Last year will be looked on as the year of renewal for the CRM industry; new technologies around the real-time enterprise (RTE) come into the picture in 2004.
Posted Jan 5, 2004
The CRM industry has come a long way over the past 20 years. What started out as an SFA industry in the early 1980s soon emerged as an SFA and customer service and support industry in the late 1980s. Marketing got added to the equation in the early 1990s. In the late 1990s business analytics and e-customer applications were added to the CRM family of applications. CRM suites began to emerge with the entry of EPR players. These were great years--30 percent to 50 percent annual growth was not abnormal--and they helped propel CRM to the number one position in terms of software application licensed revenues worldwide, a position that CRM retains and will continue to do so for some years to come.
The turbulent dotcom crash meant a considerable decrease in CRM growth rates and a closer look at the CRM value proposition. CRM failure rates began to be bantered around as much as CRM benefits and the industry came under attack. Stock prices of CRM public companies crashed. It was a real wakeup call.
CRM software vendors used to rely on third-party integrators to install their software, but today vendors themselves are doing more installations. These vendors also used to sell software, but more and more they are now offering complementary business-process and change-management services. CRM software vendors insisted on high prices and then systems integrators added to these already high prices, but a new alternative was born, namely ASP hosted solutions. The result? Software and implementation prices have come down significantly. An important event took place recently: Microsoft entered the CRM space. Consequently CRM has achieved best-practice status within most industries.
Last year will be looked on as the year of renewal for the CRM industry. CRM software vendor revenues, as well as CRM implementation service revenues, are on the rebound. Customer, vendors, and implementation firms have finally understood that CRM is not a technology play and have begun to understand the significance of getting the people, process, and technology mix right to drive CRM success. Back-office/front-office integration is on the rise. Consolidations are up within the industry. More CRM software vendors have created vertical market software solutions to differentiate themselves. Self-service applications and other customer support applications are on the rise. Wireless has become the norm with the forecast of 80 percent of all CRM applications being wireless ready by the of end this year. The ASP model continues to grow.
So where is the industry headed over the next 18 months? CRM increasingly integrates front-office applications (sales, marketing, customer service) with back-office applications (ERP applications for finance, human resources, manufacturing, and inventory control), with e-customer applications (Web shopping, Web self-service, permission-based marketing), and with supply-chain applications (B2B exchanges). What, then, is the inherent weakness in the current CRM scenario? These different applications are being stuck together with proprietary pipes that are expensive and often require high-maintenance middleware solutions.
Here is where new technologies around the real-time enterprise (RTE) come into the picture in 2004. This is technology that seamlessly links these different applications with a common, open-pipe based on .NET and J2EE technical architectures. This RTE pipe offers easy and open integration links based on XML, a business workflow or business process engine, and real-time analytics capabilities. Now disparate applications can be put together in a cost-effective way. No longer are CRM software suites required. Best-in-class software point solutions will become more and more the norm.
While these technology advances help to propel the growth of the new emerging CRM/RTE industry, another significant factor will occur towards late 2004 and early 2005: the federal government enters into the equation. Given the need to drive down costs and to better manage customer relationships (relationships both internal and external), government agencies significantly step up their purchase and use of CRM/RTE software. CRM/RTE revenues once again begin to soar.
About the Author
Barton Goldenberg is president and founder of ISM Inc., a CRM and real-time enterprise consulting firm in Bethesda, MD. He is the author of CRM Automation, and the publisher of The Guide to CRM Automation. Contact him at firstname.lastname@example.org
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