Fall and rise

CRM was once the talk of the town with vendors promising speedy implementations and a rapid ROI. The truth though turned out to be a little different and the number of deployments slowed. However, the technology has now matured and vendors have tweaked their sales pitches.

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By  Vijaya Cherian Published  June 22, 2003

|~||~||~|In the late 1990s, customer relationship management (CRM) was the hottest buzzword in the IT industry. Vendors were falling over themselves to get products to market, while end users were snapping them up with gay abandon in the belief that the applications would revolutionise the way they dealt with their customers and boost their bottom lines.

However, the market’s love affair with CRM was brief. 2001/2002 saw widespread disillusionment with the software and many CRM projects were classified as failures due to their inability to convert the market hype into reality.
This led to a serious bout of finger pointing, which saw customers complaining about poor products and vendors accusing users of neither understanding the scope of CRM nor implementing it correctly.

For example, Paul Kane, Middle East manager of Maximizer Software, says “customers can’t just say ‘I want CRM’ and stick it in and expect it to work miracles. They have to identify and document the measurable benefits that they want to achieve and then go forward and choose the appropriate solution.”

Ruediger Spies, vice president of enterprise applications at Meta Group, confirms that vendors such as Maximizer have a point, as pre-implementation planning was almost non-existent in early CRM projects. “Companies failed to assess the readiness of their business to see if they were ready to embrace all the ideas of CRM, both from a cultural and technology point of view,” he confirms.

However, it was not just a lack of planning that led to project failures. Many users simply misjudged the kind of existing infrastructure needed to run CRM applications successfully.

||**|||~||~||~|“Successful CRM requires comprehensive profiles of customers… This cannot be done without a sophisticated internal information infrastructure, such as an ERP package, as only this will pull all that information together and drive that CRM application,” says Hari Padmanabhan, president of ICICI Infotech MEA. “In the absence of such basic requirements, CRM cannot produce results,” he adds.
Another factor that contributed to CRM’s poor reputation was that, due to its popularity, many organisations tried to shoehorn the software into their business environments whether they needed it or not. For instance, Marc Van der Ven, general manager of ACCPAC Middle East, says many businesses actually require only a contact management solution.

“20% to 30% of the people we speak to just need a system in place to track their contacts and their customers. So we offer contact management separately because a lot of companies out there don’t really require a complete integrated CRM,” he explains.

Padmanabhan concurs and argues that, locally, this can be attributed to the type of business that is done in the Middle East. “In this part of the world the number of customers a company deals with is often far less than those in the US. Therefore, companies have to ask themselves if [CRM] applications can really reduce the cost of their interaction with customers,” he says.

Although problems such as poor planning and the inappropriate use of CRM persist, the vendor community has been working to make implementations easier for end users while also bringing their products to maturity. Oracle, for instance, has tried to reduce deployment pain by giving its clients ready-made workflows that better integrate business processes with its CRM app. It also provides customers with an implementation checklist.

||**|||~||~||~|“The basic checklist is ready and it can be fine tuned to meet each client’s individual requirements. That is the difference between now and two years back, when customers had to do it all by themselves,” says Arun Khehar, director for Oracle E-business suite & CRM, Oracle Middle East.

Other vendors are helping users ensure they are prepared for CRM by letting them run pilots. “Many people want to have a taste of the technology to see how it can be adapted into their organisation before they deploy it across the whole enterprise,” notes Mohammad Shihan, regional manager, Frontrange Solutions, Middle East & Turkey.

This hands on experience not only helps end users choose the right solution, but it also helps ensure employees use the solution once it is live — something that is key to an implementations long term success. “CRM adoption and acceptance involves a lot of handholding, training and follow up,” confirms Rasheed Muhammed, managing director, Metadata Technologies.

In addition to allowing users to test CRM software before buying it, vendors are also encouraging greater adoption by accelerating implementations. Lagan, for example, no longer espouses ‘big bang’ implementations, but instead employs an incremental deployment model.

“Now it is no good to have a big bang attitude to CRM. The CRM strategy needs to deliver phased and recordable improvements consistently during the implementation. At each phase the shape of the CRM strategy may change due to lessons learnt and organisational nuances,” says Dr. Ivan Roche, principal business consultant at Lagan.

“[Customers have] become more pragmatic and chosen to go with a phased approach to CRM. They are no longer willing to sign for a project that will last for months or years. They want quick results,” adds Riadh Boukhris, vice president, Altitude Software Middle East, Africa & South Asia.

Such a piecemeal approach delivers a number of benefits. Foremost among these is that it allows an IT department to accrue value on a regular basis, which in turn helps it retain the support of an organisation’s business units. “What the incremental approach also allows the IT department to do is pin down benefits to certain parts of the organisation, which means that the company will be able to see what is in it for them,” says Ashim Pal, vice president web and collaboration strategies, Meta Group.

||**|||~||~||~|Quicker implementations also mean lower prices, which Oracle’s Khehar says means a wider market as packages become attractive not just for larger enterprises but also for mid-range businesses.

“In the past, the product was complicated, so the time to implement it was longer, and therefore, it was more expensive. But today, products have become more user friendly, therefore it is easier to implement and so the implementation time has also been reduced. This in turn, has brought the cost down and made it more affordable for mid-range businesses,” he explains.

Cheaper prices and quicker implementations that ensure users don’t repeat the mistakes made by early adopters appear to be driving the CRM market forward. Khehar, for instance, says spending on CRM apps is likely to double over the next couple of years.

“Of the top 10 [Oracle] projects in this region now, five have been CRM. We have not met with such success in the past. This year and the next, we are counting on doubling the revenue in CRM,” he adds.

Furthermore, the analyst community appears to suppor the positive attitude currently being espoused by the vendors. For example, Gartner Group estimates that the CRM market will recover from late 2003 onwards and achieve a five-year compound annual growth rate (CAGR) of 8.3% through to 2007.

Elsewhere, IDC Middle East reports that CRM spending in MENA reached US$13.17 million in 2001 and is on the up. Meta Group predicts that businesses that deferred CRM evolution in 2001 and 2002 are now more inclined to move ahead. “We expect more success in CRM projects through 2004 and a parallel maturation of clients’ understanding of CRM,” says Spies.

However, while the market outlook may be good, analysts warn that users should still be cautious when it comes to predicting when exactly they will achieve a positive return on investment (ROI). “A company will need to give itself anything between three and five years to realise ROI,” says Meta Group’s Spies.

Torben Pedersen, senior analyst at IDC, concurs and urges users not to become dispirited if their CRM implementation takes some time to deliver its promised return. “It takes a while for you to realise how big the benefits are,” he says. “They are not direct and you can’t see them all immediately.” ||**||

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