The Evolution of CRM Applications

Customer relationship management (CRM) applications are one of the most active software arenas in the latter part of this decade. The Data Warehouse Institute recently published the results of a membership survey. Sixty percent of the IT managers and business users who responded indicated that their companies have or are planning to deploy a CRM solution.

Three converging trends have enabled the emergence of CRM applications as a major force in the marketplace. The first trend is the availability of robust, scalable decision support technology. Data warehouse software is helping companies collect vast quantities of data from multiple, heterogeneous sources, such as accounting, manufacturing, human resources, sales force automation, and customer service applications. This provides the technological foundation for building a consolidated, enterprisewide view of the customer, rather than a limited perspective offered by departmental applications. Data warehousing can also be used to deliver consistent information to any customer touch point, such as a Web site, e-mail, call center, or customer self-service application. Customers hate getting inconsistent information from different business units in the same organization. Data warehouse technology is also leveraged by analytical software, such as OLAP and data mining tools, which are extremely useful in analyzing customer relationships.

The second trend is the emergence of front-office applications. This software category has made it easier for companies to identify and track customers. Front-office applications tend to focus on the sales and the marketing departments, and are essentially transactional in nature. This limits their use in analysis -- something that is essential for complete customer understanding. Some vendors have recognized this limitation and are adding OLAP capabilities to their applications.

The third trend is the recognition that a new, individual customer-focused marketing model is needed to maintain a competitive advantage in the late 1990s. The emergence of the one-to-one marketing phenomenon has helped put a rationale in place for companies to have their marketing activities focus on the customer, rather than on their products, distributors, sales force or suppliers. One-to-one marketing helps drive an analysis of customer share, rather than market share. Customer share is the concept of increasing your share of the customer's business, enhancing their value to the organization and leveraging the investment the company made in courting the customer in the first place.

CRM is more than sales force automation (SFA), marketing automation or call center software, although it incorporates elements of all these applications. An enterprisewide CRM solution may include data mining functions to enable analysis of the attributes and behavior of large groups of customers or prospects. It also may include external data from sources that collect and maintain large databases of consumer profiles obtained from a variety of public and private sources.

Like most new technologies, this is a space that is changing rapidly. New vendors are popping up like mushrooms. Siebel Systems Inc. is an enterprise sales force automation market leader, and is now delivering analysis capabilities as well. SAP AG recognizes the need to add customer management features to R/3, but isn't shipping anything yet. E.piphany, Annuncio Software and Rubric focus on delivering marketing applications for CRM on the Internet.

So what should your company do about a CRM solution? The first thing to do is understand what products you need to implement such a solution. For example, if you work for a bank or other service establishment, you need to be concerned with defining the attributes of your best customers, with the goal of reducing churn and improving customer loyalty. Evaluate various products on the market, and look for scalability, industry expertise, and an open, customizable solution. Be sure to pick a platform that will scale up to support both the anticipated growth in data, as well the complex queries your users will want to execute. --Robert Craig is vice president of marketing at Web Engine Inc. (Burlington, Mass.), and a former director at the Hurwitz Group Inc. Contact him at rcraig@webengine-db.com or via the Web at www.webengine-db.com.