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Collaborations for the customer Reflections on customer management

Nov 15 2002

Collaborations for the customer Reflections on customer management

Written by Saugata Chatterjee

Friday, 15 November 2002

The CRM Rush and Roadblocks on the Freeway

collaboration for cust.jpg Suddenly, everywhere you go, everyone seems to be chanting a new mantra – CRM. The freshers out of college are talking about it at the roadside dhaba, and the young executive you bump into in the elevator is singing its praises; the technology guru is turning blue at the gills evaluating the different CRM vendors, and the once-bitten-but-not-quite-shy-yet venture capitalist is eyeing this space with some interest still.

Although the CRM space is now expanded to include many peripheral and associated concepts and technologies, at the heart of everything is the simple – and age old – business truth: you need to know your best customers intimately and manage your relationship with them as well as you can on basis of such knowledge, in order to sustain and improve your business performance. And CRM, essentially, is all about this. It is about using technology to identify, understand, profile and talk to your customers, in order to build long-lasting and mutually beneficial personalized relationships.

This very simplicity of the core CRM concept ensures that businesses can ill-afford to overlook it. Not just businesses of any one type, or category, but businesses of all natures, shapes and sizes.

Yes, this means that CRM is big business.

Although reams of paper can be filled to outline the fantastic proportions that the market for CRM and CRM related applications are supposed to reach, suffice to give this broad overview: Sales of existing CRM software, services and associated hardware reached about $40 billion last year, according to Scott Nelson, vice president and research director at the Gartner Group, and are growing at the rate of about 45 % annually.

With CRM market-size predictions reaching such astronomical levels, there has been no shortage of businesses clambering over each other to grab their share of this newfound gargantuan pie. This has caused a space fearsome fragmentation of the overall CRM space, and spawned an incredible number of businesses staking claim – armed with a confusing array of products, solutions and services – to their own self-defined jagirs within the CRM universe.

Many a time, especially here in India, I get a lot of people equating CRM with call centres alone. While definitely contact/call centres fall under the broad CRM envelope, many other areas of customer management make up the overall CRM space.

Judy Andaloro, senior research analyst at AMR Research, explains that the CRM market has grown rapidly over the past two years, starting with employee-focused sales and service applications such as sales force automation, call centre and field service software. But those packages only gave employees a partial view of the customer. “They couldn’t see transactions and historical information,” says Andaloro, because that information was still hidden in inaccessible back-office systems. Nor did the applications integrate channel partners, who also play a major role in servicing customers.

Over the past 12 months, says Andaloro, there’s been a rise in “e-CRM” vendors, mostly consisting of successful CRM vendors, such as Siebel Systems, that have extended their traditional front-office functionality to the Web. These e-CRM applications include Web capabilities such as sales configurators, customer self-service functions such as ordering and order tracking, and Web-enabled call centers in which customer service reps can communicate with customers via e-mail, chat or Internet telephony. But they do not, for the most part, provide links to other systems or legacy applications. So the full panoply of information needed to manage and develop a business relationship is still not available.

Other applications, mostly developed by vendors who were earlier dealing in data management, deal with warehousing, analysing and mining data trapped in legacy systems and databases. Another set of vendors deals with managing communications – via e-mail, traditional direct mail and the newly opening up domain of wireless communications. But apart from a new, and very small, and extremely expensive breed of integrated CRM players, most CRM applications deal with different parts of the overall customer management space – a major problem, as far as the client business is concerned, because this means having to choose multiple solutions and technologies, and then having to integrate them.

These shortcomings have driven vendors who want to compete in the CRM market to enhance their capabilities and create more comprehensive applications. And – especially in the last year – there has been a whole lot of shaking going on amidst these vendors, what with an unprecedented amount of merger and acquisition activity in this sector. According to a recent Gartner Group report, there were more than a dozen major deals. Among the most recent: E.piphany’s purchase of Octane Software, Nortel Networks’ purchase of Clarify, and Kana Communications’ purchase of Silknet Software.

Despite the flurry of mergers and acquisitions, the CRM market remains fragmented. “Right now, a comprehensive CRM solution requires customers to purchase from 10 to 12 vendors. That is too many,” says Scott Nelson of the Gartner Group.

While confusion that results while choosing from among a bewildering array of vendors is one problem that needs urgent address, other problems and sources of confusion also exist: confusion resulting from the quantum of time and money spent while integrating the chosen technologies with one’s legacy systems, and confusion at the frequent epitaphs written as many CRM implementations fail to deliver the promised business benefits – some analysts predict that up to 70% of current CRM implementations are failing!

I personally share the view of many who believe that the last is the most critical problem that needs urgent address: Why are so many highly publicised, high technology CRM projects failing to deliver satisfactory business returns?