Gartner says companies need to put more strategic emphasis on CRM

Research VP says companies need to address integration of CRM solutions to drive business strategy

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By  Mark Sutton Published  November 30, 2008

Gartner has outlined the importance of CRM for companies to meet their strategic objectives and to manage diffifult economic circumstances.

Speaking at the Gartner CRM road show in Dubai last week, Michael Dunne, Research VP with the analyst company, highlighted the strategic value to companies of improving customer relationship practices.

According to a Forbes 500 survey conducted at the end of 2007, the two main priorities for business executive were to retain and enhance relationships with customers and attract new customers, although 66% of IT spending goes on simply maintaining existing operational projects, instead of using CRM applications to improve efficiency in a range of areas.

Spending on CRM also tends to focus on specific areas, with 70-80% of CRM spending going to campaign management, sales force automation (SFA), and contact centre and call centre operations.

“Gartner sees CRM as a holistic business strategy for economic gain. You can’t just go and buy CRM,” said Dunne.

The main issues for companies looking to get the most from CRM investment going forward will be to ensure integration of different silos of CRM, between operational, analytic and collaborative applications, to address systems as one strategic whole, according to Dunne.

Companies also need to address gaps between the amount of data they collect, and which proportion of it can be analysed in a meaningful way – the ‘fact gap’ – and between the amount of analysis and actual execution on that analysis – the ‘execution gap’.

Businesses can also use CRM to provide a competitive edge in a declining economy, in three key areas: price execution and deal management to help manage sales negotiations; price analytics to optimize pricing and charge more where possible, and relationship management and account management to identify the most lucrative customers.

Dunne also highlighted the growing importance of web technologies, which both provide new channels to manage customers, but have also increased customer expectations of interactivity and communications with companies.

Gartner warned that it expects to see consolidation among CRM vendors over the next twelve months, with as many as thirty vendors expected to cease trading in 2009, and urged companies to consider vendor viability before entering into any new projects. The CRM market will continue to expand however, with more competition between the cheaper CRM offerings, and ongoing development of niche CRM for certain verticals, or specialized functions.

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