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Why are storm clouds gathering over CRM?

6th Aug 2013
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Over the last year or so, the CRM landscape has changed radically. Oracle recently announced that it had bought the marketing automation platform Eloqua, meanwhile, in April, SAP was toppled from its top spot (in terms of CRM revenue) by Tellingly, Microsoft recently announced a massive change to its leadership, but the Microsoft Dynamics business applications group will remain as it is; could this be a sign of a future spin off for this division? There was further evidence of the changing fortunes of the big players in IBM’s decision to kick out its legacy 67,000 seat Siebel implementation with mid-tier SugarCRM.

Why does the shifting strategies and fortunes of the big players matter to the user? The bottom line is that, as CRM becomes the front-end of many enterprise systems, and therefore more deeply integrated with back-office systems, the vendor that controls this portal could determine control of the entire technology stack and the whole user experience. As the CRM wars hot up, the ramifications for all of us could be far-reaching.

CRM as the front-end

In recent years, CRM tools have moved on from being an automated rolodex and are now integrated with a host of other tools from enterprise social media to back-office financial systems. CRM can now be used to do a quick credit evaluation, check any customer support issues or any outstanding invoices.                                               

The net result is that the CRM tool now functions as the front end of many enterprise systems and therefore it is the CRM 'user experience' that matters most for many enterprise users. This is only going to increase as the mobile workforce needs apps that will deliver all the functionality and workflow capability right to their fingertips. As users need more functionality delivered through a user-friendly portal, the temptation would be to plug in more modules produced by the CRM vendor.

This means that by extending or withdrawing support for other tools, a CRM company could, in theory pressure their clients into decisions regarding their back-end stack.  Whilst today's reality is that there is a mix of different technologies, the support and partnerships of different vendors will become increasingly important in determining the entire technology stack.

The integration challenges 

One of the biggest challenges is that, all too often CRM solutions are bought with the “straight out of the box” promise of SaaS, but deeper understanding of the solution may have been necessary. 

While vendors sell CRM solutions with industry standards built in, integration doesn’t happen out of the box. The reason that industry-wide open standards are important is that they make integration easier.

A case in point is the price book, a feature which allows you to upgrade your pricing and make it accessible to sales people without the danger they will change the pricing. In certain cases, it may be possible to change the pricing in a CRM implementation because all the sales team has to do is change the unit volume. Extra work is therefore required to ensure the system would only accept whole integers, so that a discount cannot be applied by selling 0.8 units, for example.  Rather than seeing this as a negative, with foresight it is possible to use customised, instance -specific coding to get around these problems rather than implement the whole model out of the box.

The shifting landscape 

Ultimately, the shifting fortunes of the big players raises the importance of compatibility, integration and customisation when selecting a CRM system. 

When IBM commented on why it had selected SugarCRM, an IBM executive referred to Sugar’s open source nature, the look and feel of the UI and the flexibility to run SugarCRM on-premise. The 'on-premise' advantage may seem counter-intuitive in the days of Cloud, but it does make sense. Not only does IBM have a lot of users to pay for monthly, but they work in different countries and this would need extensive customisation. IBM also has its own tools such as Lotus Notes and DB2 to integrate with CRM.

This all implies that the value IBM saw in SugarCRM was flexibility, ease of customisation and compatibility with existing tools. This is a game changer for SugarCRM, as they can now compete  with larger players, but also has an impact on the rest of the CRM market. For Oracle, it raises the question of customer willingness to be tied to a stack and ageing technology. For, it puts a question mark on the viability of the Cloud-only, minimum customisation model. For other CRM players, it shows that customers are buying in to a world where we buy the best fit of each technology we need and then integrate them, rather than wall-to-wall purchases.

This is where a process-driven integration tool (unlike ETL) which doesn’t require the customer to invest in an additional portal is valuable. In place of this, by focusing on workflows, sales, marketing, operations, technical and managers can all use the same systems, but with only the functionality they need.

The CRM battle is going to affect the entire enterprise and will become more significant given the rise of BYOD and mobile application interfaces that need to be aligned to the device they run on. Increasingly, integration will be the foundation of successful CRM implementations so that, whether an organisation 'mix and matches' or is locked-in to one vendor, they are supported by processes and workflows which  function in a way that suits their business operations. 

Dave Akka is UK MD of Magic Software


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