CRM technologies - Key trends and issues

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Michael Juer is a founding director of CustomISe and a specialist in the application of technology to support sales and service transformation strategies.

His experience of both business development, process design and implementation and technology in CRM make him a specialist in this market with a thorough understanding of the organisational impact and issues relating to the application of technology.

Michael writes: Recent reports on the state of the CRM market make sobering reading. To quote one of many available sources, the ARC Advisory Group recently said: “The global Customer Relationship Management market has suffered a sharp downturn partly as a result of the extended depressed economic conditions and market uncertainty created by the terrorist attacks of September 11th. As a result, the value of CRM software and services markets fell to $6.75 billion. However, in spite of the economic downturn, Arc expects the CRM market to rebound from these setbacks over the next five years and grow to $10.4 billion by 2006 on a Cumulative Average Growth Rate (CAGR) of 9.1 %”

But what has the CRM market learnt over the past 18 months difficulties, and how will CRM vendors respond to the tough challenges faced by their customers over the next coming years?

A glance at the American research institutions shows some key trends around new technology and organisational objectives for CRM investment.

Cost-efficiency drives change

Forrester thinks that CRM is preparing for the next wave of its development. They make the point that CRM vendors have suffered set backs in the past 2 years but must now consolidate and invest for the next generation of technology offerings in order to present the best potential competitive advantage to their customers.

There is no doubt that organisations adopting CRM (both Public and Private) will be looking for water tight business cases and seeking to drive benefit from their projects through different ways of working and smarter ways of utilising their information and data assets. They will also increase their understanding of the growing importance of change and recognise that in order to deliver lasting business improvement, significant change needs to be achieved as part of a CRM programme.

A lot of innovation will be going on, which drives risk and change levels up but also promises more lasting benefit and improved service capabilities. For the technology market this means delivering integrated, flexible systems that form a robust platform for a highly integrated, innovative way of doing things. It also means vertical specialisation with the associated investment that this dictates both in software development and specialist skill.

The Gartner Group confirms this prediction, stating: “Businesses will be more realistic about the CRM projects next year, and will take the measure of their initiatives by establishing hard and fast metrics and return on investment (ROI) models based in the real world”

A further increasing requirement is for seamless integration to Internet and back office technologies. The ERP vendors have spent the past 18 months catching up with CRM technology vendors, and now present a real threat with their integrated, enterprise wide solutions.

The largest CRM vendors in Europe will address vertical market needs with companies like Oracle, PeopleSoft, SAP and Siebel increasing their vertical versions to more than 15 during 2003.

Caution should be exercised around trusting in all vendors claims. The lessons of the past 5 years hype should be heeded, and any vertical investment should be demonstrated through customer references and partnership.

Information - and process change - the key

The issue of information and knowledge management will also continue to increase in importance. CRM client experience to date has shown a gap in the delivery of information from systems to broad internal and external audience. Early CRM implementations often failed to deliver comprehensive data analysis strategies, thereby falling short of delivering an enterprise-wide picture of customer relationships and performance.

Data warehousing, data analysis and information management will continue to grow in their dominance and their interdependence to CRM projects. Their success is not only reliant on the appropriate technology, but on companies being able to define what their customer service and success criteria are and how they are going to capture this data.

It is not technology, however, that will dominate the CRM stage in the next few years. Whilst Internet advancements continue to provide a wide range of opportunity for new CRM technologies, the principles of CRM strategy remain the same. The one big change is that organisations adopting CRM will no longer be prepared to undertake high-risk projects with little control over their return.

The global economic climate will dictate, at least for the next 3 years, cautious investment but yet a burning need for customer retention and increased profitability. CRM projects will be urgently needed, but will have to be run in a way that is more controlled, more planned and more likely to deliver staged benefits and lasting change.

Companies have also learnt through their early CRM efforts that technology alone delivers little by way of business change and that the ingredients of success lie in the human aspect. Anyone already involved in stage 1 CRM projects will know that process, training and change are critical elements for a successful programme of change. Investment in these areas will increase in proportion to software spend, and companies will be more likely to engage specialist consultants for access to best practice, process change skill and CRM low risk methodologies.

It is clear that successful CRM projects will be dependent on a number of key factors: Clear strategy and vision, and a clear understanding across the whole organisation of what type of customer experience it wants to create. Process change, people management and the provision of good, corporate-wide customer information will be the main ingredients for CRM success.

Michael Juer

[email protected]

CustomISe Ltd

CustomISe is a CRM specialist services business that aims to deliver best practice standards in CRM by transferring knowledge and skills to clients to help them achieve the greatest business gains out of CRM.

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