Report assesses CRM's ability to increase sales

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By: Wise Marketer Staff |

Posted on October 8, 2008

The past three years have seen a great deal of consolidation in the CRM industry, with some of the large CRM players being acquired by even larger software development companies, while the divide between ERP firms and CRM firms has closed, according to the new 'CRM Market Assessment 2008' report by Key Note, available from Research and Markets.

The report noted that the gap between CRM and ERP developers has closed as a result of having extended their product ranges to provide more complete business management solutions, with many having either acquired the technologies to integrate the functions provided by different solutions or having developed them in-house.

CRM has, it seems, turned out not to be a passing fad but rather an essential way for organisations to understand their customers and, in the words of one of the respondents to the CRM roundtable discussion in the report, "sell more now" technological advances have allowed organisations to link their front office functions (e.g. customer contact centre operations, marketing, and sales) to their back office systems (accounting, inventory, payroll and personnel, stock control, etc.).

This area was a major issue for early adopters of CRM systems, and one that barred many companies without huge IT resources and development budgets from entering the CRM arena. However, the report asserted, the situation has changed. CRM products, understanding of these products, and the technology involved have all improved allowing vendors to begin marketing their products to small to medium businesses (SMBs).

At the same time, Web 2.0 has also given rise to a new generation of internet users (both developers and consumers) who increasingly use open-source technologies and the internet to collaborate and network online.

Users have also become more mobile. Because CRM systems had already developed web-based accessibility, it has been a relatively small step for vendors to make their entire systems available to the whole organisation this way by hosting it themselves (i.e. 'Software-as-a-Service'). These hosted solutions provide a relatively low-cost entry into the world of CRM for SMBs and, with this sector being increasingly targeted by vendors, the case for developing their own hosted offerings has generally proved irresistible: almost all of the major CRM and ERP vendors now offer such hosted solutions.

However, these companies do face competition. There are a number of software companies that have entered the hosted CRM market, designing their products largely around sales and marketing processes. For SMBs, facing a decline in economic growth, as well as increasing costs, the attraction of being able to increase productivity and to generate better-quality leads for a low monthly subscription fee is attractive. It is therefore likely that vendors offering basic CRM functionality for SMBs will enjoy growth during the next 2 - 3 years.

One remaining question is whether or not these new, smaller providers will survive in the long term. As customer needs change and the economy picks up again, SMBs may look for deeper functionality. This is where the established software providers - such as Oracle and SAP - are likely to win in the end. Unless the start-ups have something new to offer that has not been already developed by existing vendors, the report warned that they may not survive.

Still, the CRM industry - even in the face of an economic decline - is growing healthily. Many of the commentators interviewed for the report suggested that the economic decline would fuel the continued growth of the CRM industry, as CRM has the potential to be the tool most used to make cost savings and increase productivity. Moreover, with hosted solutions being ready to tap into this need, the short-term future for the sector looks very promising.

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