• August 4, 2009
  • By Jessica Tsai, Assistant Editor, CRM magazine

Beyond the Hype: CRM Applications Endure

In a report that could have gone well over 46 pages, William Band, principal analyst at Forrester Research, manages to extract and organize critical details of what he calls, "The Extended CRM Application Ecosystem." The evaluation covers 19 applications which serve one of five core purposes: customer targeting, customer acquisition, customer retention, customer understanding, and customer collaboration. The 2009 third-quarter report, "TechRadar For Business Process & Application Professionals," assesses and projects the future of CRM technologies. Band goes on to further segment and articulate the business imperative for each solution, and more important, their individual business value. 

Band acknowledges that while CRM suffered criticism and skepticism early on, solutions supporting this initiative have become critical to the business strategy. In the early 1990s, CRM solutions came onto the scene and promised to solve every organization's problems, Band recalls. Then, by the late 1990s, early 2000s, analysts reported that the majority of CRM implementations failed. Still, CRM persisted, becoming now a top priority in most organizations. "Everybody's using this stuff," he says. "They're not going back to spreadsheets."

In a survey of more than 1,000 enterprise and small and mid-size businesses in North America and Europe report, 49 percent of respondents are piloting, had already implemented, or were upgrading customer service and support solutions; 37 percent have sales force automation; roughly 30 percent have marketing solutions; with 20 percent indicating initiatives to implement all three.

Forrester finds that companies worldwide will spend about $12.3 billion on traditional CRM applications, which broadly cover the areas of marketing, sales, customer support, and customer data analytics and management. Still, the amount of money spent fails to translate directly into the success businesses are having with these solutions. According to Band, spend on CRM-related applications is among the highest, if it's not the highest, in the software industry. Beyond the typical marketing, sales, and customer service applications, CRM has expanded as clients demand end-to-end solutions, such that the total spend actually approaches $23.6 billion.

"The large amount of investment that has been made over the last decade speaks to the fact that organizations are continually challenged to improve their customer facing processes-those challenges aren't getting any easier," Band says. Organizations are continually looking for solutions to help them get better, and as a result, they're spending more to fill the gaps. "They're not easy problems to solve," he says.

In his January 2008 "CRM Best Practices Adoption" report, Band surveyed 260 business and technology decision-marketers and influencers about their CRM best practice adoption. Respondents reported "poor/below average" performance for all categories surveyed, which Band attributes primarily to "poorly conceived strategies," the top five of which were:

Marketing..............................37 percent self-reported their capabilities to be "poor/below average";
Customer analytics..................36 percent;
Customer service....................35 percent;
Indirect sales.........................33 percent; and
Customer data management....31 percent.

Band argues that the challenges around adoption can be attributed to a variety of factors:

  • Criticality: a business problem isn't important enough so no one cares to develop a solution;
  • Complexity: a business problem is very difficult and therefore, the technology has yet to effectively approach and resolve it; and
  • Corporate: a business problem is rooted in lack of coordination and transparency within the organization.

Applications are plotted on a graph that measures:

  • business value-add (negative, low, medium, or high);
  • trajectory of impact (significant, moderate, or minimal success);
  • phase in the CRM application ecosystem (creation, survival, growth, equilibrium, or decline); and
  • time it will take the reach the next "phase" in the ecosystem (ranging from under 1 year, up to >10 years.)

The report evaluates the following 19 applications, which have been segmented based on their phase in the CRM application ecosystem:

Creation Phase: This phase marks the initial steps where companies may be interacting before turning to any solutions.

Survival Phase: The early stage when a product hits the market, initial deployments take place, and users expand to include suppliers, customers, and systems integrators.

  • Customer Community Platforms;
  • Enterprise Feedback Management;
  • Revenue & Pricing Management; and
  • Field Service Management.

Growth Phase: Characterized by widespread implementations that demonstrate clear business value. Vendor consolidation begins. Applications can progress down one of two paths during this time: sustainability or obsolescence.

  • Enterprise Marketing Management;
  • Customer Business Intelligence;
  • Customer Data Management;
  • IVR/Speech Portals;
  • eCommerce;
  • Product Lifecycle Management; and
  • Contract Lifecycle Management.

Equilibrium Phase: Perhaps the longest period overall, this stage sees a market that is highly consolidated, and for the most part, applications are "large and resilient," where "benefits and limitations...are documented and well known."

  • Salesforce Automation;
  • Order Management;
  • Customer Service and Support;
  • Contact Center Infrastructure;
  • Partner Relationship Management; and
  • Customer Forums.

Decline Phase: External changes-be it new regulations, business environment, a shrinking talent pool, or a disruptive entrant-result in the gradual abandonment of certain technologies.

  • Configure, Price & Quote; and
  • Electronic Bill Presentment & Payment.

Social applications are in the future of CRM, but Band notes that it is still viewed as "optional" in most organizations -- "I'm getting feedback that I'm the ‘counter revolutionary'," he says. Before Band can agree that social media is going to "transform the world," he demands to see business results. "We anticipate social computing will be more and more important but it will only be proven when more and more people try stuff," he says.

Social components can be found within customer community platforms, customer forums, and enterprise feedback management. Paul Greenberg, president of consultancy The 56 Group, CRM magazine columnists, and chair of the CRM Evolution conference, commends Band's thorough coverage of the CRM landscape. However, Greenberg notes in his blog that social monitoring solutions -- which touch upon text analysis, speech analysis and attitudinal or sentiment analytics-didn't, but perhaps should have, made the cut. While Band defends that social will undoubtedly have a significant impact in the future -- if not immediate future-organizations have yet to demonstrate concrete business value. In a down economy, he says, people are going to go for the tried and true.

News relevant to the customer relationship management industry is posted several times a day on destinationCRM.com, in addition to the news section Insight that appears every month in the pages of CRM magazine. You may leave a public comment regarding this article by clicking on "Comments" at the top; to contact the editors, please email editor@destinationCRM.com.

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