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SMBs Plan Growing Investments in CRM
Aberdeen interviewed 232 decision-makers at SMB firms to examine the components of business technology that most closely map to the strategic needs of small enterprise.
Posted Aug 31, 2004
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An Aberdeen Group study shows that although CRM functionality has not penetrated the SMB market as deeply as integrated financial suites have, SMBs are enthusiastic about the prospects for expanding their CRM capabilities in the coming year. Aberdeen interviewed 232 decision-makers at SMB firms--more than 80 percent from companies with less than $100 million in annual revenue--to examine the components of business technology that most closely map to the strategic needs of small enterprise. "One of the key things was to find out what is keeping small-business owners awake at night, and how they are going to address those [issues,]" says Katherine Jones, Aberdeen Group research director of enterprise applications. "They had higher levels in their applications today than to a certain extent the applications might merit, particularly since a number [between six and twelve percent] had homegrown, cobbled-together applications," Jones says. "Some of their confidence may be misplaced." Implementation and satisfaction figures were both second highest for CRM, trailing core finance packages and ahead of other disciplines like supply chain management, human resource applications, and logistics systems. To an overwhelming degree respondents indicated plans to expand their spending on CRM in the coming year. In all, 60 percent of those surveyed intend to increase CRM spending, compared to 39 percent who plan financial-system investment and 36 percent looking to increase spending on human capital-management software. The lack of alignment in this spending is a result of relatively low weight placed by SMB firms on integrated ERP and CRM systems--just 22 percent of those surveyed felt that an integrated, single-source solution was a high priority. What surprised Jones was not the strong reaction in favor of CRM investment among SMB practitioners, but the reasons behind it. "CRM is [often seen] as a way of getting new business, or [being] more proactive, but the degree to which people said, 'No, we are still trying to reduce application cost' is significant." Many respondents who indicated a plan to increase CRM spending will still do so with an eye towards efficiency, not new revenue generation.
A smaller size may not be as strong as an advantage for clear strategic vision as is commonly thought. Aberdeen asked respondents to name their top-three strategy challenges, and the second most-frequently cited challenge was an ability to clearly communicate across the company. Typically larger firms are seen as being more susceptible to information stovepipe breakdowns, but the problem appears pervasive. It would appear that SMBs will no longer wait on the sidelines for others to solve their problems. "This is a bit of a laggard community, and a show-me state of business," says Jones, noting that SMBs also sat back while larger companies experimented with ERP systems a decade ago. "SMBs are now embracing [CRM], because they know the good, the bad, and the ugly." Related articles: CRM Tops SMBs' Wish Lists SMBs Fear an Overreliance on Microsoft
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