Keeping The Customers Happy
The Age
Tuesday November 23, 1999
Caution is certainly the key word where customer relationship management applications are concerned, writes David Braue .
CUSTOMER relationship management (CRM) software has been hailed as a revolution in the way companies relate to their customers, allowing all customer contact to be centrally managed and tied into financial and other key operating information. But despite its compelling value, a recent analyst report has warned that companies rushing into CRM may well find themselves shelling out millions to recover from failed implementations and likely budget blow-outs.
The META Group survey, which examined the CRM rollouts of 50 Global 2000 companies, found that most of the companies don't have adequate project plans in place and are underspending significantly on the projects. Although most companies were well advanced in implementing operational customer care systems (such as call centres), less than half had addressed the need for analytic and customer collaboration applications that allow companies to analyse and act on the data they collect about their customers. Most companies' CRM efforts were "highly fragmented and lack[ed] customer focus," the survey's authors concluded.
This shortcoming, META predicts, could see many companies forced to spend as much as $US250 million (nearly $A400 million) by 2003 to get up to speed with the technology - which is expected to be the next big IT growth area now that most large companies have completed their massive enterprise resource planning (ERP) implementations. Analyst firm AMR Research expects CRM revenues to grow at 49 per cent annually to be worth $US16.8 billion by 2003 - which is just about the amount spent on ERP software around the world last year.
But this growth will come only if customers take a more intelligent approach to CRM deployment than they did with ERP, where companies tended to throw millions of dollars at a project and explode in frustration when the software alone didn't deliver the expected benefits. This could create a backlash against the many CRM companies that have promoted CRM as being much more accessible than ERP because of its inherently modular design.
Pat Sullivan, president and CEO of CRM vendor SalesLogix, believes there will be many CRM disappointments as companies take the same approach this time around as they did, at first, with ERP.
"The mistake that's being made by companies wanting to [integrate CRM into their enterprise systems] is overreaching," he says. "While you see tremendous interested from customers, unfortunately because of the way a lot of CRM vendors are advising their customers, failure often results.
"They look at all the various ways they touch their customers and their customers touch them, then set out to automate all the various possible ways that could be done. Whilst that is admirable, the cost and time to do those big monolithic projects becomes very difficult and even prohibitive. Something on a smaller scale will often have better and more measurable results." To succeed in CRM, companies must also combine the technology with the construction of business processes that are built around the customer and take advantage of the still-maturing technology, warns Iain Anderson, program director of application delivery strategies with META Group Asia-Pacific. "The contractual obligations you bought into require you to have support mechanisms to those people you've sold to," he says.
"If you understand that cycle, you realise that there's a requirement there to manage the transaction side of it - and that, ultimately, back-end integration will be essential for getting everything out of it. But if your sales force is poorly organised, poorly managed or doesn't manage new prospects well, a [CRM] tool will be useless when you try to manage that entire transaction lifecycle." braue@ozemail.com.au
© 1999 The Age