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Energizing your CRM solution hosting services portfolio

Christine M. Campbell, Assistant News Editor

With CRM outsourcing opportunities growing, companies can get into this market if they remember that clients are looking for flexible, modular and simplified CRM software and services, Katrina Menzigian, IDC's program manager for CRM and Call Center Services, said at IDC's eSolutions Forum in Boston.

"Clients will increasingly demand flexible, modular and simplified CRM solutions," Menzigian said. "Clients need clarity and simplicity."

In today's market, it can be difficult to purchase services in a simplified and integrated manner, and few companies offer a total CRM solution, she said. Clients of CRM services need an integrated approach to the offerings, and the challenges of implementing CRM services and software are driving a push to a more flexible outsourcing model.

Menzigian cited IDC research showing that the compound annual growth rate for worldwide CRM services, including call center outsourcing, training, support, software and consulting, is 27% over the next few years. By 2004, companies will spend $125 billion worldwide on CRM, with $63 billion being spent in the U.S.

Right now, Menzigian said, 80% of the $23 billion spent on CRM goes toward call centers, citing figures from 1999. As the landscape of CRM shifts, so will budgets, as 68% of funds will go to call centers and 12% will go toward solution service providers (SSPs), which focus on CRM software and services and falls between customer care and contact center

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outsourcing and pure application service providers (ASPs), she said.

CRM SSPs "are really a step beyond the ASP," Menzigian said. Its distinguishing features are a focus on the CRM business solution area, a focus on the pre-integration of applications and infrastructure, supplementing the technology platform with value-added CRM services, and the assumption of responsibility of both the technology and the business issues, she added.

As compared to outsourcing of the past, the current SSP breed is based on "best-of-breed" applications, accessing technology at the core of the service, and a modular approach to people, process and technologies. SSPs, once targeted at dot-coms and other small businesses, are now targeting large vendors. As compared to ASPs, SSPs are more than renting software, but draw on their expertise in CRM technology and business processes.

New partnerships are forming as a result of this shifting landscape. For example, MarchFirst and APAC announced a relationship where MarchFirst will do two things. "One, it's helping APAC build up its own technology capabilities. ... It is also helping clients of the solutions service model integrate that solution with their existing requirement," Menzigian said. She also cited a partnership between PriceWaterhouseCoopers and TeleTech to address challenges with dealing with clients within the financial services industry. A large opportunity in vertical industry CRM packages awaits companies willing to venture into that sector, according to Menzigian.

IDC has three predictions for e-solutions integrators entering the CRM market, according to Menzigian. First, client demand will drive e-customer care services firms and e-solutions integrators to partner. Second, the growing adoption of hosted technology services will require firms specializing in design and implementation of CRM to address their client's technology access needs, Menzigian said. Finally, hosted CRM solutions will be popular with mid-market and smaller clients.

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SearchCRM Editor's Picks: CRM Implementation: Outsourcing Options

SearchCRM Editor's Picks: Vertical Industry Applications: General Information


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