CRM: Then and Now
Balls. Pool, billiards, snooker—no matter what game you’re playing, there’s an undeniable beauty in the chaos of brightly colored ceramic spheres suddenly set in motion. The geometry may be convoluted, with collisions and caroms reorienting direction and destination, but the goal of the players—clearing the table, partly or in full—is fairly clear. Intricate in its implementation and elegant in its ideal, CRM can be said to share many of the same traits. (Some, it should be noted, may prefer to apply a different “ball” metaphor, given the industry’s inclination to juggle competing interests.)
Beyond the abstract spectacle, however, there are some very concrete realities—and some hard-number expenditures. According to figures from AMR Research (now part of industry-analysis giant Gartner), annual sales of CRM software exploded from $762 million in 1997 to $14 billion in 2007—nearly a 20-fold increase in just a decade. To be fair, the methodology for gauging the size of the marketplace has always varied widely, and continues to do so today. But there’s little debate about CRM’s ongoing growth streak, a run that shows little sign of abating any time soon.
Is there any company today that doesn’t have at least some form of CRM? You’d be surprised: The percentage of firms that have implemented CRM may have increased, according to industry research firm CSO Insights, from 53 percent in 2003 to 75 percent in 2010, but that means that, even now—as CRM has come to be seen as table stakes, as a must-have—a quarter of all companies are still muddling along without.
As with any enterprise initiative, CRM still requires a compelling business case in order to get the nod, especially in the midst of a difficult economic climate. (See CRM’s Recession Issue, February 2009.) Startling as it may seem to those who have seen its benefits, CRM often loses the budgetary battle to other projects that promise a better return on investment.
Cost remains an issue, of course—but one that’s faded and continues to fade fast. The expensive start-up price of an on-premises solution is now frequently supplanted by the relatively inexpensive subscription rates of CRM delivered via the software-as-a-service (SaaS) business model. (You may know it better as “on-demand computing,” or its newer tag, “cloud computing.”) According to CSO Insights, 85 percent of all CRM systems in 2003 were on-premises solutions; just 15 percent were SaaS. Fast-forward to 2010, and SaaS has become the predominant method of accessing CRM, now claiming 53 percent of all deployments.
Need a sure sign of how SaaS has forever altered the CRM landscape? You need only cast an eye at SaaS pioneer Salesforce.com (which we did in an issue-length special report in November 2009). Just as cofounder Marc Benioff’s company accelerated from annual revenue of zero in its fiscal year 2000 (which ended in January of that year) to $1.3 billion in its fiscal year 2010, its branding also shifted, from sales force automation to CRM to on-demand computing to cloud computing. The transformation of CRM itself can be said to have followed a parallel path, says Sheryl Kingstone, director of the enterprise research group at analyst firm Yankee Group: the client-server era’s basic sales tracking and customer care gave way to Web-based CRM at the turn of the century, which led to the cloud-based CRM applications and services of today.
On the pages that follow, you’ll find tales of CRM implementations at a half-dozen companies begun during the last 15 years:
The stories vary greatly, not just in the table-top factors—the goals, the strategies, and the outcomes—but in the shot-by-shot elements as well, such as the industries involved, the ages of the initiatives, and the brands of software deployed.
Only a handful of vendors are named in the stories—Amdocs, Microsoft, and Salesforce.com, to name just a few—while others may seem notably absent. Our intent wasn’t to praise some to the exclusion of others, but to present a sampling of participants over the years. Similarly, we aren’t spotlighting certain industries to prove a point about those verticals, but to show CRM’s overall breadth. (While it’s true that financial services—with its customer-focused, account-based structure—has often been at the forefront of CRM, customers are no less important anywhere else.)
But first let’s address the painful legacy that continues to haunt the industry, lingering like a haze of smoke above a smoldering fire: Some CRM projects have failed.
Roughly a decade ago, CRM’s reputation took a significant hit, one from which the industry has only begun to fully recover. (For more on the lessons and legacy of CRM’s darker period, see “CRM Is No Longer a 4-Letter Word,” Insight; and this month’s columns Customer Centricity [“The Siebel Effect—and Its Survivors”] and The Tipping Point [“The Cautionary Tales of CRM”].) But even as CRM flourishes—thanks to the emergence of mobility, analytics, and social media—we’re left to wonder if failures may once again fill its future.
As shown by Michael Krigsman, chief executive officer of the consultancy Asuret and a specialist in project risk assessments, CRM failures—and failures in information technology overall—may be a fact of life, but they’re by no means a foregone conclusion. Gathering reported figures for CRM failure rates over the years—and noting the wildly disparate methodologies used in generating them—Krigsman illustrates how difficult it can be to accurately depict “success” and “failure.” Yes, 70 percent of CRM users in 2002 reported failures in their initiatives; yes, by 2005, that figure had dropped to just 18 percent. But does the “improvement” really reflect a change in the application of CRM itself? Are the conclusions undermined by the results of later years, as CRM “failure” rates rose to 31 percent (2006), 56 percent (2007), and 47 percent (2009)?
The unfortunate answer is that there may be no way of knowing for certain. As a maturing market, however, CRM now has the benefit of its own history, a track record to compare against, and recommended practices that can at least help tilt the scales toward success. Many of these are captured in the stories that follow, enabling Editorial Director David Myron to collect five “time-tested tips” for CRM success in his Front Office column, “15 Years of Pocket Shots and Miscues."
One last point: As you read through these stories, you’ll notice one player helping to call the shots in all of these deployments—CRM consultancy ISM. Barton Goldenberg, founder of ISM and a regular columnist for CRM, deserves special thanks for helping to arrange access to an assortment of contacts and companies that have been ISM clients over the years. (Goldenberg is also the author of this month’s Reality Check column, offering a look at the industry’s next 15 years.)
By no means is this small group representative of all CRM initiatives—no set of examples could plausibly make that claim. Setting our sights on a specific playing field, however, bounded by the experience of a single implementation partner, allowed us to identify recurring patterns that underscore the versatility and variation comprised by the category of successful CRM projects.
We hope you’ll join us online for an ongoing discussion of these implementations, and for a collection of views about CRM’s past, present, and future. We look forward to hearing your reminiscences—and your projections of what lies ahead.
Annual Sales of CRM Software:
1997—$762 million
2007—$14 billion
Source: AMR Research (Now a unit of Gartner).
Percentage of Firms That Have Implemented CRM
2003—53%
2010—75%
Mix of CRM Systems in Place
2003—85% On Premises vs. 15% SaaS
2010—47% On Premises vs. 53% SaaS
Source: Jim Dickie, managing partner, CSO Insights Annual Sales Performance Optimization Studies
CRM Failure Rate
2001—50%
2002—70%
2005—18%
2006—31%
2007—56%
2009 —47%
Source: Michael Krigsman
Note: The yearly figures are drawn from various sources, and therefore may not reflect comparable methodologies.
Fiscal Full-Year Revenue for Software-as-a-Service CRM Pioneer Salesforce.com
2000—$0
2010—$1.3 billion
Source: Company Filings