CRM's next step

By Barney Beal, News Director 20 Jun 2007 | SearchCRM.com

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Five to seven years ago, companies were buying full CRM suites with complete sales, service and marketing functionality, oftentimes to disastrous results. That led to a backlash of sorts, with organizations taking more of a tactical, piecemeal approach. For example, a company may have looked to a small module or best-of-breed tool to get a handle on a sales division or automate an email marketing campaign. Now companies are still thinking tactically, but with an eye to the long-term strategic goals.

"Companies are still deploying pragmatically, one module or business function at a time, but they're now doing it with a more strategic plan in place," said Rob Bois, senior research analyst with Boston-based AMR Research. "Two years back, companies were saying, 'Let's enable the salesforce,' and that's one reason Salesforce.com has been so successful."

The shift from tactical to strategic deployments is one the San Francisco-based Software as a Service (SaaS) vendor has also observed, and one it claims on-demand can address. Recently, Salesforce.com has expanded its emphasis from

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CRM alone to making SaaS a full development platform. Its AppExchange, an online repository of on-demand applications, allows companies to extend on-demand deployments beyond CRM. It's a shift from how the company built up much of its customer base, relying on small sales organizations fed up with cumbersome, complicated CRM deployments.

"Years ago it was finding that small sales organization that needed to get up and running," said Al Falcione, director of product marketing. "Today it's a bit different. When people dig into the platform they discover how they can leverage on-demand. Today we have conversations with the CIO. It's a nightmare to manage all these existing applications within an enterprise. Now you can manage all these different applications on demand and focus on innovation."

Oracle eyes CRM's future

Down the road from Salesforce.com in Redwood Shores, Calif., Oracle Corp. sees both strategic and tactical CRM deployments. And with its own SaaS CRM application in Siebel CRM OnDemand, plus on-premise applications from its Siebel and PeopleSoft acquisitions and its existing Oracle CRM, the company claims it can deliver for both. A new push around its Application Integration Architecture (AIA), building a common data model for customers, employees and suppliers, keeps companies from having to worry if they're making tactical or strategic CRM decisions.

"We're going to them with the idea it's not one or the other," said Stephen Fioretti, vice president, product management, CRM products. "It used to be a lot of the CIO versus the VP of sales. The fact is, this architecture and approach alleviates some of that pressure between the sales organization and CIO."

Organizations making strategic moves and trying to transform into a "customer-centric organization" also need to worry about legacy applications and non-CRM systems that still impact customer interactions, like billing and other back-office operations.

"The CRM aspect of it is it's not myopically focused on CRM, it's how do we improve the customer experience," said Ed Abbo, Oracle's vice president of CRM products. "If you think about that, we still focus on how to treat and interact with customers and create a better value. Now we talk about how we can bring it through to the back office. We have conversations with CXO, the CSO. It's a different conversation. There are multiple buyers in every company. There are buyers trying to solve strategic problems like the CIO, COO, CEO, then there's a VP of sales or a VP of support."

A battle looms

There has been a growing realization that as products increasingly become more and more commoditized, serving the customer can become a key differentiator, according to AMR's Bois. That's ultimately going to lead to some conflict within an organization as users who have become comfortable with the application they spearheaded with a tactical deployment are reluctant to change in the interest of long-term strategic goals.

"CIOs are leading the comprehensive approach," Bois said. "A lot of times there's a mismatch between the line of business and CIO. A lot of users are using something else. IT has to rationalize how they work in this big purchase. With applications like ACT and Salesforce.com you're going to have to pry that out of the sales people. I think we're getting close to some internal battles."

It's ultimately a conflict that IT will probably win, but there remains the danger of internal users reverting back to their old, comfortable applications.

"That's one of the reasons Excel is still the No. 1 CRM application," Bois said. "We urge deploying modularly, identify the low hanging fruit, achieve the early tangible results and roll from there. But do it within the context of bigger picture."

While the days of "big bang" deployments where a company brings in sales, service and marketing all at once may be over, there are instances of companies buying everything and waiting to deploy. Often the deal on licenses is just too good to pass up, Bois said. It's one reason SAP AG leads the market in CRM. The Walldorf, Germany-based applications giant has sold the most CRM licenses -- it's just that many are sitting unused. It can be an effective method depending on how deals are structured and how much a company is willing to pay for unused CRM seats, Bois said.

SAP is seeing the shift in the approach to CRM as well, and sometimes helping companies discover it.

"We'll walk into a company and talk about CRM and find all these divisions are looking for a portion of it," said Michael de la Cruz, senior vice president of CRM products with SAP. "It's less a matter of whole companies thinking holistically. We're in a lot of situations where we think it's [strategic or tactical] but it's really both."

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