Those who say history never repeats itself are wrong – particularly when it comes to enterprise software.
The Customer Relationship Management software sector is evolving in exactly the same way that every other software technology has over the past 25 years. Thats good news for customers, because more mature and battle-tested software is now available. But the rules have changed – new approaches to CRM implementation can save your company time and money.
Where is CRM now? It has matured beyond the explosive early stage of investment and development, and into consolidation and contraction.
Many of the CRM companies that bloomed during the Internet boom years — including Broadvision, Blue Martini and E.piphany and are now pleased to report revenue of $10 million to $25 million in revenue per quarter. Thats a lot less than their heady late nineties stock valuation would have implied, but its pretty decent for today.
A few, such as NetPerceptions, have either faded away or been merged out of existence. More weaklings will follow. Even some of the industry leaders, such as SAP, IBM, PeopleSoft, J.D. Edwards, IBM and Seibel Systems, have suffered from slowing sales over the past two years. The days of automatic IT implementations are over. Today most companies ask probing questions about what sort of return they can expect from the money spent on CRM.
Customers are now concerned not only about the cost of CRM systems but also about anecdotal stories of CRM implementation failures. Theres just no stomach any more for scrapping and rebuilding CRM mistakes. Its just too expensive.
Theres good news, though, in the CRM market. After a sharp cutback in 2001 and 2002, IT managers modestly increased their CRM investment in 2003. And the prospects for even bigger increases next year look bright.
Turn the page for my two key strategies for successful CRM implementation.
Ziffpage Successful CRM Implementation Strategies
Take It Slow: If youre planning a CRM implementation soon, dont rush. Youre better off taking a phased approach, rather than implementing everything all at once. For the first phase, simply install those modules that are most critical for your operation. Then wait until they have delivered a measurable return on investment before proceeding to the next phase.
This approach also lets you work with multiple vendors to select best of breed CRM components rather than opting to install a large and expensive integrated system from a single vendor.
Instead of buying into the all-in-one packages offered by SAP, IBM, PeopleSoft/J.D. Edwards, or Oracle, consider mixing and matching components from some of the smaller companies, such as Blue Pumpkin, Kana or Blue Martini.
Whats wrong with the all-in-one approach? Those packages that combine typical CRM activities such as sales force automation, call center, order processing, inventory, partner relationship management and marketing can be risky as well as expensive. If something doesnt work right, you cant just scrap that module – you have to live or die by the entire package.
Save Money With ASPs: Another potential money saving tactic is to work with Application Service Providers rather than purchasing software licenses for CRM components. This approach can potentially reduce both the up front cost and the investment risk by letting you pay as you go. It also makes it easy to phase in just the CRM modules you need.
The ASP model is particularly valuable for small and medium sized businesses new to CRM, because its easy to implement and the initial cash outlay is small. Its essentially a form of outsourcing that lets you avoid the cost of an in-house implementation. It also allows your company to accurately predict and budget your CRM service costs down the road.
There are a number of ASP-based CRM vendors, but currently Salesforce.com leads the way. The company claims that even major enterprises can reap substantial savings by outsourcing their CRM. Large companies are much more receptive to this approach today, because it lets them reduce their huge in-house data processing costs. Thats a big plus these days, with revenue and profit squeezed by the prolonged business slump.
Working with ASPs complement the phased approach because you always have the option of gradually migrating critical CRM components in-house when need or cost considerations justify the move.
So if youre planning a CRM implementation, consider combining a phased approach with an ASP model. That will increase the chances for success, along with delivering the biggest productivity and profitability gains from your investments in CRM technology.
eWEEK.com Enterprise Applications Center Editor John Pallatto is a veteran journalist in the field of enterprise software and Internet technology.