While the technology industry loves its three letter acronyms – ERP, FUD, XML, DVD, and ISP to name just five – one has to question how they are received by the wider business community. CRM – sorry – customer relationship management is a prime example of a technology that every business can benefit from, but mention the dreaded acronym and most people’s eyes start to glaze over.
On the other hand, tell them about a computer system that enables them to interact more efficiently with their customers and get more revenues and ears start to prick up.
“Mention CRM to a standard small company and they probably won’t know what it means – you need to take it and put it in context for them,” says Neil Tanner, business manager for Microsoft’s Business Solutions division. “When you outline the business benefits they assume it requires a complex infrastructure and they start to switch off because they assume it costs huge money and they would never get the return on the investment.”
CRM is all about applying technology to optimise your relationships with your customer – whether that be selling to them, marketing or providing service and support. It’s ensuring that everyone in your organisation can see all the relevant information about a customer, and ensuring that data is drawn from a single source. To work effectively it’s a technology that needs to be used by everyone in the business who interacts with sales prospects or customers. In short, it’s about automating your sales and marketing processes, and formalising those processes if you haven’t already, to increase revenues and profits.
Formal CRM software packages have been around for about ten years now but businesses have been using databases and other technologies to manage their contacts and other customer information for even longer than that. For most of that period the big players like Siebel, Oracle, SAP and Peoplesoft concentrated on the big bang approach with large customers. These projects had mixed results – a common complaint from sales people was that the time and hassle necessary to populate the CRM application wasn’t worth the benefits it provided.
In the last year things have started to change and there are now encouraging signs that CRM could become the killer application for businesses of all sizes. Just last month Microsoft launched its CRM package on the Irish market, which it has been selling in the US for 18 months. Microsoft CRM integrates with Microsoft Outlook, is aimed at small to medium sized businesses, and – as everyone knows – the software giant isn’t interested in niche markets.
Around the same time, CRM pioneer Siebel Systems ponied up US$70m, potentially rising to US$130m, for Irish banking software company Eontec, in a move to support its strategy of being able to play in as many vertical markets as possible.
Meanwhile, industry analysts are united in predicting that 2004 will be the year of CRM. Speaking in Dublin recently, Steve Minton, a director of technology research house IDC, predicted a significant revival for CRM after having gained a reputation for long projects that deliver a poor return on investment. Rather than the big bang approach that was favoured during the tech boom, Minton said the trend is now towards shorter phased projects that are more manageable.
One approach to integrating CRM on a phased basis is by using an application service provider which rents the software to your company for a monthly fee. Salesforce.com has successfully pioneered this approach in the CRM space – it now has over 140,000 subscribers accessing its service – and competitors like Siebel and ACCPAC have embraced the model.
“A few years ago, small and medium sized businesses didn’t have the possibility of buying enterprise class software – it was just way too expensive,” says Fergus Gloster, a director of Salesforce.com’s European operations. “They still have the same business problems as big companies but they don’t have the wherewithal for the big products. Now there’s an option to try it at low cost. Once they’ve applied it in one area they can exploit that and solve their CRM business problems in other areas at a level affordable to them.”
At first glance, offering CRM as a software service may seem to open up the risk of creating an island of customer data that doesn’t integrate with the rest of the organisation. To counter this, vendors like Salesforce.com offer developer tools and easy hooks into financial and other systems that also contain customer data.
Microsoft’s approach is similar – its CRM product integrates into one of the most popular user applications – Microsoft Outlook. In fact, some commentators have dubbed it ‘Outlook on steroids’. “The feedback we got from our customers is that they keep track of their customers using Outlook, Excel, paper – a variety of tools and a lot of them are Microsoft,” says Tanner. He estimates that up to 20% of Irish businesses are already using Outlook as a mini-CRM package, so the strategy of layering a CRM product on top of Outlook should fit well with the local market.
Noel Shannon, managing director of ProStrategy, one of the Microsoft partners selling CRM, believes the biggest challenge is formalising sales processes in smaller businesses. “It can be very difficult to manage the sales process in a small company because many don’t have one,” says Shannon. “The large companies are much better at having it defined.”
Research conducted for Microsoft suggests that the market opportunity is huge – just 6% of Irish companies are currently using CRM. With Microsoft playing in the space you can expect that figure to grow quickly this year.
Next time: Implementing a successful CRM strategy
By John Collins