Customer Relationship Management And The Internet Challenge
Rapid growth of the market in both Europe and the US A White Paper on CRM enterprise jointly prepared by Cap Gemini Ernst & Young and IDC
11 September 2000
Conducted on the basis of in-depth interviews with 500 large European and US companies, this White Paper confirms that CRM solution implementations are rapidly moving ahead: the number of large European and US enterprises equipped with CRM solutions will double within the next two years. The development of the Internet will strongly contribute to CRM’s market growth as companies are going to increase their use of Internet technology for customer support and transactions.
Rapid growth of the CRM market in both Europe and the US
Current investments in, and the future sales pipeline of CRM solutions, will lead to a rapid increase in the adoption of these applications.
The number of CRM solution implementations is increasing rapidly. Large European and US companies are at various stages of investment in CRM solutions. Survey results show that 44% of the enterprises interviewed already have CRM programs in an operational or production phase, 33% are in a planing or implementation phase, and 23% are in a study or evaluation phase of the project. These results confirm that twice as many enterprises will use CRM within the next two years.
Progressive investments driven by a step by step approach
CRM initiatives show an extreme diversity in budgets invested and indicate that enterprises have adopted a step by step approach and are implementing CRM applications progressively.
Survey results reveal a wide variety of situations in terms of budgets invested in CRM projects. The investment scale is very large and covers budgets going from some hundreds of thousands of dollars to more than $10 million. Meanwhile, many CRM initiatives consist of small-scale project; survey results indicate that nearly two out of three of the annual budgets allocated to CRM programs are lower than $1 million.
The results suggest the situation of a market previously undergoing a phase of significant change in both Europe and the US.
The impact of the Internet on an enterprise’s current CRM vision
The current generation of CRM applications has helped companies gain better understanding of their customers via traditional selling and marketing channels. However, the popularity of the Internet presents a new set of challenges for companies trying to generate prospects and retain existing customers.
While Internet technologies are widely spread within enterprises, they are evolving more and more to integrate CRM functions. Survey results reveal that two our of three enterprises consider the Internet a key issue for a company’s CRM strategy: 40% of companies envisaged CRM applications in a new way, centred on the Internet while 27% declare that the Internet is driving the decision to start a CRM implementation. Thus, the move towards the integration of Internet technologies with CRM solutions is underway. By way of illustration, 56% of the enterprises surveyed have already integrated interactive customers’ support into their CRM strategy.
A CRM project integrates a number of different and complementary channels. Far from considering them as competitors, large European and US companies clearly perceive the complementarily of the Internet with call centres, points-of-sale and field sales forces. While the Internet decreases the costs of interaction, call centres and traditional channels enable more intimate relationships with customers. The association of different technologies optimises the quality of customer relationships. It also improves the capacity to answer customers’ requests in a personalised way and with a superior level of service.
Key success factors
Change management and the weight of legacy systems are the major challenges to the success of a CRM program. In this context, the challenge for a CRM project is to benefit from the support of top level company management in order for it to be perceived as a strategic initiative.
Change management and the integration of legacy data into the new work model are the most significant obstacles in starting and developing a CRM strategy. Clear definitions of strategy, employee resistance and size of budget are not perceived as major difficulties by most enterprises. This suggests that a CRM initiative should be more often perceived in long-term strategic terms rather than as a single project.
The challenge for a CRM project, therefore, is for it to be perceived as a strategic initiative and supported by the company’s top management of enterprise. Survey results show that top-level management plays the leading role in initiating a CRM project (46% of the projects).
“Customer Relationship Management and the Internet challenge is a White Paper jointly prepared by Cap Gemini Ernst & Young and IDC. Its main objective is to assess and measure the corporate awareness and strategies large accounts in Europe and the US regarding CRM, and to provide an understanding of the impact of the Internet opportunity on the enterprise’s current vision of CRM.
IDC surveyed over 700 large corporations in April and May 2000. In-depth interviews were carried out with 500 companies which had effectively engaged in a CRM project, whether at the planning, implementation or operational stage. Statistics and figures published in the report refer to these 500 companies only, including 300 in Western Europe (Benelux, France, Germany, Scandinavia, Spain, UK & Ireland), and 200 in the US.
The companies surveyed all have a minimum of 500 employees., and operate in high industry sectors: Life Sciences, High-tech, Banking, Automotive, Utilities, Retail, Insurance, and Telecommunications.
About IDC
IDC delivers dependable, high-impact insights and advice on the future of ebusiness, the Internet, and technology to help organisations make sound business decisions. IDC forecasts worldwide markets and trends and analyses business strategies, technologies, and vendors, using a combination of rigorous primary research and in-depth competitive analysis. IDC provides global research with local content through more than 500 analysts in 43 countries worldwide. IDC’s customers comprise the world’s leading IT suppliers, IT organisations, ebusiness companies, and the financial community. Additional information can be found at http://www.idc.com.
IDC is a division of IDG, the world’s leading IT media, research and exposition company.
About Cap Gemini Ernst & Young
Cap Gemini Ernst & Young is one of the largest management and IT consulting firms in the world. The company offers management and IT consulting services, systems integration, and technology development, design and outsourcing capabilities on a global scale to help traditional businesses and “dot companies” continue to implement growth strategies and leverage technology in the new economy. The organisation employs more than 55,000 people worldwide and reports global revenues of 7.7 billion Euros (1999 pro forma).
More information about individual service lines, offices and research is available at www.capgemini.com
