CRM Revival

While big bucks and 'big bang' CRM projects may not be seen again and the 'disaster' perceptions leave a tainted reputation, making the most of customer interactions still matter. Analytics, hosted services, midrange systems and better business intelligence reports contribute to new moves in the market. Stephen Withers reports

“A confluence of factors” is sparking renewed interest in CRM, according to Doug Farber, vice president marketing Asia Pacific at, but a new focus on IT spending to support growth is high on his list.

Bruce McCabe, technology analyst and principal, S2 Intelligence, echoes this sentiment, noting a recent trend away from ‘defensive IT’ -- restructuring, consolidation and other cost-effectiveness issues -- and towards outward-facing systems such as CRM.

Rob McGregor, country manager at Siebel Systems Australia and New Zealand, sees renewed vigour in this part of the IT market during the last year as executives develop a clearer idea of what they expect from CRM and set appropriate baselines and criteria for determining success.

One step at a time

Large CRM projects are disappearing in favour of an incremental approach, scaling out and up as positive results are achieved and reducing the associated risk. “The whole idea of the ‘big bang’ project has gone,” Farber says.

Adrian Tall, services director at Intentia Australia & New Zealand takes a similar view. “Organisations are now recognizing that you 'eat the CRM elephant bit by bit',” he says.

Yet Rod Bryan, partner and head of CRM Asia Pacific at IBM Business Consulting Services (“the largest CRM implementer in the marketplace”), sees different clients succeeding with large-scale and incremental approaches to CRM.

A good consultant can help organisations choose the appropriate path, he says.

An example of this progressive installation can be seen at AAPT.’s CRM system was initially adopted with around 15 seats in the division, and has now grown to more than 300 users across multiple lines of business within AAPT.

One danger of the incremental approach is the risk of creating silo implementations, warns Kerry Scotland, marketing director of systems integrator Integ Communications.

Sales, service, or both?

While Bryan’s opinion is that “Customer management strategies must incorporate service as a function of selling,” Archie Wilson, vice president Asia Pacific for FrontRange Solutions, thinks that CRM for sales and marketing purposes may be returning to favour after a period when interest waned following some “spectacular failures” and “measurable results [which] have been questionable.”

Bryan says CRM disasters “are a bit of an urban myth” and suggests some projects were judged failures because expectations were set too high, or because an organization was unable to change its processes to exploit the new system.

“Issues around CRM are about the business, not the technology.”

CRM aimed at the service and support side of the industry has been growing strongly for the last couple of years, and continues to do so, as there is a more compelling business case, Wilson says. It can be hard to convince sales staff to use new tools, but the service side is more process-driven.

‘Vanilla’ CRM isn’t an easy sell into a customer service operation, Wilson says, and FrontRange is overcoming such objections by pre-packaging ‘best practice’ models for a range of industries including insurance and consumer electronics. This has significantly increased uptake of the product, he says.

Going public

There is growing interest in CRM in the public sector, according to McGregor, seeking to emulate the success of CRM pioneers such as the finance and telecommunications industries. CRM allows agencies and non-government partnerships (such as in social welfare) to reduce costs and improve reporting and perceived service levels, he says. “That’s a market that’s emerged strongly -- locally and globally -- over the last couple of years.”

Helen Robinson, managing director of Pivotal, also notes public sector interest in CRM, but says “often our biggest challenge is getting over the hump of the old-school IT person that thinks it [CRM] has to be hard.”

Hosted solutions

CRM pricing has dropped, McCabe says, and hosted CRM providers are getting good traction in the Australian market. Both factors reduce the risk associated with CRM projects by reducing the investment required.

These lower costs are also opening CRM to smaller companies which were previously “segmented out” by vendors, Farber says.

Ross Dembecki, lead product manager, Microsoft Australia, agrees, pointing to a growing realisation among mid-range and small companies that they can now afford hosted or licensed CRM, although they are generally better served by vendors with strong partner networks rather than those that focus on direct sales.

Hosted CRM providers such as and RightNow are having an impact on the market beyond their customer base by providing competition for traditional CRM vendors, McCabe says. A recent research note from Meta Group analyst Steve Bonadio suggests the cost advantages of hosted CRM may be short term.

“When long-term costs are analyzed, hosted products approach an equivalent total cost of ownership (TCO) to that of on-premises products in about three years. After this time, a hosted TCO will exceed an on-premises TCO.”

Farber is understandably sceptical, questioning whether that comparison is based on a true TCO. He prefers to point to a recent Gartner opinion that “By 2006, about 25 percent of small and midsize businesses will conclude that an application service provider will have a role to play in their customer relationship management initiatives.”

McGregor argues that the main advantage of hosted CRM (including on-demand implementations of traditional CRM software such as Siebel’s) is not cost, but speed of implementation.

However, he says it is not an either-or decision, pointing to “a new generation of thinking about the value chain where you can mix and match these technologies.”

For example, banks may need a hybrid model to deal with mortgage customers whether they come direct or via a broker.

In some quarters, there is a feeling that hosted providers may be gaining business by default.

“The negative publicity that the ‘traditional’ CRM vendors received means that the mid-sized companies have an innate distrust of them which makes them more open to a new company and the concept of a hosted solution,” says Nigel Turner, marketing director at NetReturn.


An absence of analytics has been a major limitation to achieving the projected ROI from CRM, according to Tall, and a resurgent interest in this area is driving new deployments, McCabe says.

“That is going gangbusters,” he says. Organizations are getting “exceptionally good value out of analytics” and therefore from the CRM systems which collect and store the raw information about customers.

This is a vital change, McGregor says, as in the past some organizations have collected a lot of data in their CRM systems without gaining any insight or transforming it into knowledge at the point of interaction with the customer.


Opinions vary on the importance of integration. Tall sees it as central to CRM success: “Integrating these applications into other fulfilment processes, such as supply chain functions, enterprise management systems, and the like, is where the value comes in being able to deliver on promises and gain the full benefit from such deployments.”

McCabe warns against overstating the importance of integration, and sees it as an underlying trend, with Web services helping to reduce costs

Farber suggests the incremental approach extends to integration. Organisations start with a focus on sales and marketing, then link to their billing system, then the provisioning system, and so on. Addressing the priority areas first is a “more thoughtful, more returns-oriented” approach, he says.

Customers selecting stand-alone CRM systems generally specify a requirement for integration with ERP and accounting systems, something that modern CRM products do readily, says Wilson. Of increasing importance is integration with telephony systems. “We’re seeing a lot more interest in voice and data convergence,” he says, including regular and IP telephony.

The wider availability of integration tools and staff with integration experience means organisations are more confident of getting a business return from CRM, McGregor says.

What users say

Although Stephen Langsford, CEO of Quickflix, says “CRM was a much hyped new business application” when it first emerged, knowledge of individual customers is necessary in the context of e-business to provide holistic and meaningful engagement.

Quickflix’ delivered DVD rental business involves many interactions with customers including a large number of e-mails. CRM was needed to handle this process properly and allow the business to scale up. “It’s an absolutely key business application,” Langsford says.

Several years ago, he says, the CRM label was applied to complex and costly software. Now, managers understand CRM and they just want the software to do what they know it can, he says.

Quickflix chose Microsoft CRM because it integrates well with its .Net architecture (including B2B integration with suppliers and portals), and is well priced, can be implemented quickly, and provides a familiar interface.

“[CRM] is core to our business,” Langsford says, “It’s a real strategic weapon.”

Jon Satterley, managing director of Roadrunner Records Australia, recounts a couple of false starts to the company’s CRM journey. An early attempt using Tracker failed through lack of integration, and when Roadrunner later sought a custom solution “we got taken for a ride”, he says.

Two or three years on, “we came to CRM thinking we’d reached the end of the road of operating on gut feeling.”

Satterley wanted to sell more albums by using the information the company had accumulated from buyer response cards, reviews and radio and TV playlists. After talking to several companies, he selected FrontRange GoldMine, largely because it was readily customizable to meet Roadrunner’s need to micro-market to small niches -- the label specialises in hard rock and metal, and their sub-genres.

“You can get great sales if you talk to the market,” Satterley says. By using GoldMine to target the most likely buyers according to their expressed preferences, the company is able to sell 2500 copies of an album by a new and unknown band.

Roadrunner’s music doesn’t get a lot of airplay, so reaching customers via CRM is a vital part of getting the word out about fresh bands and new releases.

“CRM is about a corporation’s desire to have a genuine relationship with its customers,” says Klaus Bartosch, sales and marketing director at Hostworks.

Merely implementing technology does not teach you how to deal with customers, he adds, and the biggest barrier to CRM is a lack of corporate will to genuinely understand customers.

Hostworks uses across its management, delivery and sales teams: “I think it’s the best value product in the market that I’ve come across,” he says. Companies need a CRM product that is simple, sophisticated and customizable, and that can be delivered quickly.

An additional advantage of hosted or ASP systems is that they are potentially available anywhere. When visiting a customer in Asia for the first time, Bartosch was able to accessing via a wireless hotspot immediately prior to the appointment so he could go into the meeting fully briefed about any outstanding issues, the customer’s most recent contacts with Hostworks, and armed with information about key people on the customer’s staff.

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