Time for the CRM faint hearts to leave the stage

Eugene Lacey: The market for CRM software is "not there" says Tom Siebel. Recent Morgan Stanley research appears to agree with him.

Tom Siebel has a knack for delivering the lurid quote or sound bite. Two weeks ago in New York he raised eyebrows at the CRM Conference by asserting "There's no market for CRM. It's not there."

"Does he mean us?" must have been the thought running through many a Siebel employee listening to the keynote. They didn't have to wait long for an answer. No, he clearly didn't mean the company that carries his name. When Web services rule, Siebel's out-of-the-box e-business solutions, tailored to the needs of specific industries, will have a strong appeal, he argued.

The future is in automating business processes and coding in 'best practice' approaches, says Siebel, banging the drum for Web services and yet steadfastly refusing to get off the fence on the J2EE versus .Net debate. "We'll support them all" he says.

All well and good -- pretty much the standard Siebel sales pitch from a man who, more than any other, can claim to have created the category and therefore commands the attention of all those interested in CRM's future.

The problem is that the message isn't getting through to a key audience -- the chief information officers of large organisations. A recent Morgan Stanley survey into the views of this group found: "20 percent thought CRM is useful, but not a high priority at the moment" and another 20 percent noted they were unsure about the potential return on investment. Twenty-nine percent said they either didn't need CRM or were sceptical about it.

According to the survey, firms would rather spend scarce IT development funds on integrating applications and buying security software. Neither Siebel nor anybody else in the CRM business should be panicked by these findings. The 9/11 factor is behind a good deal of increased spending on security. It is almost impossible to say how long anxiety over security will run -- though equally firms will reach a level of best practice in security beyond which there is unlikely to be commercial or competitive advantage.

CRM, on the other hand, remains by definition a customer-facing technology and is therefore much closer to the bottom line performance of organisations than security. There is enormous potential for boosting competitive advantage by improving customer relationships.

The Morgan Stanley research fails to explain that application integration is often a precursor to a CRM project -- and may even be budgeted as a component of the same project. This is because many chief technology officers prefer to bring some order and consistency to business processes and applications before introducing a CRM 'front end'. What Morgan Stanley and Tom Siebel's own cautious words describe is a market for CRM technologies that needs much greater accountability.

These are tough times for the CRM business. Budgets are squeezed everywhere and all business expenditure is expected to pay back in as short a time as possible.

The faint hearts will now leave the stage, and that will be a good thing. CRM's status as e-business flavour of the month has not helped it one iota. It has just upped everybody's expectations to unrealistic levels. CRM software is not a universal cure for business ills born of bad customer experiences. Never was, never will be.

Tom Siebel is probably right that Web services represent a massive opportunity for improving customer service. But only if consumers are prepared to accept more electronic channels. Acceptance will take time -- and will depend on a high quality, highly personalised service being made available. As consumers we have a simple choice to make ourselves. What would we have the companies that we buy goods and services from spend most money on -- improved customer relationship tools that are aimed squarely at me, or application integration projects aimed mainly at internal efficiencies? Surely no contest for most people.

No market for CRM? As a consumer alone, let's hope this is one headline-grabbing Siebel sound bite that turns out to be 100 percent wrong.

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