The high cost of CRM

A new report has revealed that customer relationship management applications can cost users in excess of $10,000 ($6,900) per...

A new report has revealed that customer relationship management applications can cost users in excess of $10,000 ($6,900) per seat.

The report alleges that the majority of CRM implementations are failing to resolve the problems they were designed to solve. Few, if any, users were found to be seeing a return on their investment.

A study of 352 call centres worldwide discovered that 23% of respondents who had deployed a CRM paid around $10,000 per seat. The research was conducted by Merchants, the call centre outsourcing subsidiary of Dimension Data.

Martin Hill-Wilson, the director of CRM Europe at Merchants, described the finding as "unbelievable" and speculated that a return on investment was some way off.

"If we have this conversation in two years' time, we'll probably be able to see the first groups claiming a return on investment," Hill-Wilson said. "But the majority will only get to a point of proficiency in five years."

Analysts and industry watchers have been warning for some time that CRM systems are too expensive and rarely provide a return on investment. Recent research conducted by the analyst group Gartner claimed that 80% of all CRM projects in Europe would fail by 2003.

Hill-Wilson concurred with this view. "I agree 100%," he said. "If you look back in time, all three-letter acronyms go the same way. ERP and SCM are just two examples."

Greg Gianforte, the CEO and founder of the CRM entrant RightNow, was not surprised by Merchant's findings. "CRM is notoriously expensive and hard to implement," said Gianforte, who believes that £2,000 per seat is a more realistic price.

Gianforte also pointed out that the majority of CRM vendors generate between 40% and 70% of their revenues from professional services. "You buy the licence, but you're less than half way there then," he explained.

With 23% of respondents having deployed a CRM system, and a further 36% intending to do so in the future, Hill-Wilson warned that organisations should not treat CRM as purely a technology system, but more as a business strategy.

Organisations must be prepared to spend time and energy personalising the system and understanding the objectives they want it to achieve, he said.

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