"At the moment the public sector is very short of CRM experience," said Nick Hewson, managing director of Hewson Group.
The more experience you have with CRM, the more likely that systems will deliver, he added.
The report identified CRM as crucial to the UK's ongoing e-government agenda. Hewson said, "CRM is key to the success of e-government in the UK because the underlying philosophies of CRM - when applied to the private sector - are entirely germane to the public sector."
It lets you understand markets and customer behaviour more than a single channel point of service, he added.
Officials at Oxfordshire County Council, which is currently developing a CRM system to link electronic service delivery projects, agree that CRM is crucial to meeting the Government's 2005 target.
Ian Williams, network services manager at Oxfordshire, said, "If you aspire to know what your public want and if you aspire to deliver the right services to the right people, then proper CRM is essential."
A number of UK local authorities are already employing CRM to help meet the Government's 2005 target for getting services online. Last year Liverpool City Council announced a £6m CRM deal with Oracle to consolidate 220 IT systems and more than 500 databases.
The London Borough of Brent has also established a reputation for itself as a CRM trailblazer. Council IT staff have been working on the e-shop Pathfinder project to provide an affordable CRM option for local authorities.
Brent's scheme, which is being developed jointly with Onyx software, Deloitte & Touche and six other London authorities, is designed to provide low-cost, easy-to-install CRM for local government.