Many areas of IT have been affected by the recent economic downturn. However, one segment not yet feeling the slowing economy’s full sting is customer relationship management (CRM), especially in small- to medium-size enterprises (SMEs).

Gartner analyst Joe Outlaw agrees: “For midsize companies, I haven’t seen much pullback yet in CRM plans, and if there is a little, I think it will be temporary.” Outlaw spoke recently at Gartner’s CRM Summit Spring 2001 in Chicago. (TechRepublic is a subsidiary of Gartner.)

Recent statistics bolster Outlaw’s claim: According to an IT budget study by Morgan Stanley Dean Witter, customer service applications, network applications, and e-commerce initiatives are areas least likely to see budget cuts at their organizations. Networking aside, the survey suggests CRM will continue to hold a place in IT budgets.

Fast, phased implementations reduce risk
But despite its importance in the enterprise, CRM poses a risk of becoming expensive and time-consuming to implement.

Outlaw said organizations could remove implementation risks by running integrated solutions quickly and in stages. Outlaw advised organizations to develop an overall CRM strategy, starting, for example, with an application for the sales team followed by one for the customer service group.

Following a CRM strategy forces an organization to plan how CRM will be used, whereas implementing point solutions—deploying separate applications for various departments—only solves organizational problems when they arise.

According to Outlaw, phasing in implementations, as part of a larger strategy, can provide a quick return on investment (ROI) for CRM initiatives. Staged implementations also give organizations time to adjust to applications. “If you have a two-month implementation, how far out of control can it get?” Outlaw asked. “You haven’t spent a lot of money, and it’s not like you’ve got a vast number of people involved.”

Response from the vendors
Outlaw also argued that CRM vendors are changing the way they target small- to medium-size enterprises by rolling out faster, proven software. We recently interviewed Outlaw about changes in the vendor market:

TechRepublic: Are vendors changing they way they market to SMEs?
Outlaw: There is more of an emphasis on quick implementations. PeopleSoft and SalesLogix have quick processes for SMEs. They realize that one of the values is to get something in quickly. I think, historically, that SME implementations have been shorter than larger [enterprise implementations], but it seems to me that they’re competing more on how quickly and how cost-effective these things can be.

TechRepublic: Should SMEs concentrate on suite or best-of-breed solutions?
Outlaw: We think that in the large enterprises, best-of-breed approach is still the best advice for them to follow. But in the midmarket, there are plenty of well-integrated and well-balanced suites of solutions.

TechRepublic: Any new CRM trends coming from CRM vendors?
Outlaw: An emerging trend is vertical specialization, vertical options. For example, if you’re in the financial services business, then you want to get a product that is already partly customized for your business and that gets you to your eventual solution faster and cheaper. These kinds of vertical solutions have been available for larger enterprises for a while. What you want to do in CRM is tailor the product very closely to the way you do business.

What do you think?

Are you an SME that is looking for CRM solutions? Which ones are you considering? Tell us which ones and why they work for your organization.