Gartner estimates that spending on CRM services in North American will increase at a compounded annual growth rate of 8.4 percent from 2001, reaching roughly $22 billion in 2006.
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Large enterprise customers find professional services firms often add complexity to CRM implementations, but most are likely to use at least one services firm, according to research firm Gartner Inc.
Recognizing the importance of professional services firms to CRM success, North American companies shelled out $16.8 billion for CRM services last year, up from the 2002 level of $15.5 billion, Gartner states. The research firm estimates that spending on CRM services in North American will increase at a compounded annual growth rate of 8.4 percent from 2001, reaching roughly $22 billion in 2006.
"User enterprises, understaffed and overwhelmed by the complexity of CRM, find consultants and systems integrators add complexity to CRM implementations, as their presence requires added investment to share business and institutional knowledge the integrators lack," says Beth Eisenfeld, a research vice president at Gartner. "However, Gartner estimates through 2004, more than 75 percent of CRM initiatives will involve at least one external service provider [ESP]. Through 2004, CRM ESPs will be the primary vendors for integrating different areas of CRM functionality."
To get their CRM initiatives humming, Gartner says large enterprise customers will invest most heavily in process management, systems integration, and IT management. Technology vendors are well suited to provide these types of services for their own products, but most enterprise customers work in a heterogeneous technology environment, necessitating the need for a technologically well-rounded ESP. "Technology vendors, for example, application, networking, and database providers, are looking to ESPs to supplement their professional services staffs, which are often more capable on the vendors' products alone," Eisenfeld says.
But it's a different story for the midmarket. According to Wendy Close, CRM research director for midsize enterprises at Gartner, out of 139 midsize enterprises polled last year only 33 percent stated that they use an external integrator for CRM services. A higher percentage surveyed, 52 percent, stated that they farm out their CRM services to their CRM software vendors.
These numbers will likely remain the same through 2005, Close suggests, as risk reduction, speed to benefit, and shortages of in-house skilled resources will encourage small and midsize businesses to employ their CRM vendors and ESPs to further their CRM efforts.
Already, 64 percent of midsize companies Close polled have achieved a return on their CRM investment, she says, but most claimed they are still "immature in their investment." According to Close, small and midsize enterprises will continue to turn to CRM vendors and ESPs to help define their CRM strategy, develop a CRM vision, improve data collaboration efforts, enhance CRM processes, help establish metrics, and clean up their data.
A Helping hand for building buy-in
It's natural to resist change. But when change comes in the form of a new CRM system, it is imperative to get everyone onboard. Otherwise, failure to convince employees of the benefits of a CRM system often results in passive resistance and low employee-adoption rates, says Jonathan Copulsky, a partner at Deloitte Consulting.
No matter how good the CRM technology, some hand holding and coaching is usually needed to encourage buy-in. This is where a CRM external service provider or consultant can help.
Lands' End was facing a unique business process change in its customer support center that required customer service agents to shift gears from support mode to sell mode and make alternative product suggestions when items are out of stock. Understandably, customer service reps were resistant to the foreign idea
So Copulsky and his team conducted a series of visioning exercises, what he calls A Day in the Life Of, to show employees how their lives would change after the CRM implementation. The idea was to gently introduce agents to the new system and address all their concerns up front.
Lands' End's CRM vendor, Trilogy Software, integrated the applications itself, but the first release included suggestions from the A Day in the Life Of exercises. With the help of Deloitte to encourage buy-in through the visioning exercises, the initiative went according to schedule. Lands' End was later acquired by Sears, Roebuck and Co., which Copulsky suggests is partly due to Lands' End's superior customer support. --D.M.
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