New research reveals many corporates are unhappy with their
customer relationship management software, writes Daniel
Thomas.
Businesses will spend about £35m on CRM in 2005, according to
analysts' predictions, yet dissatisfaction with the software
remains high, new research from the consulting arm of IT services
firm EDS has revealed.
Improving customer relations is a key aim for the majority of
companies, but the lack of metrics to judge the effectiveness of
CRM packages and poor internal communications has meant European
businesses have made little progress with CRM, EDS Solutions
Consulting said.
The research, based on responses from 355 senior directors and
executives responsible for CRM in large organisations in 11
European countries, revealed that 33% of European companies are not
content with their CRM implementations.
This widespread dissatisfaction is partly because companies have
still not got to grips with how to measure the success of CRM
projects, the report said. Despite the increased need for rapid
return on investment on IT projects, 40% of companies still lack
CRM metrics.
"The report shows that there is widespread uncertainty about how to
establish a customer-centric business and that metrics are not in
place to measure [CRM's] effectiveness," said Mike Fitzgerald, head
of applied value chain services at EDS Solutions Consulting UK.
"The business case for CRM is there - 87% of respondents give a
high priority to customer relations - but actual progress in CRM at
the enterprise level is seriously lagging."
The majority of initial CRM implementations are "tactical fixes",
focusing on areas such as improving customer service or sales-force
automation. This has made it difficult to measure overall success,
Fitzgerald said.
"CRM has been largely tactical with lots of small projects but the
connectivity has not been there," he said. "Enterprise-level CRM is
where the real benefits are but linking all the systems together is
hard work."
The report revealed that communication between IT departments and
their boards on CRM projects is still poor. Even though 60% of
companies now have a designated head of CRM, performance reports
take at least six weeks to reach chief executives, it found, while
5% of chief executives never receive reports at all.
"We can only conclude that the board has yet to get a clear view of
its strategy and seriously grapples with the need for joined-up
thinking in the quest for successful enterprise CRM," said
Fitzgerald. ''The board needs to get a grip and use top-down
directives on what is expected of CRM."
Companies need a greater understanding of the true value of
customers, Fitzgerald said. "The report shows that companies
cherish their customers, while retaining unprofitable customers.
Companies have to ask themselves whether they measure the true
value of their customers and whether their systems provide them
with a basis to do so."
The report showed that companies do not manage CRM projects tightly
enough, make little effort to gauge return on investment on
projects, and fail to understand their customers and how to get the
most out of them.
"No wonder enterprise CRM has a long way to go before it can be
seen to be successful," said Fitzgerald.
Key findings of the CRM Report
- Some 33% of directors are not content with their CRM
systems
- Sixty one percent of directors do not know the projected return
on investment for their CRM programmes
- Only 59% of directors measure the effectiveness of their CRM
effort. Forty eight per cent measure customer lifetime
value
- Sixty per cent of organisations have a designated head of
CRM
- CRM initiatives targeting B2B outnumber those for B2C by 5%,
continuing a trend shown by previous reports
- Banks and telecoms companies give the highest priority to CRM
investment, while manufacturing and retail give it least priority.
Overall, just over 33% of respondents said CRM receives a high
priority in the competition for investment.
Source: EDS Solutions Consulting UK CRM Report
Leeds City Council's CRM success
While many in the private sector have struggled to exploit their
large CRM investments, some public sector organisations are showing
that it is possible to achieve major benefits by using the
software.
Leeds City Council this week revealed that it has significantly
improved customer service delivery and operational efficiency since
rolling out Siebel's suite of e-government applications in
2000.
The local authority is using the suite, which includes CRM,
Siebel Service, Partner Relationship Management and Employee
Relationship Management software, as the platform to support its
call centre, which receives 25,000 calls a week.
"We now have a single point of contact for citizens which can
handle a multitude of enquiries," said Elaine Wainwright, assistant
director for strategy and development at Leeds Council. "Our return
on investment measurements are not in terms of selling more, but
improving the service we offer to citizens, and Siebel is helping
us to do this."
The council is planning a number of initiatives based on the
Siebel platform, including improvements in social services,
environment and job training schemes, Wainwright said.
In addition, the authority is planning a major initiative to
improve the management of all incoming correspondence. "This is not
just about managing correspondence that comes in but tracking what
exactly our response and follow-ups are," she said. "It is not
necessarily about centralising management but giving us a holistic
view of what is going on."