In an industry that over the course of six years has evolved from a provider of simple call center systems and contact managers to one that delivers complex, Web-based, multifunction enterprise technologies, the future is always anybody's guess. What will CRM's next generation offer? Who will be around to offer it? To hazard a guess at these and other questions, CRM magazine asked four industry experts from leading consulting and research groups to look into their crystal balls and make predictions on the future of CRM, and of its principal technology areas: customer interaction, marketing and sales.
CRM: The Big Picture
By Joanie Rufo, AMR Research
What does the future hold for CRM? There are multiple angles to be considered when addressing this question--the vendor landscape, growth rates, user adoption rates or deployment strategies. This piece will focus on what forward-thinking companies should look for when evaluating CRM vendors in the coming years.
From an application standpoint, CRM suites have become very broad, encompassing traditional sales, marketing and service functions, as well as sell-side e-commerce capabilities such as order management or channel management. Given the narrowing parity between application suites, AMR Research has identified five key components that will define a vendor's future leadership.
Web-based architecture: The market today is focused on one aspect of Internet architecture: Is there any code on the client? However, that is only one aspect of being Web-based and it points to the fact that most vendors have partially or completely rewritten the client and parts of the middle tier in order to provide universal access over the Web. A truly Web-based application must be written on a standard-based application server, preferably Java 2 Enterprise Edition or .NET, and take advantage of built-in features like security and integration.
Personalized access for all users via a portal: The portal is becoming the way all users access customer information. A portal framework is a critical technology for two reasons. First, it is a poor man's integration tool, allowing information from several systems to be integrated to glass. And second, it has the ability to personalize the flow data and analytics to any role inside or outside the company. In addition, it will become the way to access and leverage Web services.
Analytics embedded in the business process: Analytics are the talk of the CRM world, which is enamored with the vision of using the mountains of customer data to personalize interactions, drive real-time decision making, and understand and manage customer profitability over the lifecycle of the relationship. However, outside of the capability some vendors provide in marketing to drive campaign decision making based on predictive data mining, none of the vendors has yet embedded analytics to drive the business processes in sales and service.
Multichannel support based on a private trading exchange (PTX) platform: CRM is no longer possible on a simple one-company-to-many-customer model. The CRM strategy has to support multitiered distribution channels, incorporate vendors and other service partners, and provide a common platform across multiple divisions of an enterprise. The PTX platform provides the data model, services and access management to support a many-to-many network, and it should increasingly find its way into CRM deployments.
Support for all interaction types: The days of single channel applications are numbered. Applications will be increasingly required to support any and all forms of interaction with customers and partners, regardless of the communication type--Web, e-mail, voice or face-to-face. Today, vendors have added support for multiple communication channels in the contact center based on partnerships or development of interaction management services. Vendors still show limitations in supporting various communication methods such as the management of e-mail across the full spectrum of CRM technologies.
Leadership also will be defined by those vendors providing verticalized applications. As major enterprise application markets develop, they start with first movers that have lots of vision and good core technology. They grow based on depth in point applications, narrow as vendors add breadth, and finally begin the race for product verticalization. As CRM moves into the last stage, future leadership in the CRM market requires focus and commitment to create deep vertical products that address specific segments of broader markets, like the insurance or investment banking portions of the financial services world.
Customer Interaction Management: Hearing Voices
By Chris Martins, Aberdeen Group
The Aberdeen Group believes the role of contact centers in providing customer interaction management will remain prominent. But the value proposition must change from assuming that telephone-based interactions are the only way. Organizations traditionally depended on call centers as the gateway through which customers communicate with the enterprise. Studies from the mid-1990s suggested that up to 70 percent of customer interactions happened via call centers. Yet, the idea emerged that the role of call centers is diminished in deference to lower cost, more Internet-centric communications. The understanding must be clear that, while there are other modes of interaction, voice remains the best way to interact with customers in certain business circumstances.
For contact centers to assume this role they must continue to evolve. First, customer interaction management (CIM) must be able to deliver a complete end-to-end customer interaction capability that incorporates Web, e-mail, voice, text/instant messaging, perhaps fax, and do so in an integrated fashion. More and more suppliers aspire to such capabilities, but challenges remain. Many multichannel solutions are the result of mergers and acquisitions involving different product architectures that must be synchronized and melded together. It is hard work--and doubly so in a difficult economy--but it must be done to deliver the solutions customers want.
Second, contact centers will begin to acknowledge and embrace self-service, either via the Web with improved search and natural language interfaces, or via the telephone with stronger interactive voice response support that goes beyond simple menu navigation. The value proposition of self-service in terms of cost-effectiveness is too compelling not to be incorporated as part of an overall CIM strategy. Advances in the ease of authoring of self-service content, ease of finding of information, and integration of self-service more seamlessly with back-end transaction systems will help facilitate adoption. On the voice side, the concept of voice portals will begin to mature in terms of front ends to customer management solutions.
Third, suppliers will work to make things easier. The marriage of analog and digital communications involves a lot of plumbing work. That low level complexity diminishes the flexibility of solutions. Emerging graphical tools will depict operations and allow processes to adjust to business needs. Yet, the infrastructure of existing hardware will remain an impedance to making things easier; investments in existing gear preclude wholesale replacements, and the complexity therein remains.
Fourth, there will be continuing emergence and maturity of analysis tools that focus on business metrics. Rather than feeds-and-speeds data such as call wait or call duration, CIM solutions will begin to go beyond efficiency to include effectiveness. CIM is moving up the value chain in terms of providing business solutions.
Fifth, look to outsourcers to lead the way in executing. The value proposition of outsourcing will no longer just be inexpensive staff resources or access to infrastructure. Outsourcers will tout and deliver expertise in both the technology and business practices. And they are often large enough to weather difficult economic times.
Sixth, workforce management will emerge as an enabling tool, rather than a scheduling or management tool. Capabilities like monitoring will be augmented with e-learning and other services that help staff do jobs better, rather than merely ensure that enough people are at their desks taking calls.
Finally, CIM will become the CRM solution for certain markets. The reality of certain businesses is that a relationship with the customer is fully encompassed by managing the interactions effectively, together with strong integration with back-office transaction systems. Look for some displacement of earlier generation CRM solutions by strong CIM capabilities that eliminate the need for a complete CRM deployment by going directly to the back office.
CIM is alive and well. There is a lot to be done, but there is a lot of potential, as well.
Marketing Automation: Defining Priorities
By Gareth Herschel, Gartner
The choice of marketing technologies is increasingly reflective of the difficult decision marketing organizations are facing about their role within CRM and the focus of their role within the company.
Just as CRM is a business strategy focused on balancing the needs of the customer with the needs of the enterprise, most CRM investments need to strike a similar balance between the needs of the external customer relationship, and the internal needs of the enterprise to support that relationship.
Much of the focus on the use of technology to support marketing has been on the external customer relationship. Marketing's responsibility has been to add insight and guidance to cross-channel customer interactions to ensure that they support and develop the overall customer relationship. Typical investments by companies have been in:
• Campaign management tools focusing on customer segmentation and campaign execution.
• Customer analysis focused on predictive modeling of loyalty, product and channel preferences.
• Tools to measure customer profitability and lifetime value.
New generations of these tools deepen marketing's focus on customer value and seek to deploy it in real time to other parts of the business, particularly the Web and customer service call centers. When properly deployed, these investments can help the enterprise to focus scarce resources--whether of the marketing budget or the call center agent's time--on customers with the highest potential value. Leading vendors in this space, like E.piphany Inc., NCR, Protagona Worldwide and Unica Corporation, offer integrated analysis and robust capability to segment customers and guide interactions across traditional outbound campaigns, event triggered communications and real-time, inbound interactions.
This focus on optimizing the customer relationship has raised marketing's profile with most of the CRM suite vendors from an irrelevance to a must-have category of functionality. However, even as marketing has raised its value to the rest of the enterprise as part of a broader CRM implementation, the use of technology to support marketing's traditional processes and activities has been much more limited.
The vast majority of marketing spending still goes through traditional, nontechnology-enabled channels such as brand advertising, and trade promotions. Most marketing processes focus on nontechnology-enabled activities such as content creation, definition of marketing strategy, and the development and launch of new products and services. Driven by a variety of internal marketing issues such as a desire to increase speed to market, capture and share corporate best practices and ensure best use of marketing investments, marketing departments are now beginning to look at another category of software, usually described as marketing resource management.
Marketing resource management is focused on work-flow and collaborative technologies to help marketing manage tasks such as the conceptualization of new campaigns, the design of collateral with a variety of partners, and tracking the relative success of different types of marketing investments. Early vendors include Aprimo Inc., Emmperative Marketing Inc. and Notara, although none of the vendors in the space today can offer a full range of functionality.
The choice between relationship optimization and marketing resource management is not an either/or decision. Within a few years companies, and most of the surviving vendors, plan to offer functionality to support both these roles that marketing can play. The challenge for companies today is to decide where their focus needs to lie, with aggressively managing the customer relationship, or managing the marketing process and resources.
Sales Force Automation: Sales, Not Technology
By Steve Bonadio, Meta Group
Maturing sales automation (SA) applications are proving to be a double-edged sword for many organizations. As the capabilities of commercially available SA packages continue to increase, the propensity is to take a "deploy everything" approach, thereby inviting longer implementation cycles and user defection, and ultimately impeding organizations from allocating resources to other critical pursuits. Although SA is an important component of the CRM ecosystem--especially for managing direct sales activities and processes vis-à-vis prospect and customer relationships--organizations must shift from a pure feature/function or technology-centric philosophy to one based on automating and optimizing sales activities and processes. More important, though, the philosophy should be based on optimizing sales activities within a customer lifecycle framework (engage, transact, fulfill, service).
A key requirement for making this lifecycle seamless and frictionless for customers and organizational constituents that manage customer relationships is the utilization of integration technologies. It is also the realization that CRM integration costs for a specific project can account for 60 percent of the total implementation services cost. Through 2002, a batch-driven, order-centric integration approach will enable organizations to get to market fairly quickly, with value-added services such as order promising/status, inventory checks and quoting. By 2003/2004, process-driven integration approaches will supplant batch as the preferred mechanism of integration, thereby leading to real-time access to critical sales information.
However, organizations will continue to suffer setbacks, long implementation cycles and cost overruns in their SA initiatives through 2002/2003. To combat those challenges, organizations must demand data model flexibility and openness from their vendors so they can adapt the model to fit their unique needs, and declaratively represent complex sales organization structures so changes can be made easily.
During the same time period, organizations with large field sales deployments will continue to face significant user complaints due to unacceptable replication times. That is often due to ineffective data administration and synchronization practices, rather than a shortfall of the replication technology itself. Organizations must adopt sounder practices by 2003, while looking to their vendors to provide more robust and automated administration and application management tools.
By 2003/2004, increasingly flexible application architectures, integration technology adoption and improved administrative and application management capabilities will diminish some of these deployment challenges. Progressive SA vendors will have moved to more modularized and componentized architectures based on Web services, thereby enabling organizations to deploy specific functions or services on an ad hoc basis with minimal impact on existing application functions or infrastructure.
Our research reveals that through 2004 more than 70 percent of field sales representatives will be enabled with a range of pervasive computing technologies, such as PDAs, cell phones and auto-PC extensions. Pervasive devices will supplement or replace the existing policy of many organizations to automatically deploy notebook computers to their field sales force. In fact, most SA vendors will support more than one type of pervasive device through year-end 2002. Organizations must begin planning for mobile requirements, because ongoing support of a field sales force commands a significant cost premium (ranging from 50 percent to 150 percent) over traditional LAN-based users.
By 2004/2005, organizations will have evolved to a process- and lifecycle-driven approach to sales, enabled by significant investments in requisite application integration technologies. Concurrently, hybrid channel selling strategies such as synchronization of direct and indirect channel activities will emerge, primarily supported through operational technology convergence, in addition to adoption of robust analytics for channel mix optimization.