CRM Gets Real
CRM solution providers and the business community at large have spent more than half a decade wincing at publicized stories of missteps, flubs, and collapses attributed to bad CRM software, strategy, or both. Meanwhile, the world has gone on, and much of the skepticism has fallen by the wayside as more and more companies successfully integrate CRM programs and practices into their standard operating procedures.
In fact, two in three CIOs consider CRM efforts in 2004 a high priority, according to a survey of nearly 1,000 CIOs conducted by Gartner Executive Programs (EXP). Similarly, the December 2003 Morgan Stanley CIO Survey indicates that enterprises rank CRM in the top third of all IT spending priorities.
CRM vendors certainly have not lost confidence in their products either. IDC research indicates that such CRM outfits as Siebel and Oracle will lead the pack of vendors increasing their marketing budgets and efforts for the year.
Chris Selland, managing director of Reservoir Partners, says that CRM adopters are increasingly more dedicated to ensuring that their projects are a success, because they are making investments to execute on sales, service, and marketing strategies, rather than simply trying to make headlines. "[Vendors] were telling managers that if you buy this [product], your stock price is going to go up," he says.
Now that the new-car smell is gone, everyone is more focused on realistic solutions to problems of high-velocity, multichannel customer interactions. "We've been in this business for ten years; there's a maturity," says Jeff Pulver, Siebel vice president of worldwide marketing.
Skepticism over the true impact of CRM is also starting to dissipate. "The Financial Impact of CRM," a study conducted by IDC of more than 30 companies, found that productivity gains account for a clear majority of CRM return on investment. That companies are tracking the source and destination of their CRM benefits at all is a major improvement over years past, and a major component of the increasing levels of success.
According to Beth Eisenfeld, Gartner research vice president, about three in four companies now measure the TCO of their CRM endeavors after implementation, while three in five carefully measure benefits. Fewer are tracking ROI throughout the life cycle of their projects, but she credits awareness of costs and benefits to greater focus on results and, therefore, greater success. "Higher expectations make them focus more on what they're really trying to do," Eisenfeld says.
According to The Yankee Group, companies have gained enough confidence in their core CRM and supply chain capabilities that the lion's share of their spending and focus in the coming year will be on edge-of-enterprise technology that provides a two-way interface between corporate processes and customer supply and demand. It is on the edge where strategies like customer self-service come into play, and they can only deliver when the underpinnings are robust.
The end of the IT boom has also played some part in creating more rational, attainable CRM strategies. "Many companies are not doing the $30 million to $50 million projects they once were, and [are] being pragmatic in implementation," Eisenfeld says. More important than the dollar figures are the sources of the spending, which she says are increasingly business units, rather than IT.
CRM adopters have also come to understand the importance of integrating their CRM and supply-side processes and technology to provide information to customers with great authority, not just great speed. "When you look at customer service, it's not just 'who can respond the fastest,' it's 'who is more reliable' that is the big factor. 'It will be there in between two and twenty days' is less accepted than 'it will always be there in seven to eight days,'" says Mike Dominy, a senior analyst at Yankee Group. "The only way you can provide that information to a customer and actually execute is [through] tight linkages."
4 reasons for CRM success
Companies are finally getting the hang of delivering CRM results. The reasons:
1. Companies rank CRM as a crucial business priority and continue to invest time and money in their CRM efforts.
2. A more deliberate approach to business transformation projects mandates more tightly focused, achievable initiatives.
3. Organizations are paying more attention to planning and tracking tangible gains in customer revenues and corporate productivity.
4. Closer integration between CRM systems and ERP and SCM systems enables customers to send and receive crucial business information quickly.