Preview 2003--What's in Store for CRM? (PART 2)
CRM Stands for Value
What will be the biggest trend in the CRM industry in 2003? Customers demanding not just ROI, but true value from the CRM investments.
"2003 is about value and ROI: How do I get value out of these solutions? How do I differentiate myself using these solutions? This is what CRM is supposed to do--create value and help treat different customers differently." --John Grozier, vice president, CRM product marketing, SAP AG
"The trend in CRM in 2003 is driving true value out of CRM implementations as measured by customer revenue, profitability, and turnover. Purchasers and users of CRM are going to go to greater-than-normal lengths to justify the purchase of CRM."
--Roger Siboni, president and CEO, E.piphany
"The biggest trend is enabling CRM processes and technology to improve the cost structure of companies, as well as enhance the customer experience. There will be more of an emphasis on cost savings: How do I use CRM in a much more cost-effective manner?
--Adam Klaber, global CRM leader, IBM Business Consulting Services
"Getting value out of your CRM initiative. This is not rocket science. Today people are reluctant to invest in CRM without knowing how it will pay off." --Mark Whitemore, CRM practice leader for Canada, East Americas, Braxton
"Companies are going to go away from hype and brand, and go toward pragmatic, operational, proven, successful CRM. There will be far more reference checking, far more technical due diligence on what really exists in the products, and they're going to hold their vendors more accountable. I don't think the whiz-bang is going to happen; it's going to be around delivery, success, and integrity." --Brent Frei, CEO, Onyx
The realization that cost cutting and increasing revenues are not mutually exclusive. Companies have been almost solely focused recently on quick ROI or on cost cutting; soon the [focus] will be balancing those for the long term."
--Rob Saultz, director of strategy and business development, CRM solutions, IBM
"Companies will no longer purchase enterprise-scale licenses until they have proved the success of CRM initiatives with pilot programs. They will expect their software provider to be their partner in solving the problem, not just providing software." --Richard Brock, president and CEO, Firstwave
The King Is Dead; Long Live the King
Will Siebel still reign supreme in 2003? CEO Tom Siebel, of course, is certain it will. His competitors, however, see change coming. What do they see as the biggest trend for 2003?
"The enterprise vendors will continue to take market share from Siebel."
--Joe Davis, vice president and general manager, PeopleSoft CRM
"The dispersing of power among CRM application vendors; the power will shift away from Siebel toward a broader set of competitors. The market is rejecting the value proposition of Siebel, which is expensive and difficult to customize and deploy." --Bo Manning, president and CEO, Pivotal
The Battle of the Platforms
Unlike the war between Beta and VHS, the CRM industry is unlikely to see a clear winner in the battle for Web-services dominance. Myriad companies are embracing .Net, while others standardize on J2EE; some vendors support both platforms. So instead of .Net versus J2EE, it seems the real question will be: Web services or not?
"2003 will be the real start of Web services incorporated into CRM. It will change the number of possibilities for CRM."
--David Thacher, general manager of CRM, Microsoft Business Solutions, Microsoft
"Web services are going to become a valid alternative for Fortune 500 and Global 1,000 companies, because they're looking for low total cost of ownership, fast deployment, and ease-of-use."
--Keith Raffel, chairman and founder, UpShot
"The industry must gain significant traction in solving the integration challenge. Proprietary integration architectures are being replaced with open integration or Web-services architectures."
--Tom Siebel, chairman and CEO, Siebel Systems Inc.
Top Priority: Integration
There are many hot issues right now in CRM, and respondents to the CRM magazine reader survey have a definite opinion of which of those issues will translate into CRM's biggest trend in 2003. One respondent said, "Breaking the trend of failed CRM implementations by getting back to basics." Another respondent echoed that sentiment, adding: "ROI measurement and expenditure justification."
Although achieving ROI is on almost everyone's minds, most respondents say the biggest trend for 2003 will be successful integration of front- and back-office applications. Many vendors agree. "In 2003 there will be an increased emphasis on integration. Customers will realize that CRM needs to be connected to other business solutions," says David Thacher, general manager of CRM, Microsoft Business Solutions for Microsoft Corp. In fact, says Roger Siboni, president and CEO of E.piphany, "Web services and EIA standards will be having the biggest impact on how people think about, purchase, and deploy CRM."
What will be the biggest CRM trend in 2003?
Integration of front- and back-office applications 36%
Creating the real-time enterprise 18%
Transforming call centers into contact centers 15%
The move to J2EE and .Net platforms 14%
CRM software offerings for vertical markets 12%
The Only Constant Is Change
What will be the biggest change in the CRM industry in 2003?
"CRM will actually be a staple of business regardless of the size of the business."
--Marc Benioff, chairman and CEO, Salesforce.com
"More attention will be paid to customer service driving CRM rather than sales-driven CRM initiatives." --Patricia Seybold, founder and CEO, Patricia Seybold Group
"The biggest change will be that the smaller [vendors] will not make it in 2003. You'll see larger companies prospering. In reality it's positive, because there were lots of companies and individuals without the real depth and capabilities to turn the PowerPoint presentations into real business value. By eliminating the noise in the system, there will be a few companies left who can really deliver." --Adam Klaber, global CRM leader, IBM Business Consulting Services
"Customers will ask 'Where is my return on investment? Don't sell me a strategy. Tell me how to get a deliverable return within four to six months. Come and help me manage my customer experience, process, and problem.'"
--Stephen Kelly, president and CEO, Chordiant Software
"2003 will be the year that you see midsize companies adopting CRM solutions. Up until now most spending has been by large enterprises. That trend will change dramatically."
--Patrick Bultema, president and CEO, FrontRange
"Clients are going to stop spending on a leap of faith on CRM technology and programs. They're not going to spend on huge applications and consulting fees." --Laura Pollard, founder and president, CRMA Canada; president, Accelerate Growth Management
"A larger emphasis on outsourcing in CRM--it has been happening in the past year in ERP and supply chain management, and to a limited extent in the call center. We will see a lot more dynamic [outsource] offerings in the coming year, like moving call centers offshore." --Mark Whitmore, CRM practice leader for Canada, East Americas, Braxton
"There will be a change in the belief structure around integration from the fact that everything needs to be integrated and integration is impossible, to one where people recognize that integration is something companies can do on a selective basis and is not as difficult as everyone thought it would be." --Bo Manning, president and CEO, Pivotal
"The realization that CRM is a business strategy driven by business process, not necessary the technology, which is the tool to do so." --Rob Saultz, director of strategy and business development, CRM solutions, IBM
"Putting customer back into CRM. Vendors and integrators will really have to listen to what customers want and need, and deliver it. No more hard sell."
--Barton Goldenberg, president and founder, IS
"CRM will actually be a staple of business regardless of the size of the business."
--Marc Benioff, chairman and CEO, Salesforce.com
"More attention will be paid to customer service driving CRM rather than sales-driven CRM initiatives." --Patricia Seybold, founder and CEO, Patricia Seybold Group
"The biggest change will be that the smaller [vendors] will not make it in 2003. You'll see larger companies prospering. In reality it's positive, because there were lots of companies and individuals without the real depth and capabilities to turn the PowerPoint presentations into real business value. By eliminating the noise in the system, there will be a few companies left who can really deliver." --Adam Klaber, global CRM leader, IBM Business Consulting Services
"Customers will ask 'Where is my return on investment? Don't sell me a strategy. Tell me how to get a deliverable return within four to six months. Come and help me manage my customer experience, process, and problem.'"
--Stephen Kelly, president and CEO, Chordiant Software
"2003 will be the year that you see midsize companies adopting CRM solutions. Up until now most spending has been by large enterprises. That trend will change dramatically."
--Patrick Bultema, president and CEO, FrontRange
"Clients are going to stop spending on a leap of faith on CRM technology and programs. They're not going to spend on huge applications and consulting fees." --Laura Pollard, founder and president, CRMA Canada; president, Accelerate Growth Management
"A larger emphasis on outsourcing in CRM--it has been happening in the past year in ERP and supply chain management, and to a limited extent in the call center. We will see a lot more dynamic [outsource] offerings in the coming year, like moving call centers offshore." --Mark Whitmore, CRM practice leader for Canada, East Americas, Braxton
"There will be a change in the belief structure around integration from the fact that everything needs to be integrated and integration is impossible, to one where people recognize that integration is something companies can do on a selective basis and is not as difficult as everyone thought it would be." --Bo Manning, president and CEO, Pivotal
"The realization that CRM is a business strategy driven by business process, not necessary the technology, which is the tool to do so." --Rob Saultz, director of strategy and business development, CRM solutions, IBM
"Putting customer back into CRM. Vendors and integrators will really have to listen to what customers want and need, and deliver it. No more hard sell."
--Barton Goldenberg, president and founder, IS
Honey, I Shrunk the Market
The close of 2002 was full of partnerships among CRM vendors. Industry watchers expect the trend to continue throughout 2003, to such an extent that it will dramatically change the CRM landscape. What will make the biggest impact on the industry in 2003?
"Whether by viability or consolidation, at least half of the people will not be selling CRM solutions in the fourth quarter of 2003."
--Roger Siboni, president and CEO, E.piphany
"Fewer vendors will play in the market going forward. It's a very crowded industry. Big companies that are providing stable solutions will play the most important role." --Dror Pockard, president, Amdocs/Clarify CRM
"We'll see a shakeout of the major vendors and the emergence of SAP and PeopleSoft in addition to Siebel. In that shakeout we will be left with a small group of the big ERP providers on one end of the spectrum and on the other end some important niche providers like E.piphany; a lot of the people in the middle will be squeezed.
--John Freeland, managing partner, CRM practice, Accenture
"The majority of CRM vendors are on their way out of business. There's a harsh scrutiny and sorting out of the industry that's under way. I think it's a healthy thing." --Patrick Bultema, president and CEO, FrontRange
"Consolidation. Players are going away, because the market cannot sustain them. The consolidation further narrows the options large and midsize companies have." --Kelly Spang-Ferguson, senior analyst, Current Analysis
2003: The Year of CRM
Will 2003 be the year that CRM shines? Industry leaders think so--and so do we.
The whole customer management space will be focused on business processes. To do this there will be a shift from client-server to Web applications, with a continuing emphasis on integrating a multichannel customer experience from the front end to the back end. We'll see a blurring of the lines between marketing, sales, and service as organizations start building their companies around their customer." --Stephen Kelly, president and CEO, Chordiant Software
"The positive trend is the adoption of CRM solutions by smaller companies. Smaller companies generally lag behind the technology curve. You don't have to have 5,000 customer service representatives to give customers the best possible service. Technology adoption takes a little longer at this level, but now is the time." --Evan Goldberg, CEO, NetLedger
"The major change or trend will be that people are more focused on the M of CRM than anything else. Managing the whole process is important, and that means no CRM products ordered without an ROI assessment plan. As a consequence, more and more vendors will be asked to do risk sharing, and risk-
avoiding behavior will be punished. This will be a major change." --Ad Nederlof, CEO, Genesys Telecommunications Laboratories
"We'll see much more emphasis on vertical solutions--vertical by industry. We'll stop seeing generic CRM solutions and see more specialized offerings. An aspect of that will be seeing vendors emphasize process integration in their offerings as a way to meet the demands of those vertical industries." --Scott Nelson, vice president and research area director, Gartner
"The biggest trend will be the companies and corporations learning how to capture the data that they get from their customer transactions and turning it into information...they can use to improve their customer interactions--and ultimately, the profitability of their businesses."
--Paula Kruger, president, CRM Service Line, EDS
"Enterprise computing is undergoing a sea change. Customer requirements, emerging industry standards, such as Web Services, and technology innovation have combined to kill the market for generic CRM applications. CRM applications must be industry-specific and support business-process computing. Organizations no longer look at IT as a collection of discrete applications--what they want are total solutions enabling them to leverage existing investments by deploying end-to-end business processes, such as closed-loop dealer lead management in the automotive industry, or one-stop claim handling for the insurance industry. CRM solutions will have to reflect best practices for a given industry's customer-facing business processes. --Tom Siebel, chairman and CEO, Siebel Systems Inc.
It's a Wrap
What is your number one CRM goal for 2003?
Complete a CRM project or implementation 24%
Start a CRM project or implementation 18%
Prove ROI on an existing implementation 18%
Get management buy-in 15%
Get user buy-in 9%
Find the right CRM vendor 8%
No response 8%
Source: CRM magazine reader survey
The New Definition of Downsizing
Like last year's fashions, mammoth implementations are out of style. What is in for 2003 are smaller-scale implementations that deliver quick wins.
"Deals will be more and more focused on departmental [solutions]. We will see fewer large implementations in which companies buy everything at once, then figure out how to deploy it. People are being much more cautious about what they purchase. There will be a lot more million-dollar as opposed to ten-million-dollar deals."
--Joe Davis, vice president and general manager, PeopleSoft CRM
"The biggest change in CRM will be the focus on departmental and best-of-breed solutions. Be-everything-to-everybody solutions that were the bulk of the CRM\-solutions purchases as measured by total money spent prior to the current recession will not be back in favor. The returns from the investments have just not been there, regardless of the amount of time and money spent." --Richard Brock, president and CEO, Firstwave
"Large corporations that are disillusioned by multimillion-dollar, yearlong CRM projects are now emulating midsize companies in their implementation strategies. Some big companies are essentially starting over with their CRM installations. Instead of attempting enterprisewide launches, these large organizations are scaling down projects to the department or regional level. This way they can focus CRM software on one area of immediate impact, and accelerate ROI." --Greg Colley, CEO, Clear Technologies Inc.