Magazine Article | November 1, 2001

The Inevitable Change In The CRM Market

Source: Field Technologies Magazine

Are companies spending too much money for high-end CRM (customer relationship management) solutions?

Integrated Solutions, November 2001

Contrary to popular belief, there are several CRM (customer relationship management) products available on the market today that are not only powerful and configurable, but also quite affordable. Many of the established vendors in the CRM market are tied to a business model that requires expensive and time-consuming consulting services for the installation and customization of their software. However, in today's market, having a powerful solution no longer necessitates these expensive consulting services. With the advances in technology, customers ought to be empowered to configure and adapt their systems according to their unique and changing business requirements.

Old-Guard CRM Solutions
Many of the traditional high-end enterprise software vendors designed their systems years ago when database and Internet technologies were very limited compared to the technology available today. The consequence is that those systems have been forced into an architecture that requires significant programming work be done to customize and deploy the systems for customers. Consulting teams are required whenever a customer wants to add product lines or change workflow logic, and when the system needs to be updated with feature enhancements and new versions of the software. Over time, these companies have developed business models that have as much as 35% to 40% of their revenue stemming from consulting services. They can no longer afford to re-architect their products to require less consulting work, because they have grown to depend on that consulting revenue stream.

New Players, New Technologies
Some of the newer players in the market are changing this business model. Designing and developing high-end solutions over the last few years, these vendors have been able to create very powerful high-end products that are built with state-of-the-art tools and utilize today's advanced technologies. The result is a new breed of high-end solutions that compete head-to-head with the established vendors in the industry on a feature level, but that also empower the customers themselves to fully configure, customize, deploy, and maintain the system without the need of an expensive and time-consuming consulting team. Since many of these new vendors are young companies, they have the luxury of defining a business model that does not depend so heavily on deployment and configuration service revenue. Rather, these vendors can focus on training, customer support, and implementing special integration projects with other systems the customer has in place.

CRM Change On The Horizon
It will not be long before the major enterprise vendors wake up and realize that these smaller companies are winning significant market share from them, based primarily on their ease of deployment and configuration. Customers will soon begin to realize that there are other solutions available that do not require such huge expenditures of time and money to deploy and maintain. Customers will then demand similar solutions from all vendors. When this happens, even the big players in the CRM market will be forced to re-architect their solutions as well as their overall business models

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