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Top 10 Minus One

Two Thousand and Ten has been a year of recovery, although not for everyone I recognize. To those in the world of CRM who are still searching for employment I hope that 2011 is a better year for you.

Within the CRM industry we saw modest growth with CRM programs picking up in the second half of the year. From a consulting perspective it has been an extremely busy year, which I view as a bellwether for the continued resurgence of the economy. Below are a few trends that serve as a bit of a summary for the year just completed and perhaps an indication of what we have to look forward to in the coming year.

NanoSpherium

Cloud Computing – the most significant trend in CRM is the move from software that is purchased to that which is rented (Software as a Service or SaaS). Roughly three quarters of new CRM installations are cloud based, a trend which has leveled off, while the decline of on-premise installations has also reversed slightly. This is due to the growing trend of hybrid platforms utilizing both approaches to drive flexibility in multi-unit organizations. I suspect this will be a trend that will increase.

Vendors – three companies dominate the software landscape – Salesforce.com (fast-growing top player), Oracle (shrinking previous leader), Microsoft (some growth since market entry and a very distant third). Each vendor offers platforms with advantages and disadvantages – depending on the customer’s needs. Salesforce.com wins most vendor selections lately, but the best fit will depend on your organization’s specific needs. Likewise, there are other vendors in addition to these top three that might be a better fit for your specific situation.

Cost – cloud-based solutions are clearly more cost-effective in the short term and are the most affordable option for small and medium-sized businesses. Few companies can leverage the “out-of-the-box” appeal of the SaaS marketing hype and complex business requirements may be best managed with the more adaptable on premise options. As things get more complicated overall cost of ownership seems to converge.

Challenges – the original lure of cloud solutions as “plug & play” have led to many CRM program disasters, harkening back to the early days of CRM when failure rates hovered around 80%. This is due to the misconception that simple software initiatives can be matched with a simplistic focus on organizational requirements. Results are now driving failure rates north of two-thirds due to poor attention to basics such as change management. Don’t be fooled into believing that you can just install the software and everything is going to work magically. There are still people involved in the process, even if the software is rented.

Integration – the future of CRM technology is clearly to be dominated by cloud solutions, not as single platforms, but rather the integration of multiple SaaS offerings from different vendors and in different locations tied together with on premise systems across the organization. Some prognosticators see everything going to the cloud, but I suspect for the foreseeable future we will continue with hybrids.

Mobility – the hot activity over the past two years has been the empowerment of the field-based professional via mobile technology. The marriage of improved hand-held devices and powerful CRM emulation applications has driven CRM productivity in the field through the roof. The double-edged sword aspect of this trend leads to significant dissatisfaction with groups (especially sales) who do not have this access to CRM on the go. If you don’t have mobile CRM you probably have a growing rancor in your field.

Social CRM – yes, this is the sexy lingerie of CRM today, but like the analogy, not yet practical or with significant every-day utility. Social CRM applications get a lot of press, but time will tell if the integration of social media as a customer interaction point with CRM will be a significant breakthrough. At a minimum it should reside on every CRM program roadmap for future consideration.

Marketing – of the big three functions within the CRM arena (Marketing, Sales, Service) without question marketing remains the third in the race, especially in key industries such as life sciences. The best practices have been well identified and the software is fully mature, but many organizations continue to under-spend on CRM investments for marketing. There is a strong business case to reverse this trend. It would be great to see more focus on marketing in 2011.

CRM For The Masses – The explosive growth in cloud computing, especially for vendors such as Salesforce.com, has been borne largely on the success of selling into the small and medium business market. While the growth of SaaS CRM in larger and more complex organizations is on the rise, we will continue to see an increase in activity within the SMB sector. Increasingly smaller businesses will be using a broad swath of software providers in a subscription-based approach, and largely done out-of-the box. This is fantastic that the advantages of CRM automation can be achieved by a larger set of organizations, but this comes with a bad side effect (see “Challenges” above). Because many of these installations will be done on the cheap, many of them will also be abandoned because of the lack of focus on the organizational aspects of CRM implementation leading to poor adoption. Training, process adjustment, management sponsorship and other elements of change management are required for these smaller programs – just the same as the big ones.

Happy 2011 and good luck with your CRM program!

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