Australian organizations are finally realizing the value of their unique information assets and learning to derive significant competitive advantage through their use of CRM.

Strip away all the nebulous mumbo jumbo about loving customers and most CRM projects can be boiled down to two essential elements: a company's vital information assets and the technology that is applied to those assets in order to gain some type of competitive advantage.

Despite all the warm talk about clients and customers, at the core of every CRM system sits a cold information asset - usually a database of facts and figures unique to every enterprise. CRM is all about applying technology to that information asset in a bid to change customer processes for the better.

In fact, many initial forays into CRM proved a little [ITAL] too [END ITAL] effective for the technology's own good. CRM earned a dirty reputation in Australia in the early days because many enterprises opted to use their new CRM systems to segment out less-profitable customers, leading to the disenfranchisement of thousands. The gradual withering of the number of Australia's rural banking services is but one of the most visible consequences of such moves.

Even CRM vendors are willing to concede that the technology didn't get off to a flying start in this country. According to StayinFront CTO Tony Bullen, who runs the US-based CRM company's software development efforts from NZ, "CRM got a bad rap in the media because of the shedding of customers out of big financial institutions."

"Once everybody heard about that, the label stuck. Segmenting your services and your customer base isn't necessarily what CRM is all about, but for a while you couldn't use the word in Australia because of the negative connotations," he says.

This year is shaping up to be another one of consolidation and conservative IT spending but, for a vendor, Bullen is remarkably unconcerned. "I just don't see 2006 being a slow year for CRM anywhere in the world," he says.

"It's a logical next step for companies to build on."

The way Bullen sees it, the high number of acquisitions and mergers in the CRM space, like as Oracle's purchase of Seibel back in September, is not some hazardous upheaval but rather the sign of a healthy market. "One of the reasons things like that are happening is because CRM is a key area for future IT," he says.

"It is something that people see as part of their overall long-term IT strategy. For a lot of organizations they've either held off on doing it or they've done it and gotten it wrong. I look at 2006 with a lot of optimism."

Given the numbers some CRM vendors are posting, it's not hard to understand why Bullen is so optimistic. Competitor Salesforce.com, which offers a hosted, subscription-based CRM service, increased its global revenue more than 80 percent in the first nine months of last year. Startups have also flooded the market with on-demand offerings, and every enterprise vendor has a strategy for countering Salesforce.com. SAP has announced an on-demand product which is due some time this year. Siebel is another story, however. Two years after launch, its on-demand service remains small, and finished last quarter with just over 44,000 users.

But when it comes to CRM, the US has never been the most reliable indicator of how things will happen in Australia. In terms of timing, Australia is still one of the strangest CRM markets in the world. A few years ago when CRM first appeared on the scene, the world was gearing up for Y2K, and many overseas companies used the millennium bug as an excuse to roll CRM into their plans for an enterprise-wide overhaul. In Australia, however, Y2K preparations were followed immediately by GST, leading to a lag in local companies undertaking large-scale CRM projects. But Moore's Law keeps kicking along, and thanks to today's computing power not only have many of CRM's past false-starts since been realized, but many Australian companies find it hard to imagine a future without them.