Despite investment in, and deployment of customer relationship management applications in close to 75% of large organizations, it seems that many enterprises are struggling to clarify, or even define, a distinct and lucid customer relationship strategy.
According to the recently published Forrester Wave: CRM Suites for Large Organizations for Q3 2012 (available after registration on the Pega website) by William Band, the result of this confusion is that IT departments are finding it increasingly difficult to re-engineer customer facing business processes, or acquire and deploy appropriate technologies.
We have over the years seen similar problems in the enterprise content management space, which has resulted it the misuse, or even non-use, of content and information in enterprises in a market where information and company value are intrinsically linked.
With customer relationship management (CRM), the failure to develop an effective strategy is equally problematic in that the real differentiator in business now is how effectively enterprises look after their clients.
Customer loyalty cannot be depended on any more, and if a company cannot provide the services customers are looking for, then those customers will quickly move to a company that does look after them.
At a technology level, CRM software is designed to give companies a cutting edge; to provide companies with the tools needed to hang on to customers. However, it’s not as simple as that.
There are literally dozens of different solutions and -- increasingly -- many different specialist solutions for specific verticals, or with specific functions within the CRM space. The question now is what solution suits your company best. This current Forrester Wave aims to give enterprises the information needed to begin their search, and it’s important to be clear about this -- Forrester does not suggest that this report will answer all your questions, or even cover all the solutions.
All it is a guide, and like Gartner’s Magic Quadrants, Forrester recommends that prospective customers look at all the vendors and solutions mentioned in this report, even if they don’t fall into the Leaders section. It may be, Forrester points out, that a particular functionality that a company is looking for may be provided by a niche player, or by a company that is only beginning to develop its products.
To get a better idea of what is happening in the CRM space and to see what vendors are providing what products, in the first part of this examination we will look at established and emerging trends in the market.
In the second part later in the week, we will take a look at the vendors that made it into the Leaders category: Oracle Siebel CRM, SAP CRM, Microsoft Dynamics, Salesforce, Oracle CRM on Demand, RightNow, and Pegasystems.
The findings are based on surveys and interviews with 556 large North American and European organizations who were evaluated on 414 different criteria. Of those 556 organizations, 50% have already implemented CRM solutions and many are currently in the process of upgrading their tool set. A further 25% have plans to adopt CRM solutions within the next 12 to 24 months.
The first thing Forrester looks at is why companies are turning to CRM in the first place. According to the report the main and obvious reason is to better manage customers and to better connect with them. To attract large enterprises, the CRM market itself is changing too. The bigger vendors are slowly but surely snapping up the smaller vendors and competitors, or buying new customer functionality that they think will give them an edge.
We have entered what Forrester is describing as the “age of the customer”. In the past, while companies have always described themselves as customer-centric; this, however, is different.
Competitive advantage through the traditional differentiators like brand, manufacturing, distribution is no longer a given. The only differentiator that matters any more is the customer experience.
Although the report focuses on large companies, CRM is not exclusive to large companies. As the number of cloud applications increases, mid-size and even small companies are also avid consumers of this kind of technology, Forrester adds.
With these changes in the market, a new definition of CRM is needed. Forrester now defines it as:
The business processes and supporting technologies that support the key activities of: targeting, acquiring, retaining, understanding, and collaborating with customers.
Although Forrester does not advocate that organizations view CRM only as a set of technologies, strong interest in investing in and deploying technology solutions to improve customer-facing business processes continues.
To negotiate your way through what is becoming an increasingly complicated landscape there are a number of established and emerging trends that need to be understood. They include:
1. Aspiration to Strategy
Enterprises are finally beginning to define their CRM strategies. Those strategies cover:
- Outlining the desired customer experience
- Activity and decision making
- Funding decisions and project prioritization
- CRM is becoming a function of management
2. The Experience Ecosystem
Increasing tendency to examine customer experiences in terms of every single interaction through every employee in a given enterprise, along with every external fact that impacts on customer decisions.
3. Solutions Converge
Forrester is predicting the convergence of all customer related technologies, from e-Commerce platforms to content management platforms, along with site search, personalization and customer service .
4. Taming Processes
Poorly managed customer facing processes are being revamped, especially those that impact directly on customers like customer on-boarding, order administration, loan processing, incident management, customer service and investigations.
5. Mobile Applications
Interest in mobile CRM is red hot and will continue to be over the coming years. Despite investment in CRM, many mobile employees still do not have the necessary data to have on the road. Virtually all vendors have mobile CRM options; it is now for companies to invest.
6. Social Customer Engagement
Enterprises are using more social CRM as the advantages become clearer and the products become better built and easier to manage.
7. Big Data
With the amount of data now available to enterprises, it is only a matter of time before all enterprises are looking at Big Data management software, particularly Big Data analytics.
8. Agile CRM
Like every other technology space, CRM is now looking at best ways to become more agile. Keeping in mind that agility refers to the ability to respond to changing environments, agility is a key requisite when dealing with a wide customer base.
9. Voice of the Customer (VoC)
Enterprises are increasingly trying to hear the Voice of the Customer, which is quickly becoming the harbinger of business culture changes. More customer feedback through social sentiment is showing enterprises how their decisions are impacting on customers.
CRM Market Consolidation
On top of these trends there have been a number of changes in recent years that have had repercussions right across the market and has resulted in considerable consolidation and turmoil in the market. Those changes include:
Oracle has bulked up over the past couple of years. Notable acquisitions included ATG e-Commerce platform as well as business intelligence vendor Endeca. All were added to the Oracle CRM on Demand offering. It also bought RightNow, a cloud CRM vendor.
2. SAP and CRM
In late 2010, SAP acquired mobility platform solutions provider Sybase. In 2011, it entered into a partnership with eGain for knowledge management and also acquired SuccessFactors, a SaaS-based human capital management company.
Salesforce has been on a buying spree since 2010 when it bought Ruby developer Heroku, Radian6 for social media monitoring, DimDim for collaboration and Model Metrics a cloud consultancy. There are others too covering all kinds of different functionality.
4. Specialty vendors
Specialty vendors are also in the acquisition space too. Notable among them, Forrester says, is Nice Systems acquisition of enterprise feedback monitoring vendor Fizzback and Verint’s acquisitions of EFM vendor Vovici, and marketing automation vendor Marketo’s acquisition of CrowdFactory.
In part two we will look at the vendors that made it into the leaders section as well as a brief look at the criteria to make it there.