Forward And Commentary
As with any maturing product category, CRM applications have evolved over time from point applications to best of breed solutions to end-to-end suites. This report examines some common styles of modernization as CRM emerges from the systems of transaction era to the systems of engagement era and beyond.
With the average CRM deployment nearing the end of their useful life, over 85 percent of line of business executives and CIOs intend to upgrade their CRM systems in the next 24 months. Why? Customer expectations and a slew of innovative solutions have changed the delivery of customer centricity. Key factors include the need to adopt disruptive technologies, complete the customer view, and achieve business value.
Constellation’s latest survey of over 200 CRM decision makers highlights a trend to consolidate the CRM core as organizations chart four paths to CRM modernization. The four paths – stay with status quo, move to shiny new CRM, consolidate and augment, and modernize and surround with best-of-breed – represent pragmatic approaches to achieve customer centricity.
Regardless of approach, Constellation recommends that executives approach CRM modernization with a lens that accounts for including tangibles, intangibles and contingencies in the calculations of business value. Using the Constellation Business Value Framework, organizations can quickly compare the four paths of CRM modernization and determine the most appropriate path.
B. Research Findings – Best Practices Indicate That a Consolidated Core Is the First Step to Modernization
Among 203 respondents, the majority (85.7 percent) intends to make significant efforts to modernize their CRM efforts in the next 24 months (see Figure 1.). The four paths to modernization include:
- Stay with status quo (14.3 percent). Organizations may choose to continue business as usual. The catalysts for change include major events such as new business models, merger and acquisition, or regulatory requirements. Status quo includes keeping the system as is. Most organizations in this category have either really good adoption or overbought and barely take advantage of existing capabilities. Backers of the status quo scenario find little business value justification and line of business support in making any changes. Many line of business executives and CIOs gain peace of mind knowing that their CRM landscape remains consolidated on one or two platforms and can deliver the power of an integrated core.
- Move to shiny new CRM (21.2 percent). Organizations may choose to stay with their existing vendor to avoid any mass changes in training, adoption and implementation costs. Another popular option will be to do a full out rip and replace. The financial wonks will weigh the cost of a reimplementation against the cost of doing nothing – status quo and making an upgrade with an existing vendor. CIO-led organizations will want the power of an integrated core and minimize point solutions.
- Consolidate CRM and augment with best-of-breed (37.9 percent). Organizations may choose to consolidate their CRM environment and surround with best-of-breed applications. SaaS applications and CRM point solutions now play a key role in enabling extensibility to CRM customers. Augmentation with third-party solutions with an integrated core not only ensures that business users gain critical functionality, but also provides users with leverage in future contract negotiations. With CMOs and line of business executives in the front office taking back IT budgets, expect CIOs to argue for consolidation of the core as a call for sanity in overall IT strategy.
- Upgrade CRM and surround with best-of-breed (26.6 percent). CRM deployments typically run a five to seven-year life cycle. With the last big set of implementations in the 2004 to 2005 era, almost 50 percent of organizations plan an upgrade. Many line of business executives want to upgrade their core CRM system and then modernize their integrated core by adding best-of-breed apps on top of CRM. This option resonates best with line-of-business-led organizations and those with rapidly changing business models and dynamic businesses.
Figure 1. Get To SCRM By Taking The Four Paths To CRM Optimization