by Edward Prewitt

CRM Gains Ground as Management Tool

Sep 01, 20053 mins
CRM Systems

Customer relationship management (CRM) is gaining importance as a management tool among executives globally, according to a recent study by Bain & Co. Survey respondents ranked CRM second to strategic planning among 25 of the most popular management tools and techniques.

CRM was used by 75 percent of the 960 executives responding to the latest Bain “Management Tools & Trends” survey, a massive study tracking the usage of various management techniques over the past dozen years. That’s a sharp increase from the 35 percent usage reported in 2000—the first time Bain asked about CRM. The popularity of CRM reflects two trends, according to Bain: an increased focus on customers and better knowledge of how to do CRM right. Because CRM requires sophisticated software and massive amounts of data, companies take some time to learn how to succeed with the practice.

The 2005 edition includes global executives from a range of company sizes and industries. They rated their experience with 25 of the most popular (according to Bain) management tools and techniques, including both enterprise-spanning processes such as strategic planning and highly specific tools such as RFID tags. The executives also answered questions regarding their views of current management trends.

Strategic planning is the most widely used management tool, used by 79 percent of companies responding to the survey. That was also the top tool in the previous survey, conducted in 2002. But CRM displaced benchmarking as the number-two tool in the 2005 study. Other popular IT-intensive tools include supply-chain management, knowledge management, scenario and contingency planning, and Total Quality Management—all of which are used by more than half of the companies in the survey.

Using a management tool does not equate to satisfaction with it, however (see chart). For instance, more companies this year reported using knowledge management than in 2002, but KM ranked among the lowest when it came to executives’ satisfaction with it. Satisfaction with many other tools that have a large IT component increased sharply, however.

The 2005 “Management Tools & Trends” survey went on to ask executives about their general views of IT. Nine out of 10 executives agreed that “information technology can create significant competitive advantages,” with only 3 percent disagreeing. These findings were consistent among companies, regardless of size or region. Six out of 10 executives agreed that “our spending on information technology is completely aligned to our business strategy,” with 22 percent disagreeing. While that leaves a lot of room for improvement, Bain concludes that IT has come of age—finally.