CIO — David Billings, senior vice president and CIO at Airborne Express, didn’t plan on skimping when he set out to replace the company’s 5-year-old sales-force automation system. But as he surveyed the vendors at the beginning of the project a year and a half ago, he realized that cost would play a part in the selection. Billings ended up with just what his Seattle-based company needed: a targeted sales-force automation package from Onyx Software, a midsize
CRM vendor, for $3 million?half of what he says he would have paid for a full CRM suite from a market leader. What’s more, Billings implemented the new sales-force automation package in only six months.
Until recently, the term customer relationship management was buzzing around every corporate executive’s suite as the IT panacea that could transform a company from laggard to trendsetter by boosting customer loyalty, sales figures and, ultimately, profits. Then the worrisome reports started to trickle in: Most CRM projects, dogged by poor planning and user resistance, were not producing measurable benefits. Costs were sky-high, with major corporations shelling out anywhere from $60 million to $90 million for large-scale CRM implementations. CIOs were clearly getting burned. (See "The Truth About CRM," at www.cio.com/printlinks.)
Then an interesting thing happened. The booming CRM market of yore started to exhibit signs of strain. Independent CRM software vendors showed a 15.7 percent drop in third-quarter revenues in 2001, according to Boston-based consultancy Aberdeen Group. And Stamford, Conn.-based Gartner predicts that CRM spending will remain flat in 2002 after falling 8 percent in 2001 (that’s compared with growth of 89 percent in 2000). Gartner does expect spending on CRM software to rebound by 10 percent?but not until 2003.
Sounds like companies are pulling the plug on their CRM projects. But that’s not the case. According to a recent CIO exclusive survey, "CRM: Are Companies Buying It?" companies such as Airborne Express have just learned to implement such projects in easy-to-take baby steps (64 percent) rather than in one scary giant step (only 36 percent). (Find the full survey results at www2.cio.com/research.)
As the economy officially dipped into recession and IT spending came under increased scrutiny, the scaled-down CRM project was seen to provide a quicker path to ROI. And the new trimmer version doesn’t have to break the bank to be successful. Like Billings, most CIOs are going with more targeted, incremental CRM investments. Others are taking the chance and patching different systems together when it saves money. And a few are turning to outsourced, hosted services that provide customer-facing technologies. All three strategies work to the same end: providing fast CRM relief with equally fast ROI.
