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Creating a Connection in a New Way

CRM as a business strategy optimizes revenue and profitability while promoting customer satisfaction and loyalty. Its forte of identifying and managing customer relationships is increasingly being explored.

CRM applications remain at the core of customer experience and customer-handling digital-transformation efforts. The transformation process is far from over, with true cognitive, AI and Internet of Things (IoT) support through these systems in the next wave of purchase cycles. Organizations are looking for business partners and technology that will enable them to build that future framework now.

An IDC study examines the vendor revenue performance in the CRM applications global market for 2016. The CRM applications market grew an outstanding 10.1 percent in 2016 to reach USD 32.9 billion in revenue.

The industry is led by big five companies, Salesforce.com, Microsoft, SAP, Oracle, and Adobe (SugarCRM and IBM are close contenders for the number 5 position). Despite acquisitions, the top five vendors represented 41.4 percent of the total market, showing an expanding, not consolidating market.

It is also marked by frequent mergers and acquisitions of smaller firms by well-established firms. An important characteristic of the industry is the growing popularity of niche players that cater to specific industries across different verticals.

Salesforce remains the clear front runner in 2016, which is attributed to the cloud-delivered product suites of the company that offer elemental functionalities to benefit large and small enterprises alike. It is the market share leader in sales applications, customer service applications, and for the first time, marketing applications. Due to the relatively unimpressive results from the other challengers, it seems the vendor will remain at the top this year as well. In 2016 it increased its market share by more percentage points than the rest of the top 10 vendors combined.

To make matters worse for SAP and Oracle, the industry trend of CRM as a Software-as-a-Service (SaaS) achieved the tipping point in 2015, whereby SaaS CRM revenues surpassed that of on-premise revenues. As a result, SAP and Oracle are expected to see continuing problems. Microsoft CRM, which does offer a SaaS version could become the industry number 2 in a few years under the current trajectory.

While CRM software market growth continues its low double-digit evolution, how that growth is being allocated among CRM software vendors is incurring steady change. Salesforce continues to lead the pack, and its pace suggests it is poised to widen the gap. CRM vendors other than the big 4 are gaining ground, suggesting the CRM market is becoming less top heavy.

The Indian Market

The Indian large enterprises have been early adopters of technology and rightly so. In addition to large enterprises, medium enterprises are now fast adopting CRM and it is expected that at least 60 percent of mid-sized businesses across services industry and 25 percent of mid-sized product enterprises will have invested in CRM by this year. Also, SMB is catching up with almost 25 percent adoption rate in services industry.

For the SMEs adopting CRM, the reasons cited include the need for streamlining and managing the processes in a better manner. Strengthening the customer relationship, push from the customer, and customer retention especially among the finance and logistics verticals are some of the primary drivers for CRM adoption among the Indian SMEs. Majority of the nonusers cited that they do not need CRM solutions as they are self-sufficient in managing their relationships on e-mails/mail clients, spreadsheets, etc.

The CRM market in India is estimated at Rs 2630 crores in 2016 and forecastes to grow at a CAGR of 20.9 percent over 2014–2019. Gartner observes that the ROI on CRM software solutions has been more than 600 percent. Pure play vendors in the market recorded strong revenue growth as midsize and large organizations sought to build out digital market and customer experience. Digital marketers have mainly focused on video, mobile, and social media channels and are now set to unfold to bring new CRM trends.

In terms of demographic spread, while the Tier-I cities have a significant share of the CRM market, tier-II cities are now emerging as the destinations for CRM providers to sell their solutions.

It is expected that there will be a tremendous increase in the popularity of mobile CRM. By 2017, at least 75 percent of the sales people will access sales applications exclusively through smartphones or tablets. Hence, CRM vendors are pushing advantageous applications that work on smartphones or tablets and are more user-friendly. It helps the marketers in making decisions without losing much time.

Social CRM is expected to become the next most sought after functionality in the industry after cloud-based SaaS delivery owing to the changing dynamics. With the proliferation of technology in the industry, mobile CRM, automated customer conversations, and robotic process automation would shape the future of the industry. The integration of CRM suites with intelligent agents to mine the unstructured contact data in discussions, connections, and potential customers is the prime focus of companies, which are directing the development of products of solution vendors.

The industry is expected to witness an ongoing tussle between large and traditional vendors and the new emerging solution vendors. The CRM ecosystem would also be affected by the convergence of different platforms and the streamlining of routine tasks will gain priority.

Cloud-based solutions have become the norm in the industry, which can be attributed to the increasing demand for solutions that help the sales and marketing teams on the go. The demand for SaaS is fueled by large and small enterprises alike as it provides numerous benefits such as cost flexibility, mobility, and almost no hardware cost. Concerns regarding security and privacy are the major hindrances observed in cloud deployment; however, as these concerns are being tackled, the cloud adoption is set to increase even further in the coming years.

Why CRM also Fails

Among the five biggest types of business applications, CRM software has the highest failure rate, by a landslide. Analyst firms report that 30–50 percent of all CRM deployments fail to achieve their objectives or fail outright.

Research also shows the larger the effort the more likely the failure. Given that CRM is a 23-year-old industry, and these CRM implementation failure reports continue to repeat themselves year after year, the statistics are cause for some much needed risk analysis and mitigating measures. Some of the top causes of CRM failures are often a lack of clear and measurable goal, poor CRM strategy, scope creep, resistance to change by the user, and poor business process design. Missing, inactive, or inadequate executive sponsorship; lack of systemic, predictable project execution; and lack of continuous process improvement are the other major causes.

The overarching strategy to prevent these recurring CRM failures is risk management. Every CRM project brings with it a certain amount of risk, and every failed CRM project incurred a risk that was either not recognized or not addressed. Risk management is the process of identifying, measuring, and prioritizing risks; implementing strategies to manage them; and creating plans to prevent, mitigate, or respond to high-likelihood and/or high-impact risks which threaten project objectives.

While it is impossible to eliminate all risk or anticipate all the challenges that may occur during a CRM software implementation, risk management is the best tool available to reduce the likelihood that big problems will occur, and that concerns can be dealt with before they become a crisis.

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