• December 1, 2004
  • By Coreen Bailor, (former) Associate Editor, CRM Magazine

10 Technologies That Are Reinventing the CRM Industry

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Technology: VoIP
Why You Need to Know About It: Cuts costs and erases location barriers while improving customer service.

Few technologies have been generating a louder buzz than VoIP, particularly among contact centers. "If there is a major driver in the call center space it's VoIP and it's finally come into its own," says Rich Jaso, Northern American managing partner, CRM practice, at Unisys.

The ability to augment the traditional contact center with remote, home-based, and outsourced agents adds to VoIP's flavor. "You begin to transcend the idea of location or geographic handcuffs," says Ross Daniels, manager of product marketing at Cisco, in the customer contact business unit.

Reducing costs and converging channels like voice, email, and Web chat may also help to extend VoIP's growth curve. "Voice over IP allows the contact center manager to manage all of these interaction types over one network," says Sean O'Connell, manager of product marketing for Cisco.

Yet its growth doesn't come without concerns. Some analysts argue that VoIP falls short in certain arenas when stacked up against time division multiplexing (TDM). According to Daniel Hong, CRM analyst for Datamonitor, VoIP is hyped as being as reliable as TDM. "When you [have a] power shortage, essentially your whole network will be down, but the phones are still working. So for business continuity measures TDM is still the number one choice," Hong says. "That's why they offer hybrid IP solutions. But eventually all the companies will make the jump to pure IP." 

And although VoIP reduces toll, network, equipment, and administration costs, according to Hong, it is not yet widely deployed. "It is becoming mainstream, but a lot of that is...in the beginnings of being deployed right now."
Over the next two or three years "you're going to have massive and radical adoption of VoIP infrastructure," Jaso says.

Technology: Web Services and Services Oriented Architecture

Why You Need to Know About It: Provides an increased span of flexibility.

Flexibility is one of the prime reasons Web services and services oriented architectures are technology platforms to watch, as are open standards like Speech Application Language Tags (SALT), Simple Object Access Protocol (SOAP), and Extensible Markup Language (XML).

Web services and services oriented architectures "provide more adaptable and flexible applications so the applications can change more dynamically in context to a business process," says Sheryl Kingstone, The Yankee Group CRM program manager. "It also helps for standardization, so now you can share information across heterogeneous platforms easier."

The industry is already beginning to see how Web services can positively affect the way applications work together, according to Denis Pombriant, managing principal at Beagle Research Group. "Many major vendors...have programs in place to help them extend their own application functionality by incorporating other third-party applications through Web services into their suites," he says. "We're going to see that approach becoming increasingly important."

However, although Web services can allow organizations to work across applications, the hype around it now is massive, says Liz Roche, CRM vice president and practice lead at META. "On a scale from one to ten, the hype factor is, like, twenty-seven," Roche says. "The reality is, every organization has to start preparing [itself] to consume Web services and Web services oriented technology."

Technology: Speech Applications

Why You Need to Know About It: Properly done they can reduce costs while boosting amount of transactions a company can process without increasing head count.

Self-service applications, with the aid of VoiceXML, can help organizations--especially contact centers--strike that happy medium between slicing costs and satisfying customers. 

VoiceXML uses open standards for building telephone and speech applications, says Ken Rehor, vice chair of the VoiceXML Forum. "What having a standard like this does for you is enable a choice of vendors and technologies that best fit a particular solution."

VoiceXML is just one pixel, albeit large, that helps create the speech technology picture. "Touchtone technology in the past, whether we loved it or hated it, could handle a certain range of transactions. But there was a whole other range that touchtone just didn't quite work well for," says Art Schoeller, Yankee Group senior analyst. "VoiceXML helps move it along by giving us a pretty solid standard upon which to do speech technology applications."

Agents still handle about 80 percent of calls coming in to the contact center and touchtone IVR systems handle only 10 to 20 percent. But with speech applications gaining ground, that IVR percentage is poised for growth, according to Steve Tran, cofounder and vice president of marketing and client solutions at BeVocal, which provides hosted speech solutions. "I see the next ten years really shifting that balance on its head," he says.

Technology:Outsourced Application Delivery

Why You Need to Know About It: Lets end-user companies quickly deploy CRM.

Organizations that want a quick launch of their CRM initiative are increasingly looking to the ASP model, including hosted and on-demand CRM. The benefits, vendors will be quick to tell prospects, can include lower cost-of-acquisition, faster deployment, and costs savings from not having to install or maintain software on the user's system.

But "it's not a panacea," Unisys's Jaso says. "On-demand by definition will never give you the type of access to data, the type of mining, the type of integration that you need in order to truly do world-class CRM. But over the next couple of years you're going to see huge increases in on-demand types of services." 

Whether businesses use an ASP to test CRM before deploying in-house or as a long-term solution, the popularity of the model has propelled such companies as Salesforce.com and RightNow Technologies to IPOs this year. "There are still many IT organizations that believe in doing it themselves and will continue to create their business case that says we can do it better ourselves," Schoeller says. "But I do see good growth and probably the outsourced ASP-type model will take some share over the next few years from the premise equipment."

Technology: Social Networking

Why You Need to Know About It: Helps employees uncover possible relationships that may increase chances of completing sales transactions.

Sealing a sales deal is often about who you know, and that is why social networking earns a slot on our list. 
"Social networking provides a new source of data on committee-based sales deals," says Laura Preslan, research director at AMR Research. Social networking tools help salespeople to figure out who knows whom at a customer or prospect's organization.

Lynda Radosevich, vice president of communications at social networking application provider Visible Path, says that social network technology allows enterprises to search for relationships to accounts and contacts in their CRM system. "The impact of leveraging these trusted relationships results is tracked in the CRM system and creates a rigorous means of measuring a company's relationship capital," she says.

Although he sees the possible potential for social networking, Chris Selland, vice president of sell side research at Aberdeen Group, says the business case is still "fuzzy." Adds Preslan: "It continues to grow slowly, but those who use it, mostly financial services firms, are creating loyal fans." 

Technology: Wireless Connectivity and Applications

Why You Need to Know About It: Allows mobile professionals to stay better connected, improve productivity, and even close deals.

Remember the days when firms first imagined how the portable computer could completely revolutionize the way we do business? Those same organizations are now abuzz with the possibilities of wireless connectivity and applications. 

"People do not have the time or the wherewithal to go and get information at a particular place," says Peter Semmelhack, founder and CTO of Antenna Software. "What wireless is doing for CRM is, it's creating that kind of convenience. The data they want and need to get their job done more efficiently, more productively, and more profitably is available at their fingertips when they need it."

And the potential increases with every mobile technology improvement--and new cell tower. "The explosion of wireless connectivity and what it's allowing the mobile professional [to do]--how often they can connect as they move around in their business day; the connection speeds and the coverage--just continues to increase every day," says Tom Johnson, BearingPoint managing director responsible for CRM solutions for consumer companies.
Fred Landis, program leader of CRM growth opportunities service at Frost & Sullivan, says that although wireless, particularly within field service and sales, could have a major impact, for it "to become more pervasive, coverage issues must be overcome, as well as the ubiquity of 3G performance and reduced costs." 

Technology: Presence Technologies (RFID, POS)

Why You Need to Know About It: Can locate customers and personally tailor messages that may help to extend the business relationship.

Is Big Brother watching you shop? According to BearingPoint's Johnson, the top technology changing the landscape today is RFID or radio frequency ID tags. With major businesses like Wal-Mart, Target, and FedEx behind it, he says, 2005 will be a huge growth year for RFID applications and 2006 should see the arrival of these applications into the mainstream. "The term I see commonly is explosion and I think no one can disagree," he says.

Alan Melling, senior director of business development for Symbol Technologies, says RFID allows things and people to be self-identifying: bar codes taken to the next level. "When push comes to shove, CRM comes down to one thing, the ability to identify that customer, identify the transactions you had with that customer, and relate all of that to provide a more positive experience for that customer," he says. But, he adds, as with any new technology, "you have to work through the kinks."

According to AMR's Preslan, the presence technologies that have the greatest potential for impact within CRM are point-of-sale data synchronization and management systems--tools that provide a real view into sales activity in the retail sector. "These tools are gaining adoption rapidly across consumer products and retail companies," she says, citing a caveat: "The tools are sixty percent of the way to an out-of-the-box solution, so the reality lags what companies really want."

How will consumers feel about see-all, know-all technology? Unisys's Jaso says it can become "a little Big Brotherish, yet for very specific types of applications there [are] some intriguing possibilities." So although he doesn't see massive adoption soon, "with a little brainstorming that technology is becoming ready for prime time."

Technology: Open Source CRM

Why You Need to Know About It: Shared source code allows for flexibility and faster product evolution.
Some CRM vendor executives consider open source software a direct flight to financial disaster, but others are not only trying their hand at it, they're seeing faster-than-expected adoption.

Open source CRM will have a major impact on the industry, as it has in other areas, Preslan says. "For industries like financial services, open source is the first stop before looking at other solutions." 

The Yankee Group's Schoeller, however, says there hasn't been much movement with open source CRM, likely because of the financial implications. "You're not going to be making money on software license fees anymore, or if you do, that license fee is basically a support contract," he says. "How much can we drive these things to zero and still have the ability to pay people to take care of all of it?"

The Yankee Group's Kingstone is concerned that open source is simply putting the build-versus-buy scenario back on the table. "I can see how companies might want to...potentially take a look at some of the open source out there--it's really about driving down IT costs," she says. "To me CRM is bigger than that."

To John Roberts, cofounder and CEO of SugarCRM, CRM is about giving customers flexibility. "We provide source code to our software so that you have complete flexibility," he says. "No one else in the industry really wants to give you source code, because that's how they lock you in to make you dependent on them as a company."

Although some vendors and analysts are not too fond of open source CRM, companies like E.piphany and Siebel Systems are starting to give the idea serious consideration, which could make 2005 an interesting year for open source.

Technology: Embedded Analytics and Business Intelligence

Why You Need to Know About It: Line-of-business users get faster, easier access to meaningful information.

CRM users love data, but hate to wait for analyst- or IT-generated reports. Getting information into the hands of customer-facing staff has the potential to substantially affect CRM results.

"We've always had analytics, but we haven't necessarily given it to the people that really needed it: the front-line business managers," Kingstone says. "They can start really seeing the impact...their decisions are having. It's really taking analytics and embedding [it] into CRM, and making it easier for the line-of-business person."

Although the benefits are potentially large, buyer beware. According to Kingstone, embedded analytics is being hyped as a magic bullet. "The hype has really been that [analytics] needs to get it into the hands of the line-of-business," she says. "It's just not this turnkey solution. Analytics is only as good as your plan and your process."

The hype is so big because embedded, prescriptive analytics can affect decision-making by suggesting actions, rather than just running multiple reports. The catch is that "the tools are more advanced than many companies' ability to use the functionality," Preslan says, adding that "a cultural shift towards trusting the systems' recommendations must occur before this technology will take off." 

Technology: Queue Management

Why You Need to Know About It: Can improve the customer experience, which may spur sales.

Any technology that can improve the quality of experience for the customer has a chance to make a serious impact on the market, and that's why queue management deserves examination.

Increasing first-call resolution rates can both reduce costs and increase customer satisfaction, and boosting those rates may start with how contact centers handle queues. "You can't manage a relationship until you've managed the customer. You manage the call, you manage the customer experience," says Paul Stockford, chief analyst at Saddletree Research. "A lot of that comes with how the customer is treated when that first contact is made." 

There are now technologies that allow a caller to have a placeholder in the queue as if they were waiting on the phone, but they instead can hang up and wait for a return call. There are also technologies that allow people to return-schedule a call at whatever time they deem convenient.

"You don't risk losing a customer," Stockford says. "Scheduling when you want a call or knowing that you're place in the line is going to be held...is a real plus. It could change the industry in a small way, but change it to the point where queue management becomes not an option but a requirement for any successful contact center."

Contact the editor at editor@destinationCRM.com

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