CRM best developed as an ecosystem

Companies are increasingly turning to customer relationship management (CRM) as a strategy to attract and retain customers. Unfortunately, most are taking a fragmented approach that will ultimately result in loss of revenue, decreased customer lifetime value, and a decreased ability to sell, according to analysts at META Group Inc. The IT research and advisory services firm warns IT managers that CRM must be developed as an “ecosystem,” combining operational, analytical and collaborative technologies, if it is to successfully meet business objectives.

“Companies need to treat CRM holistically and from the customer`s point of view,” said Elizabeth Shahnam, Application Delivery Strategies program director at META Group. “Implementing one component without consideration of the others creates a stovepipe solution that is less effective and more costly.”

META Group advises that enterprise CRM application architectures must integrate:

– Operational CRM, which includes the “customer facing” applications integrated among the front, back and mobile offices (e.g., sales force automation, enterprise marketing automation and customer service/support).

– Analytical CRM, which provides analysis of the data created on the operational side of the CRM equation. This portion of the CRM solution, which is based on a data warehouse architecture, is imperative for providing the panoramic customer view critical to CRM success.

– Collaborative CRM, which uses new and traditional communication technologies to enable customers to interact with the organization.

Shahnam said CRM implementation also requires organizational change to support the new way of doing business. “In its pure form, customer relationship management is a business philosophy, not a technology architecture. Attempting to implement CRM technology without a pervasive CRM cultural mindset in place will ultimately lead to project failure.”

META Group research indicates that one-to-one technologies are just now beginning to mature, in the form of web personalization, targeted/triggering marketing automation, customer-facing sales automation, integrated customer service, data mining and enterprise resource management (ERM) systems supporting mass customization. While the CRM technology market is still in its infancy, research indicates that, similar to the trajectory taken by the ERP/ERM market, the CRM market will rapidly expand, reaching $4.7 billion by 2001 and $10 billion by 2002/03.

“We believe companies that do not implement CRM will not be successful long-term,” said Shahnam.

She warned, however, that organizations must focus on their business strategies and make sure that IT and business requirements are aligned for CRM automation. “The CRM discipline is susceptible to the same irrational exuberance of the Web, for example, without a focused business case and solid understanding of the underlying architectural components.”


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