ref: CRM implementation
There will be a huge amount of following business at mainstreet:
---Martin---
metagroup.com
META Group Predicts "Serious Risk of Failure" for Leading Companies Implementing Customer Relationship
Management (CRM) Initiatives
First Comprehensive CRM Implementation Study Cites Under-Investment, Lack of Integration and Customer Focus as Leading Causes
STAMFORD, Conn. (October 25, 1999) -- Most Global 2000 companies' current customer relationship management (CRM) initiatives are in "serious risk of failure" according to the first comprehensive "demand side" study of 50 of the largest end-users in the CRM market. The study, which was conducted by META Group Inc. (NASDAQ: METG) and its marketing technology research affiliate, IMT Strategies, was sponsored by the world's leading CRM vendors including Siebel, Vantive, Oracle, SAP, E.piphany, and NCR.
The study, which was based on interviews with Global 2000 companies including Sprint, Nortel Networks, Eastman Kodak Co., and PNC Bank, found that most enterprises do not have adequate CRM business plans in place and are severely underspending on their CRM projects. Consequently, META Group and IMT predict that many companies will need to spend as much as $250 million over the next 2-3 years to achieve tangible returns on their CRM investments.
Of the three essential components of a comprehensive CRM "technology ecosystem," major firms demonstrated material progress in the deployment of operational technologies. These include "customer facing" applications integrated among front, back, and mobile offices.
By contrast, CRM leaders have just started to make progress in the analytical area of customer data analysis, which uses data warehouses to generate customer and product data repositories. Major firms also demonstrated weakness in customer collaborative applications, which facilitate post-transaction, relationship building between customers and organizations.
More than 80 percent of respondents have at least one operational CRM application in place, the META Group/IMT study shows. But, only one third have invested in analytic CRM applications, and only half have launched customer collaboration initiatives.
"While leading practitioners cheer their short-term successes in CRM technology, the immaturity of their long-term programs poses a serious risk of business failure," said Liz Shahnam, co-author of the study and senior program director for META Group's Application Delivery Strategies. "CRM leaders must take dramatic action to optimize their systems around the customer, or their customer relationship investments will not pay off."
"Long-term CRM success requires well-developed, integrated programs in the areas of operations, analysis, and customer collaboration," said Stephen Diorio, co-author of the study and president of IMT Strategies, a leading sales and marketing technology advisory firm. "While today's CRM leaders are well along in developing operational applications, the survey shows they still need to make major investments in analytical applications and do a better job of integrating customer collaboration technologies."
The study the first to compile and analyze primary data from corporate America's leading CRM end-users found that fewer than 10 percent of CRM programs have achieved a high level of enterprisewide integration. Overall, 60 percent of companies have taken steps toward integration, while the remainder lacked any immediate integration plans.
"This report represents a key piece of hands-on, field research," said Larry R. DeBoever, META Group executive vice president and META research fellow. "Many companies are developing or evaluating their CRM strategies and, until now, they have had no hard data on which to rely."
"This research is a collaborative effort between META Group and our affiliate, IMT Strategies," said Dale Kutnick, META Group's CEO and co-research director. "I am especially pleased with this report, as we provided the seed funding to IMT, as well as several other companies with narrow research foci, and we are beginning to see the payoff from that strategy."
The study revealed that most CRM projects are highly fragmented and lack customer focus. According to Ms. Shahnam, most companies underestimate the value of customer information, purchase disparate CRM products and services, focus too heavily on the electronic channel, and fail to employ meaningful measurement techniques.
Other findings from the META Group/IMT study include:
64 percent of respondents lack techniques to measure the business value of CRM.
Less than 10 percent of companies are able to measure a tangible return on investment (ROI).
Less than 30 percent have begun to take steps to integrate operational and analytical CRM environments.
In spite of marketplace perceptions of the Web ("e-channel") as a dominant customer contact point,
traditional selling channels such as face-to face selling, business partners, and tele-channels continue to
account for more than 95 percent of revenues.
Respondents provided multiple, conflicting and often incomplete definitions of CRM. While 78 percent describe
CRM primarily as a customer imperative, 22 percent of respondents define CRM largely as a set of tools and
technologies.
In addition, Mr. Diorio observes that most Global 2000 companies are fundamentally undervaluing their customer information assets.
"CRM boosts profits when businesses are able to collect and use customer information to create exit barriers" said Mr. Diorio. "The market will reward those who effectively leverage customer information with large stock price multiples. This is one of the factors behind the incredible valuations of online marketers like Amazon.com."
Evolving CRM into Customer Lifecycle Management (CLCM) Systems
According to META Group and IMT, competitive differentiation through superior customer relationships can be achieved by evolving CRM initiatives into enterprisewide "customer lifecycle management" (CLCM) systems. CLCM is a business process designed to cover the full spectrum of customer interactions to engage, transact, fulfill, and service the customer based on an extensive customer pattern or profile. With the customer as the "design point" for these systems, a successful CLCM approach establishes an "exit barrier" by fully immersing the customer in the entire selling process.
About the Study
META Group and IMT Strategies interviewed CRM executives in 50 of the largest end-user companies across six industries, while compiling data from more than 800 additional companies who have undertaken CRM projects. The scope of the research covers market segmentation/share, CRM decision-making, key differentiators, measures of ROI and value, and best implementation measures. For more information about the study, call META Group |
