CRM Spurring Big Budgets in Companies
A CRM spending bonanza
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CRM implementations among European and U.S. companies are rapidly increasing.

A survey of 500 large companies conducted recently by IT and management consulting firm Cap Gemini Ernst & Young revealed significant growth in the market. Cap Gemini interviewed 200 U.S. and 300 Western European enterprises operating in high industry sectors, such as banking, life sciences, automotive, retail, insurance and telecommunications.

Forty-four percent of the companies have CRM programs in operational or production phases, 33 percent have entered a planning or implementation phase and 23 percent are evaluating projects. Cap Gemini's statistics show twice as many enterprises will use CRM within the next two years. Companies are investing large amounts on projects ranging from hundreds of thousands of dollars to $10 million, although most budgets are lower than $1 million.

"It's the realization that customer intimacy builds long-term competitive advantage, and focus on product or cost reduces long-term advantage," says Gareth Herschel, an analyst with Gartner's CRM Research Practice. "It's the fashionable thing to do."

Internet Spending

Technologies mainly are Internet-driven. Of the companies interviewed, 40 percent say their CRM initiatives center on the Internet, 27 percent say the Internet is driving their decisions to implement a CRM project, and 56 percent have already integrated interactive customer support into their strategy.

It's not only CEOs or product-based companies applying CRM. A recent PricewaterhouseCoopers' poll of 374 service companies across all industries found an average of 12.4 percent of a company's operating budget for next year will be set aside for e-business efforts, split mainly among IT employees and CRM software applications.

"I've seen a long history of service companies pressing for this area on the Net, as opposed to product sectors," says the survey's author Pete Collins, director of entrepreneurial services at PricewaterhouseCoopers. "This really confirmed the anecdotal evidence we've been gathering."

The survey shows service companies generating 21.8 percent of their revenue from e-business by next August. Collins says the service sector is now enjoying the most significant operational benefit, which is having its customers and employees as its biggest supporters.

Gary Bryan, CEO of Colorado-based companies U.S. Escrow & Financial Services and Bryan's staffing Services, took part in the PricewaterhouseCoopers survey, and says the results don't surprise him.

"We're in fast forward," Bryan says. "We're actually catching up to Dick Tracy."

Bryan deployed an onsite CRM-focused Internet system at his staffing company earlier this year, which he says has made the company much more efficient. Rather than the company wasting time researching candidate information and sending paperwork back and forth, the clients now just search for suitable candidates on the company's Web site and then arrange an interview. "We're cyberfacing, rather than interfacing," Bryan says. "We're really efficient and not pushing paper around."

Herschel says over the next year, many companies will still be implementing CRM because it's a business strategy, not a technology. As the strategy continues to evolve, so will their implementations.

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