What Are We Looking for in 2005? The Year in a Hand-Basket

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This year portends big things for CRM. As I travel the world, meeting with CRM pundits, customers and vendors alike, I hear from all of them that they see a sea change in CRM that has shifted the business ecosystem from a focus on a corporate hub to a customer center. The shift means all kinds of important changes are in the offing—changes that not only can affect your business but will.

With that in mind, consider these four predictions for the year. (Note that we pundit types have a track record about as good as March Madness office pools. But I actually have been pretty accurate with my forecasts in the last three years. The last chapter of each edition of my book has occurred pretty much as I thought it would over time.)

  • Major CRM Enterprise Vendors all will move their direction from pure CRM to something more at the level of an enterprise value chain.

    OK, there’s no PeopleSoft anymore—only OracleSoft, SAP and Siebel, as far as the largest players go. Each of these three has an agenda that goes beyond CRM, and they will solidify those new agendas this year. It was signaled with several things last year:


    • First, Oracle shifted its focus to the total enterprise and an integrated value chain through its database, grid computing and Larry Ellison’s incessant discussions of a central customer hub. Then they went and bought whatever enterprise functionality they might have been missing for $10.3 billion.


    • Second, SAP announced its intent to compete as a platform using NetWeaver as its application-agnostic platform of choice.


    • Finally, at Siebel User Week in October 2004, Siebel announced both that “CRM is a business strategy”—an astoundingly bold admission from a technology company—and an entire series of enterprise-level (e.g. customer, financial, service, human resources) analytic applications, indicating the company’s intention to be a part of the enterprise value chain, not just a pure CRM company, anymore.


    • Additionally, new-kid-on-the-block salesforce.com is increasingly moving away from pure CRM functionality to become an always-present services platform—an application provider service, if you will. That is the reason for the increasing emphasis on the power of sforce and the decreasing mention of CRM, as such, in CEO Marc Benioff’s pronouncements.



  • Ironically, as CRM becomes increasingly ubiquitous as corporate strategy and programmatic initiatives, the requirements for both the storage and use of customer data will become increasingly central to corporate CRM budgets.



    What is ironic about this is that we have spent years saying that CRM is a philosophy and a business strategy supported by a system and a technology. Now that CRM as a philosophy and strategy is becoming embedded in the corporate world, technology is beginning to gain a place of paramount importance for CRM. As the newly empowered customer demands an increasingly personalized experience, the amount of data necessary to do that increases proportionately. The sheer volume of data and the burgeoning need to process that data through analytics in real time means that scalability of the hardware, CPU power, memory of all kinds and storage capacity become crucial issues this year in determining whether or not CRM applications are in your stable. Gartner forecasts that by 2010, you will have 30 times the data you had in 2004. Yikes.

  • The hosted-solutions market will move from being the new “thing” to a significant part of mainstream CRM thinking and planning—but will continue its innovative ways.



    Salesforce.com sent out a promotional bag full of $100,000 candy bars to various people (like I needed more candy!) to celebrate its 200,000-plus users—a doubling in user base in six months. Companies like NetSuite are beginning to gain ground by providing some industry thought leadership where a vacuum existed and continue to lead the way around an order-management-focused enterprise. Salesnet continues to innovate with its first-to-market vertical solutions (June 2004) and its OEM/private branding versions. RightNow 7.0 is the first day as a full suite for the rest of their lives as they expand their offering. Finally Siebel CRM OnDemand is already making major inroads, as Siebel adds verticals to its offering and puts real muscle behind its efforts with dollars and very effective leadership to penetrate the market the way no one has before. The hosted market will grow dramatically in 2005, as its cost-effective reach spreads all the more. Don’t just watch this happen. If you’re considering CRM, check it out. This is not just the disruptive innovation of two years ago; this is the move to the mainstream of omniscient services.

  • Customer Experience Management will become a significant—perhaps even paramount—part of CRM for 2005.



    The customer experience is finally being recognized for its business significance. This is an evolutionary step beyond looking at business or customer analytics (also a 2005 top hot pick) being used to establish a personalized experience. CEM looks at the gamut of emotional and rational characteristics that are necessary to enrich the single customer or segment’s experience. The purpose is not just to provide good products and services; that is no longer a real differentiator. It also takes into account much more than buying habits and optimal offerings. It is a look at the complex matrix of sensate experiences that a customer needs, not to be somewhat satisfied, but to become a brand advocate. Gartner at the end of 2004 issued a paper titled, How to Approach Customer Experience Management. SearchCRM noted in mid-January 2005 that “voice of the customer” departments—business units that are devoted to being customer advocates within a company—are reappearing. A number of key consulting firms are developing either separate customer experience practices or have incorporated CEM into their value propositions for 2005. This is no small thing. CEM will be an increasingly critical part of CRM by the middle of 2005 and perhaps will dwarf many other facets of CRM within a very few years.

All in all, take these for what they are worth. These trends and $4 (with the customer discount for preferred customers) will get you a part-skim, low-fat mocha latte. Sounds tasty, doesn’t it? This year should be.

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