INSIGHT: CRM is fragmenting, but it’s a controversial topic

CRM purchasing is undergoing a sea change.

I see that companies are no longer purchase heavyweight, end-to-end CRM solutions that have had the reputation of being complex, expensive and hard to implement - even if they have great industry specific capabilities.

They intend to impede user productivity with a bloated set of capabilities that many users can't leverage.

A number of dynamics driving this change in purchasing behaviour:

CRM purchases are moving to the Cloud:

Companies are replacing legacy CRM with SaaS solutions at a higher rate than before. Cloud CRM has gained traction, as it provides lower upfront costs, better flexibility, and faster time-to-value compared with traditional on-premises applications.

It also shifts the burden of software maintenance to the vendor.

Cloud CRM extends the life of legacy CRM:

Modernising legacy CRM to support omni-channel customer journeys is a critical priority. Companies are using cloud CRM to complement and extend on-premises implementations.

Cloud CRM provides the systems of engagement, while legacy CRM provides business process support and data management capabilities.

Business owners lead CRM purchasing:

While CRM purchases were once the purview of technology management, business leaders now drive them. Business leaders are increasingly involved in selecting CRM technologies and focus on features like user interfaces that drive adoption within their organisation.

Technology management then vets solutions that the business leaders have identified and increasingly focuses on architecture and integration. This balances the need to mitigate risks and increase agility to maximise business value.

CRM purchases solve singular business problems:

Our data shows a different degree of vendor penetration in sales, marketing, and service organisations.

This is because companies no longer purchase CRM as a monolithic application to address the needs of sales, marketing, and customer service organisations, but rather they purchase it to solve a singular business problem, modernise existing applications, or serve as the foundational component of a business transformation initiative.

For example, the sales executive leads the charge to find a solution to support the needs of his mobile sales organisation without considering the needs of marketing or customer service.

These trends fragment CRM purchases as buyers look to select precisely the product and features that they need to meet their exact requirements — products that are often best-of-breed in their specific category. So, what does this mean to enterprises:

Leverage only the CRM components that you need:

Start by documenting the tasks and processes that each customer-facing role is responsible for. Leverage the technology required to support end-to-end needs - not necessarily full CRM.

Thoroughly research the integration capabilities of each point solution:

CRM technology vendors realise that firms increasingly leverage sales, marketing, and customer service applications separately.

These vendors are cognisant of the need for more open and packaged bidirectional integrations between core CRM applications and within the extended CRM ecosystem.

Expect vendors to offer prebuilt connectors and integration flows to common solutions and make integrations more open, for example, by making APIs more accessible to integration developers.

Assess the strengths of the CRM platform:

CRM vendors are developing underlying platforms that provide shared services, collaboration, unified experiences for all users (on all devices), and integration with enterprise applications and that allow for the development of rapid business applications that extend the power of core CRM applications.

Closely watch how these platforms evolve and whether they help solve some of the inherent issues that a fragmented ecosystem presents.

Watch for further consolidation in the market:

New entrants with mobile-first approaches, modern user interfaces, and innovative technology to extend the power of CRM appear every day.

Expect market consolidation and turmoil to occur as the large CRM vendors position themselves for greater growth opportunities.

By Kate Leggett - Research Analyst, Forrester Research