The State of CRM

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Few topics got more hype late in 2000 and early in 2001 than Customer Relationship Management. You remember CRM? It was to be the salvation of accounting software resellers looking for the next force to drive sales after Y2K passed. It was the next great acronym after ERP and before PSA.

It's not a great revelation to say CRM hasn't lived up to its promise, either for resellers or for many client companies. So it should not have been a big surprise recently when Meridien Research predicted that global spending on Customer Relationship Management would show no growth over 2001 levels. Just to give you Meridien's state of mind, the headline on the press release summarizing its report is "CRM Spending Hits a Wall." (But the report's longer headline is worth repeating: "CRM Spending Update: Hitting the Wall or Taking a Time-Out?")

Here's the basic conclusion of the research report: "Corporate CRM spending, influenced mostly by commercial banks, will remain at $3.0 billion in 2002, and is also not expected to grow significantly until 2004, as many institutions examine their ROI from less-than-successful CRM investments." The report focused on retail CRM installations, but also discussed corporate CRM trends.

Partner Insights

So what's going on? Also discussed in the Meridien report and obvious to most observers--it seems a major problem is a market that has too many vendors, pushing too much over-priced software to companies that cannot figure out a return on investment. (Or even figure out what this stuff does.) Well, you can easily figure out what will happen to any market with too many vendors--a lot of them will not be long-term players. Normal consolidation should take care of that problem.

The other part is stickier for mid-market resellers. CRM has not proved a natural fit for accounting software resellers. Talk to many of them and they report that while accounting software is sold to the finance department and controllers, sales departments purchase CRM. It is a different buying process and a different selling cycle. Given the consolidation among accounting software vendors, it's always seemed that diversification is a good idea for VARs. But it's not going to happen overnight.

Most accounting software vendors chose not to write their own CRM packages and turned to partnering or purchasing to bring the package on board. In this area, Great Plains, which teamed up with Siebel Systems, missed the boat in offering something that is just too pricey and too complex for the customers who buy its Dynamics packages.

Best Software, which under its parent Sage acquired Interact Commerce, the company that markets SalesLogix, clearly made the better pick in terms of a fit for its market.

Still, don't look for 2002 to be the year that CRM bails out mid-market ERP vendors and their channels. We're in a building stage for 2003, or even 2004. It will take time for resellers to develop the skills and hire the staff needed to make CRM the hit it might still be.

What the Advisors Are Saying
After a year in which the technology market fell from favor as a decade-long growth area, firms still need to figure out where computers and software are taking their businesses.

Accounting Technology asked several practitioners who provide advice to accounting, consulting, and reselling firms about the major technology needs and trends for the next year. Their views are outlined in the "Advisor Outlook."

One need for 2002 is clearly disaster planning. After September 11, everyone should have disaster planning in mind. Staff Writer Carly Lombardo examines what is being done in this field.

Things are also different from a year ago when vendors were touting human resource packages as essential to identify and reward employees in a tight job market. Senior Editor Richard McCausland looks at how HR software vendors are focusing to accommodate a different economic climate.

McCausland also visits online financial planning. Can vendor Web sites serve as all-in-one tools that address needs previously met by a fragmented technology approach?

Speaking of online, is it THE way to go for payroll processing? Barry Knaster reviews some of the leading packages that are placing their bets on the Internet as a natural place for payroll.

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