Keeping pace with your competitors when it comes to CRM technology will likely require bigger and bigger risks on the budget line, according to a recent report by Meta Group.
The stamford, Conn.-based research firm's ongoing study of 75 Global 2000 companies reveals that CRM expenditures will continue their unabated rise. Enterprises with active CRM investments will increase their budgets an average of 23 percent year-to-year through 2001.
One of the most active areas will be marketing organizations. Automating these groups is becoming so mission-critical that spending on these solutions is now overtaking investments in sales force automation and customer service. The average Global 2000 company will spend $1.7 million on marketing automation technology this year, compared to $700,000 each for SFA and customer service solutions.
ERP applications are also taking a back seat to front-office automation, as the study finds that organizations will spend 2.6 percent more on CRM implementations in 1999 than on back-office technology. Overall software and systems-integration service expenditures on CRM are expected to grow from $1.5 billion in 1998 to $4.7 billion in 2001, a compound annual growth rate of 46 percent. The need for outsourcing CRM integration and customization services is also expanding, with Meta Group forecasting that 75 percent of Global 2000 firms will outsource at least part of their application development by 2003.
"CRM initiatives will be investment programs comparable to-or larger than-ERP initiatives," said Aaron Zones, executive vice president of Meta Group's Application Delivery strategies service. "Additionally, 21st century competitiveness mandates that speed-of-business, mission-critical functions such as data warehousing and data mining be fully integrated into the CRM backbone."