As IT spending rallies, marketers revisit CRM

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IT budgets are rebounding in 2004, and there’s a lot of pent-up demand for customer-related applications, according to industry experts. As a result, they say, companies are likely to take another look at customer relationship management this year. BtoB spoke to Elizabeth Roche, VP of META Group’s Enterprise Application Strategies practice, about what impact this will have.

BtoB: You’ve said that companies will be re-examining CRM in 2004. What trends will we see because of this?

Roche: The next big trend is both macro and micro. The macro trend is recognition that CRM is a three-domain business system consisting of a customer lifecycle [engage, transact, fulfill, service], the business processes that the lifecycle encapsulates and the technology ecosystem that enables the system. Specifically, organizations will recognize that they have over-invested in the technology domain. To execute on this macro trend they are going to be going back and trying to associate technology with appropriate business processes and potentially re-engineering those processes.

The micro-trend for ’04 is all about analytics. That’s really having a panoramic view of customers —having a view beyond just transactions, but including interactions as well. At every interaction point, you’re treating the customer correctly according not just to preferences but according to value to you as well. Companies will also be moving from simply outbound engagement and will be adding inbound engagement as well, meaning capturing customer mindshare at every contact point. This means when someone calls for a service activity, organizations will be taking that opportunity to cross-sell and up-sell.

BtoB: How can companies get employees onboard with these strategies?

Roche: The way you do this is to create a profound change in the way you handle customer-related business processes. You’re transforming from being product-centric to being customer-centric. So far, there’s been a lack of attention to the associated cultural change. This lack is one of the reasons that organizations end up feeling like their CRM implementations have failed. Cultural change can be achieved by brute force—and typically there will be some brute force when it comes to a CRM implementation—but that’s not the best way to make it happen. Organizations must develop change management strategies, as well as internal marketing and PR campaigns when transforming their organizations.

BtoB: Are businesses still making mistakes with CRM implementations?

Roche: They definitely are. I see three types of big mistakes: people, process and technology. People mistakes include not having executive support. Another CRM-specific people issue is having an IT-driven hero culture—IT people pulling overnighters. In reality, CRM is going to take you five years to implement, and small, repeatable iterations are the way it gets done. A hero culture is a real impediment to a CRM implementation because it’s really not repeatable.

On the process side, the biggest mistakes are not having a CRM business plan and not having metrics to go along with that plan. If no metrics are developed, you run the risk of people measuring success based on their own individual assumptions.

On the tech side, there are three things that people do wrong: Not having a strategy for customization or over-customizing, not having an approach to integration and not having an approach to analytics.

If I had to say what the No. 1 failure is, it’s not having consensus of what CRM is and what it means to the organization. I walk into organizations and say, "What does CRM mean to you?" And they say, "Well, we’re implementing X vendor’s product." They don’t give me why CRM is important.

BtoB: Is there anything else specifically that we’ll see happening on the vendor level?

Roche: Vendors will finally start delivering specifically vertical versions of their technology and will also offer more flexibility in terms of deployment. You’ll be able to rent, buy or a combo of both. And we’ll continue to see consolidation of the marketplace. We’ll see analytics much more embedded into the DNA of an application’s processes rather than as separate application, which may lead to more [vendor] acquisitions in the market.

BtoB: What impact has Microsoft’s entry into the CRM space had?

Roche: Microsoft is an interesting conundrum. They purport to be targeting the small end of the SME [small and mid-size enterprises] market, but many of their recent wins have been larger. Their story is still a bit muddied, though they are coming along functionalitywise. However, Microsoft CRM is important as it is yet another indicator that the CRM market is thriving and vital. And though competition will probably come down to a few CRM and ERP suite players—such as Oracle, Peoplesoft, SAP and Siebel, along with some very specific niche vendors such as SAS, Teradata CRM, Unica, Epiphany—it is very important to the futures of some very major vendors.

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