Back around 2000 customer relationship management (CRM) found itself dragged into the hype around the dotcom phenomenon and was somewhat tarnished when the boom turned to bust. It was sold as a crucial component in the re-engineered world of virtual business, a way of maximising and maintaining all important customer relationships. But part of the problem ever since has been defining exactly what it is — a technology or strategy?
Paul O’Riordan, managing director with Oracle Ireland, quickly puts this one to rest. “We mustn’t get stuck on the idea that CRM is a technology,” he says. “It’s not. It’s a way of helping companies do business better. Our job as vendors is to demystify it and develop applications and propositions that people can understand.”
What’s entirely undisputed is that any firm, small or large, that neglects its sale pipeline is like someone waking up and forgetting to breathe. “If a customer doesn’t value CRM they either don’t know what it means or they’re not fit to run a business,” says O’Riordan emphatically.
He argues that it’s the most important part of any business and demands a well-structured system to make it work. “If you don’t have a system underpinning it, you end up with your entire business in someone’s head or held together by Post-it notes. That’s unsustainable. You must have the data somewhere.”
O’Riordan paints a picture of small firms with 20 employees, each having their own systems for customer management. “If they keep their CRM to themselves and someone gets knocked over by bus or they leave the company they take that information with them. You have to have a system. “
David Larkin, general manager of Sage’s CRM division, pick ups the point. “To sell CRM to a company you need someone in there who works with the process. People who are happy to work off envelopes — a mobile phone in one hand, steering wheel in the other — won’t implement CRM successfully.”
The good news is that this culture is increasingly in a minority and Larkin detects a definite trend. “CRM is moving up, from five to three, on the company shopping list,” he says. “Companies now have a mature and bedded-in financial system and are starting to look at bringing the sales into that process. There is a hunger out there now as firms are looking to be cleverer at what they do with their customers.”
Just as well if Microsoft’s recent survey on CRM is taken at face value. It concluded that 67pc of Irish companies did not know where their business came from and the majority had no mechanism in place for recording, managing and analysing vital business information about their customers.
SAP managing director Phil Codd is more optimistic. “The term CRM is probably misleading but there are definitely more companies that have elements of it than the survey shows. If you ask a company if they have something to help manage their sales force then you’d find more of them would have said yes.”
On the wider trends, Codd thinks the market has evolved substantially. “In 1999-2000 CRM was about having a large holistic view of the business and until you had everything in place you didn’t have CRM. That concept has moved on and people have simplified their needs.”
The thinking now is that CRM is no longer a vast single solution that drops on top of an organisation but a collection of composite parts that are spread out across sales and marketing departments.
Few would argue that Microsoft’s entrance into the market energised the CRM space, tackling ease of use and accessibility issues head on. Its seamless integration with Outlook was pitched as a key selling point. David Knapp, marketing director with Mentec, a Microsoft channel partner, says the product has grown even stronger with CRM 3, the latest iteration launched in December.
“With version 3 it’s the absolute integration with Outlook that will really make the difference. To use the Microsoft phrase, ‘it works the way you work’,” he says. “It’s so embedded you can use it within Outlook and not even realise you’re using a CRM system.”
Other vendors argue that while Microsoft has helped grow the CRM market, it still leaves room for more functional solutions. “Microsoft has helped to generate awareness,” comments Larkin, “but Sage is the only company that has a full delivery team both within our organisation and through our business partner community.”
This is crucial, according to Sage, because off-the-shelf solutions only work so far: “Every single time we have a conversation with a prospective customer they want something slightly different,” says Larkin. “Yes, there is a certain generic market out there as well, but for the most part a lot of companies require a different approach.”
To deliver a customised solution to these customers the role of channel partners is crucial. Again, Larkin argues that it’s an area where the company is particularly strong. “When we entered the CRM market we inherited channel partners that were already active in dealing with our sister company in the UK. At launch we had 12 companies out there up to speed and now we have another 12 or thereabouts.”
O’Riordan also emphasises the importance of partners: “They are the third leg in the stool. We need the evangelists in the channel community that understand customer needs and can marry them to our proposition. With our finite sales force we can’t get out there on our own. We need our partners to help us do that.”
Partnering some of the biggest IT vendors, including Microsoft and Oracle, is PFH Computers. MD Paul Hourican has no doubt that CRM has a big role to play for SMEs. “It’s just not an option for them to stay away from it,” he says. “The complexity of business-to-business relationships means you must have an electronic method of managing them.”
He does, however, think the vendors have some work to do to make it a more compelling proposition. “There is an acceptance that SMEs need it, the gap that has to be bridged is the CRM industry being able to deliver. They need to make sure they have business consultants as well as technology consultants. They need to realise they are dealing with SMEs and they’re not going be getting €1,500 per day for their consultancy. There is a big learning curve for the vendors.
“They have been going through a developmental stage themselves. Generally in the software industry when you go through a learning curve you charge higher fees but when you move into the SME sector the market won’t accept that.”
He singles out Sage as an example of a firm that has got it right. “It has been dealing with the marketplace and it understands the SME space. The bigger companies still have a difficulty with it.”
At the higher end of the market Oracle’s takeover of Siebel means the CRM landscape continues to evolve. Siebel gives it an instant foothold in the on-demand delivery of CRM, a pay-as-you-go model that might be perceived as the obvious path for SMEs to take. Not necessarily so, according to O’Riordan. “A large enterprise could have hundreds of seats for the on-demand model. It’s over-simplistic to say the subscription model is for SMEs. It’s not a question of size, it’s more a question of business needs.”
SAP’s recent move into the on-demand world with subscription CRM software is aimed squarely at the higher end of the market. For SME customers Business One still represents its most compelling product. Fully integrated within its environment are key processes around sales enablement, from basic activity and diary management to providing a sales view of customers.
The reality is that many of these CRM products are yet to gain a strong foothold among Ireland’s SME community but the vendors are working hard, confident that there’s a tangible change in the way companies are looking at how they run their businesses.
“In the last 12 months we’ve seen a resurgence of interest all across the market in what we generically call CRM,” says Codd. “People are trying to figure out how technology can help them. CRM is becoming a strategic piece for all organisations.”
By Ian Campbell