Is your company now paying licence maintenance fees for CRM seats purchased but never used?
Come to think of it, how much is being spent on all types of unused software?
From hitting Gartner’s peak of expectations and sliding on into the trough, it’s been a tough couple of years for vendors of software intended to help organisations better retain, more efficiently deal with, and ultimately extract more profit out of customers. Revenue from new CRM licences worldwide was $US2.8 billion in 2002, down from $US3.7 billion in 2001, which in turn was 6.4 per cent lower than the $US3.95 billion reached in 2000, according to Gartner.
These financial trends reflect reports on software usage. Earlier this year Gartner claimed that of the CRM software licences bought in 2002, some 42 per cent were not used, representing $US1 billion dollars wasted. Causes included bulk selling of software licences along with bundled modules, leaving customers enticed by discounts, but landed with maintenance fees on unused software.
While now smaller (and possibly more rational), the CRM market hasn’t gone away. If more than half of the earlier investments are now deployed, a good portion of those projects must be paying off. Another study, by consultancy Bain & Co and as reported at CIO.com, has unearthed a growing usage of CRM tools (remember that Bain consults on many things IT, including strategy, customer and product management). Bain & Co surveyed 700 “corporate executives and managers” from 70 countries and found they used 16.1 tools in 2002, up from an average of 10.4 tools in 2000. With “tools” as much defined as management processes as any particular software, Bain ranked strategic planning as the number-one management tool. Sniffing the heels of the top dog were customer segmentation tools (fourth with 79 per cent usage), and customer relationship management tools moving up from 15th place in 2000 to seventh place in 2002 (with 79 per cent usage), the biggest mover of any top-25 tool.
Throw in market plays from Microsoft with its vertically oriented (specialised) and mid-market priced CRM tools, and the industry stalwarts rolling out similarly oriented and less monolithic offerings, and CRM will not be in the trough for ever. The logic of better and more profitable customer and client management is overwhelming.