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CRM would bounce back

While the overall enterprise application software market a beating, CRM absorbed some shocks despite weak spending. Factors such as verticalization of CRM as well as faster resolution of customer and sales cycle time would drive the CRM market in 2010 By Rajendra Chaudhary

The Customer is always right, more so in a downturn! That's why customer related activities (especially customer service), becomes so much more important when business is dull. A customer driven market automatically elevates the need to have a sound CRM system. It is no wonder then that back in 2009, even when most companies were in penny pinching mode, they were still investing, albeit moderately, in CRM capabilities. That momentum continued throughout 2009 although the overall Enterprise Application Software (EAS) market continued to see muted growth.

According to Vinay Iyer, Vice President, Global CRM Solution Marketing, SAP, despite the downturn, the CRM market saw some positive numbers and grew at an approximate 2-3% in the last 18 months. Granted, a growth rate of 2-3% is not exactly an earth shattering statistic but considering the severity of the downturn and how negative the sentiments were in the past 18 months, it is still impressive and the way businesses are using it is even more is that exciting to us.

Iyer said, “One major value that CRM solutions about have brought is the ability to provide insight and analysis to understand a customer’s needs so that companies can determine their best response to prevailing market conditions. Strengthening their focus on value delivery to customers, companies have continued to adopt CRM to not only help address short-term imperatives but also to achieve differentiated capabilities to compete effectively over the long term.”

Be that as it may, it still doesn't mean that everything was fine and that the market didn't take a hit at all. There were many instances of companies backing out of CRM projects in the final stages of signing up with vendors.

Many of them didn't just postpone CRM projects but also pulled the plug on various CRM initiatives.

According to Gerald Prabhu, Executive Director, Strategic Alliance & Marketing, CDC CRM Solutions, “There were many projects, especially in verticals such as capital markets, wealth management and real estate that shunned their projects. We had at least eight such opportunities (in the contract stage) that didn't materialize in 2009.”

Rajendra C Mruthyunjayappa, Managing Director-APAC, Talisma informed us that they had also seen many organizations stall the purchasing process and some postponing CRM projects indefinitely or at least until the time the market bounces back. “Organizations that don't have a CRM system running usually do have some Excel-based or homegrown mechanism to facilitate customer engagements. Hence, many of them chose to stay away and continue with what they had till the time sanity was restored on the economic front,” said Mruthyunjayappa.

Market saw verticalization of CRM solutions

In a bid to adjust to the prevailing market conditions and better sell their offerings vendors adopted different strategies as per their strengths during the last 12-18 months.

At CDC CRM Solutions for instance they positioned a combination of the sales and service functionality and built a core process module called the Collection and Renewals Management System for the insurance industry. This indicated verticalization of CRM systems. “The idea was to take advantage of the prevailing sentiments in the insurance sector where retaining a customer was now more profitable than perhaps acquiring a new one,” commented Prabhu. He added “We positioned the CRM as a sole aggregator of customer information and processes more than as a plain acquisition and retention tool. By positioning it like that we showed customers how other processes can be extended to CRM (thereby avoiding investment in another application). One such example was the Recruitment and Performance Management application that we had positioned, again for the insurance industry.”

Oracle shifted its focus to on-demand CRM in 2009. According to Surya Bhardwaj, Vice President, India Applications, Oracle India, “Our focus was more on capitalizing on the opportunities through the more cost-effective and affordable options such as on-demand CRM.” He said, “Our strategy is to offer customers the best possible array of solutions based on the demands of the marketplace. The success ratio of Oracle CRM solutions proves that we provide the best on-demand CRM, to deliver enterprise grade SaaS.”

Another leading enterprise software vendor, Sage, chose to verticalize its CRM offerings in a bid to better cope up with the lean times.

Thomas Abraham, Managing Director for Sage India, said, “As a concept, CRM was understood a lot better in 2009 than in the past. The components of CRM, namely, Sales Force Automation, Customer Service, Marketing, Analytics are well comprehended, which makes positioning a lot easier. In a bid to improve the appeal of our product we decided to position it according to the specific needs of some of the key verticals including brokerage firms, stock exchanges, media, and real estate.”

The company also tried to offer it as part of an integrated ERP package and more recently it has been positioning various CRM offerings based on the size of the organization and requirement complexity.

2010 and beyond

With some early signs of recovery on the horizon, CRM vendors are hopeful of a turnaround in 2010. All are anticipating an accelerated growth rate this year and their sentiments aren't misguided either.

Iyer said, “As companies look forward to better growth opportunities in 2010 and beyond, they also realize that some of the fundamentals with respect to focus on the customer have changed. Consequently, we anticipate CRM projects going higher up on the corporate agenda.”

Sharing similar sentiments, Oracle's Bhardwaj foresaw 2010 as the year of consolidation and growth. He said, “Organizations are increasingly looking to give a personal touch to their customer engagements and are looking at solutions that will help them grow their customers and also retain them through a differentiated customer approach to marketing, sales and service.”

Talking about the key factor that will perhaps define the CRM market going forward, Prabhu predicted that 'customer discovery' would be a huge factor in defining how companies adopt CRM systems in the future. He said, “Till now companies have been acquiring customers not knowing whether they are the customers that they would want to have. In the future I think a lot of emphasis would be placed on segmenting and reaching out to the customer of choice. This means that CRM systems that help companies capture information beyond the obvious will be in great demand.”

According to Abraham the multi-channel approach to CRM is going to be the key in the future. This essentially means that organizations will need to accommodate the growing channels of access such as desktop, Web, mobile etc in order to ease and improve the user experience and hence CRM systems will need to be tuned to incorporate these going forward.

Mruthyunjayappa maintained that the quality of customer service will be the key. “I think pretty soon this is going to be the primary driver for most organizations because it defines customer attraction and loyalty to a brand or a product or a service. Hence quality management of customer service and customer satisfaction are going to be the key elements that will influence how CRM systems are designed and deployed by organizations here in India,” he said.

Reducing the cycle time to reach customers and new customers acquisitions combined with faster resolution of customer queries are some of business drivers that would play a key role in CRM deployments in 2010.

rajendra.c@expressindia.com