAP, Oracle, Salesforce.com, Pegasystems... I think we have 20 different competitors in that space.”

 

And it’s not necessarily any easier at the other end of the market.

 

“I can see potentially some scope at the bottom end, but there’s a few people doing very aggressively priced or open source products, like SugarCRM and Zoho that have got quite a bit of traction in the marketplace,” says Boardman. “I think it would be difficult to get traction without something radically different.”

 

Leggett continues: “With the small market, the barriers to entry are very different, but you are dealing with much more agile, smaller companies that are really starting from nothing, like Assistly and Get Satisfaction, that have more liberty to do things differently and really architect something from the ground up with all the social business processes in mind. And I just wonder, if you look at LinkedIn for example, would their legacy hold them up?”

 

So does this mean there is no space for any new players in CRM? Absolutely not. As the recent CRM Idol competition demonstrated, there are many new and exciting small CRM start-ups joining the fray. The likes of GetSatisfaction and Zendesk have been carving out reputations for themselves and maybe, just maybe, may grow into the next CRM superstars.

 

“The most likely scenario is someone will come in at the very low end, whether it is open source or extremely cheap to buy, perhaps get traction through the developing world, and then push upwards with more sophisticated versions of the product over time,” speculates Boardman.

 

But such is the nature of the CRM sector (and indeed many other sectors), those that show the most promise are snapped up by the larger players before they have the opportunity to develop – as was the case recently when Salesforce.com swooped for Assistly.

 

“The market is consolidating rather than fragmenting and there are a lot of mergers and acquisitions that are happening,” she explains. “Customers are looking for much simpler ecosystems. Right now if you walk into any type of company, they probably have 15-20 different tools to be able to accomplish end-to-end CRM. And if you include all the call routing and switching that the Ciscos and Genesys provide, then it is a really complicated infrastructure to handle from and IT perspective as well as from a financial perspective with a ton of contracts to negotiate and to keep current.

 

“Enterprises are looking for much simpler ecosystems and that is what is driving all the mergers and acquisitions in this space, including the one that happened with RightNow and Oracle. So I think more entrants goes against this trend of trying to simplify this space.”

 

So if you’re looking for the CRM superstars of tomorrow, you’re probably better off looking at the low-end – but keep an eye out, because they may not be around for long.

 

“I think it is a great thing to have new entrants and I think the new entrants will happen,” concludes Leggett. “But it is at the low-end and then they are going to move up. And they are going to get acquired.”