Enterprise Software

CRM in 2001: Vendors must adapt to survive

This year CRM vendors are paying attention to their customers and creating solutions that are easier to use. Here is a look at how CRM vendors are adapting their products and going vertical to meet customer demand.


In 2000, the customer relationship management (CRM) industry saw an increase in the number of enterprise adoptions, software implementations, and technological advances.

So what’s in store for CRM in 2001? According to industry pundits, support for CRM within organizations will remain high and the demand for CRM will grow. However, those pundits also predict the market will cool and vendors will begin to jockey for market share.

In this article, three industry specialists give their predictions of CRM’s future in 2001 and beyond.

For more year 2001 predictions, read the TechRepublic article, “CRM in 2001: A bright but tight future.”

Pushing back
During 2000, CRM vendors offered solutions that guaranteed to meet client demands for a CRM solution that would capture a detailed picture of customer behavior. The barrage of applications promised to record, track, organize, and maintain any and all customer data.

Now, the sparkle of vendor promotions is diminishing as software users realize they may not want or even need to know everything about a customer. Based on feedback, vendors believe that clients are now telling them that it is more important to know that CRM works and that it works for each individual organization.
Software customers will create a demand for CRM solutions that are easier to use.
To reach this end, software customers are being very critical of CRM products and dictating how those products should be improved, according to Robert Kugel, an industry analyst with FAC/Equities.

“You’re getting increasing reports of dissatisfaction and backlash for at least a portion of the market,” Kugel said. “The backlash comes when [users] realize this stuff is pretty tough and not as straightforward as they thought. People are getting heat for it not being up and running, and they’re pushing back.”

CRM has always been an anomaly. The bottom line of CRM is to lower overhead and let organizations manage customer relationships, but CRM can be cumbersome and costly.

Vendors are taking a new direction in an effort to make solutions that are both economical and easier to implement.

Scott Simmer, an independent CRM consultant in Vancouver, British Columbia, Canada, said ease of use is a key component needed by CRM solutions. “I find that users of CRM solutions are very nontechnical. The more fluent you can make them in their day-to-day work, so much the better,” Simmer said.

Gartner, the leading business technology advisor, agrees. According to Gartner’s list of year 2001 predictions, “increasing customer expectations are driving the adoption of new channels, leading to poorly implemented multi-channel strategies. This is lowering both customer satisfaction and customer loyalty, and making CRM even more vital.” (TechRepublic is a subsidiary of Gartner.)

“The reason why this is happening is that very few companies actually thought this through,” said Kugel.

CRM is going vertical
Vendors are also responding to customer demands by finding special market niches for their products. In 2001, vendors will continue to develop vertical markets in areas like real-estate management, financial applications, and human resources. Some smaller CRM vendors will likely pull ahead in a segmented market.

However, vendors with applications already in these areas—such as PeopleSoft’s human recourse management applications—can hit the ground running.
Vendors will seek out vertical industries and market CRM solutions built to fit these areas.
Verticalization is a natural progression of the CRM space. “A lot of times when you’re inventing software, trying to get people interested in adopting it, you see who buys it. Then (vendors) start adding their vertical specialties in response to who has already bought it,” said Kugel.

This factor is the reason SAP is widely used by companies in the oil industry, Kugel said. One company implements a solution, another follows, and similar organizations begin to use what their counterparts are using.

“That’s the reason we find follow-the-leader a lot in these big packages,” said Kugel. “People are saying, ‘They’re a lot like me and they say it works for them for a specific purpose.’”

Vanilla: The solution of choice?
Competition between vendors for customers and vertical markets will be fierce in 2001, a factor that may reduce the variety of solutions available.

“I think there is a pressure (on vendors) to find a common ground,” said Simmer. “They are trying to compete with each other and are washing out their uniqueness. I would like them to feel confident in the way their product works as opposed to trying to strip it down and make it work like all the rest.”

Uniqueness in CRM solutions may wane as vendors vie for customers, but, as the market matures, customer demand will determine whether new solution sets are unique or vanilla.
What do you think CRM will bring in 2001? Let us know how the market will impact your CRM projects for 2001 by dropping us a line or posting a comment below.

Editor's Picks

Free Newsletters, In your Inbox