With so many cut backs being employed to combat the effects of the recession, is it wise to start investing in CRM technology? Stuart Lauchlan explains why it would be foolish to ignore such an essential component of one of the last competitive weapons in the arsenal - customer experience. The trick is to spend more wisely...
While the economic chaos of the past year or so has taken its toll on many aspects of the IT budget, one area that has managed to escape relatively unscathed is CRM. Indeed it can be argued that far from cutting back on CRM spending, the savvy organisations, those with an eye on the day after the recession, will be the ones who invest as much, if not more. They are the ones who recognise that the customer experience is one of the last remaining competitive weapons left in the arsenal.
With that in mind, research firm Gartner suggests that those companies who put off investing in CRM will delay realising the benefits until a year after the recovery kicks in. "Just because times are tough and budgets are being cut, companies should not think that means no CRM investment,” says Scott Nelson, managing vice president at Gartner.
But of course the trick is to spend more wisely. The economic realities are such that all spending needs to be cost justified and return on investment needs to be examined very closely before there's any parting with money. The days when unused Siebel licences sitting on shelves in the IT department could be regarded as an irritating fact of life are long gone – and hopefully never to return.
International Data Corporation (IDC) indicates that 2009 spending on ERP applications will be strongly impacted by the current economic crisis, but that there are clear signs that CRM applications will see increased spending in 2009. “It is interesting to see how CRM, which declined two years in a row after the recession at the beginning of the millennium, is looking much stronger during this crisis," says Bo Lykkegaard, research director, European Software and Services, IDC.
"The Western European CRM applications market will remain a growth market between 2009 and 2013, despite the depressed economic climate. Customers are, however, shifting priorities from strategic, long-term projects to shorter-term projects with clear efficiency focus. We see many organisations investing in sales force automation, ecommerce, internet-based marketing, loyalty management, and customer self-service during this crisis as a way to bring down the cost of doing business.”
Still falling short of expectations?
While spending drivers may have changed, so too have expectations for CRM packages. It had become almost the norm to accept that CRM implementations would fall short of expectations, fail to deliver their promised benefits and not see the the user adoption levels that were expected of them when the project was initiated. But such have been the technological advances in the leading CRM packages that expectations have improved.
In fact, in 2009, the majority of companies surveyed by Gartner expect CRM projects to succeed. “A decade’s experience means that CRM projects have become less risky and more predictable but on-time and on-budget projects remain constant at approximately 70%, even with all the experience that has been built up in project management,” suggests Gartner's Ed Thompson.
So who's leading the CRM pack? According to Gartner, SAP continues to lead the market - accounting for a 25.4% share - while Oracle came in second place with 16.3% of sales, followed by Salesforce.com (8.4%), Amdocs (5.2%) and Microsoft (4.1%). Gartner says the highest growth in the market is coming from SalesForce.com and Microsoft, which grew by 49.8% and 88.6% respectively.
There has of course been considerable consolidation within the enterprise applications market and the CRM space has been no exception. The five largest CRM application vendors make up almost 60% of the market and Gartner estimates that three or four large vendors will remain with an aggregate of more than 50% market share in 2020. “Instead of trying to build everything, these large vendors will provide a set of core CRM services and processes, and will act as platforms for software and service partners that are willing to build the requirements needed by smaller industries and specific functional niches of the market,” explains Thompson.
The core areas CRM vendors are focussing their attentions on are social CRM, software as a service (SaaS), open source and mobile CRM. Click on the links below to read more:
Also in this CRM software supplement: