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I blogged about my views on the future of BI last month ( So, what is next in Business Intelligence ?). There was a lot of interest from SCN readers, and a great conversation took place as comments in the blog, as well as through emails and phone calls. This was a great learning experience for me.  CRM is another area I am very passionate about, and this time around I would like to present my thoughts on the future of CRM. 

 

1. No more generic CRM, enter “specific” CRM 

 

For very long, we have had vendors offering a “one size fits all” CRM solution, but very few solutions specific for various industries. Customers were expected to buy this suite and somehow customize it to work the way they wanted. Within SAP itself, there has been a handful of industry specific solutions in CRM space – like High tech channel management. I think customers will increase the pressure on vendors including SAP, to bring more and more industry specific solutions.

 

2. CRM will become a composition canvas

 

Do we need CRM to duplicate ERP functionality? Or would we rather have CRM provide value addition to things that ERP already does well?. Sales order is a good example. Is there good value in doing CRM sales orders, where you still need ERP integration for ATP etc – or is it better to expose ERP sales orders via CRM and then add value added stuff like account information, activity information etc to it from CRM side?. Evidently this plays nicely into the SOA theme too – customer information sits in several disparate systems, and the need for easier integration will increase. This in my mind should mean better XML like standards, and more usage of web services.

 

3. Less batch, more real time

 

Traditionally, CRM interacts with ERP and BI systems primarily in a batch mode. This means there is a delay in getting vital information about your customer to all parts of the organization. I myself have been in production issues where the CRM system had an updated shipping address for a customer ,where as ERP had an older address, and hence shipped a very large quantity of perishable goods to where it was not expected. I expect such interaction to become real time in both directions, with all systems taking advantage of data before it becomes stale.

 

4.Improved segmentation

 

It is costly to do direct marketing unless you know who exactly you are directing your campaign at. Most CRM solutions, including SAP, have some segmentation functionality built in. I think the focus on segmentation will increase manifold in near future and this will give marketing organizations better ROI and customer satisfaction. Householding type segmentation functionality should start becoming commonplace.

 

5. It will be all about ad-hoc

 

As it becomes harder and harder to pre-define what markets and customers have in mind, it will be harder for organizations to have pre-defined business processes and analytics. CRM of tomorrow should have features that support ad-hoc changes in everything from transactions, surveys, analytics etc. This should make CRM a posterchild for BPM.

 

6. Sophisticated  analytics will drive transactions and decisions, and personalize customer experience

 

Simple analytics exist today that uses historic information, but they provide only limited value. Organizations usually define measurements on percieved customer value like CVI (customer value index) today. The sophistication around this will increase – and other measurements like LTV (Life time value, a futuristic value that can tell you for example whether a customer who is not a big buyer now, might change to a high value prospect in future) could become common. Internet sellers already use propensity analytics to cross sell and upsell products and services( remember the “buyers of this book also bought these titles…”).  This should also become more widespread.

 

7. A solution that customer service and field staff can use with ease, and minimal training

 

Already, there is a lot of emphasis on CRM UIs. This will continue to evolve, and become more and more unified across all channels used to reach a customer. Not only that, it could also become a reality that interfaces to CRM systems work with natural language.

 

8. CRM and the cloud

 

As cloud becomes more and more popular, a lot more CRM apps are likely to go in to cloud models. However, there is a legal bottleneck. Data privacy laws are pretty different from country to country, and were probably written before clouds were such a big deal as it is today. So for near future, I don’t expect a lot of big companies to jump into cloud based CRM for fear of being dragged into court. Plus, there is the lock-in factor. Companies might fear getting stuck with something that may or not may not work. Most companies would probably take only baby steps in this direction in near  future, till the cloud model matures some more.

 

9. Social CRM

 

Companies will be dumb to not take notice of the likes of facebook, twitter and linkedin. However, this is an area that should be handled with extreme care as a backfire will hurt you real bad. Word of mouth publicity can work wonders in increasing your sales. However, if there is bad news about your products – it will spread faster too. Even if it is bad news, there is a case to be made that having a presence in social media to help get wind of it earlier, and hence have a prayer of countering it in time. And of course, Analytics is key to make good use of social media in sales and marketing. Last year, I thought that social CRM will take some thing like 10 years to go mainstream – but now I think we should see this happening in under three years or so.

 

So there you are – those are my takes on what is next for CRM. I am waiting eagerly to hear from all of you.

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11 Comments

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  1. Nelson Raj
    Kudos to Vijay once again for having put together this wonderful piece. For someone working closely with customers, it is nice for me to try and understand where the future lies.

    I could n’t help but agree more with the composition canvas point of view, because this came as a question that I could not find words to answer recently. Those from an ERP background cannot seem to comprehend what are the things CRM does differently if it duplicates a lot of the stuff that ERP already does so very beautifully. It does indeed make sense for CRM to focus on its strengths and minimise the duplication. And of course, middleware is still very capable of ensuring sleepless nights at projects!

    And I would be really interested to know about the Industry specific CRM solutions, as the competition does get hotter in this space, each year as each company gets gobbled up by an Oracle or a Microsoft.

    We also faced a stiff challenge from the cloud aspect as you rightly mentioned. We had a proposal to publish web BI reports and E-service through a common portal for our customers. Now, the solution from CRM was right there, but there was a “small” matter of getting through to the “Security Team”, who are hard to both, please and convince!

    CRM UI, known to be the chink in SAP’s armor, is getting better and better with each release. I’m not sure how or when we will be able to catch up with Salesforces or the Siebels, but so far, I would definitely say, we are getting there..

    Keep ’em coming!!

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  2. Arno Meyer
    Hello
    This is really a very interesting blog about the direction of CRM.
    It’s interesting to see your opinion about “CRM and the cloud” and “Social CRM”. These are interesting topics as people talk about this a lot, but in real life these are areas companies currently are doing at most some small steps.
    I’m still not sure, if “CRM and the cloud” will go “mainstream” at all.
    There are risks associated with this and I guess especially in times of this crisis many people have learned to minimize the risk of such dependencies.
    However you can see and feel the (auto)acceleration of these topics.
    Best regards
    Arno
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    1. Vijay Vijayasankar Post author
      Thanks Arno – glad you liked this blog.
      In addition to the risks we have called out,there is always a risk of over marketing from vendors too.  This could be a real turn off to customers .
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  3. Pankaj Giri
    I think industry specific CRM is better IDEA to compete and i will be looking for it.
    now the main problem with SAP CRM is, that we don’t find features on basis of which we convince our customer instead of going for other CRM vendor like Salesforce , Siebel or Microsoft.
    I guess CRM UI is a great landmark that SAP is achieving version by version(However PCUI gave a wrong message in  it ).
    But again, when let’s say ERP system used is BAAN or JD or any other vendor and customer wants to go for CRM, in that case how we can convince customer to go for SAP instead of other vendor.
    So if SAP can get a better solution for this, i think then we can compete in much better way.

    Regards
    PG

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    1. Vijay Vijayasankar Post author
      Good point,PG – historically, people have used upselling/cross selling to sell SAP CRM to existing SAP ERP customers. In general however, Industry specific CRM is in my mind the best SAP and other vendors can do to get a stronger client base.
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  4. Deepali Agarwal
    Hi Vijay,

    Another great piece from you! Thanks…

    I think that CRM Operational Reporting would be another area of growth in the coming years. The advantages it provides are realtime access to CRM data, user friendliness and options to customize/personalize report outputs (talking about SAP). Though BI has flexibility to customize reports and get data from different sources, but unlike CRM reporting, it lacks data currency, which as you mentioned, is the key to business decisions these days.

    And I believe with the new and upgraded CRM UI and integration of webservices and widgets, SAP is catching up with other CRM vendors like Siebel and Salesforce. So this, coupled with SAP’s proven ERP system, should be a great selling point to the customers.

    Regards,

    Deepali

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  5. Nice Blog Vijay.

    Thought of sharing some info on the work already done by SAP CRM. It would also be great if you and others have similar information to share.

    Regarding point 4, there is now a Adobe Flex based Marketing Segment builder available in CRM 7.0. It is a great tool.

    Regarding point 7, I’m really glad you put this point. Here I would like to highlight the CRM Via Email functionality available in CRM 7.0. This was a concept that I presented at TechED 2007 and is now a part of SAP CRM. It allows users to access SAP CRM using plain text emails and Adobe Forms.

    Keep blogging.

    Regards, Gaurav

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    1. Vijay Vijayasankar Post author
      Thanks for the information, Gaurav. Email/SMS/form based access to CRM is a great step forward for SAP. I strongly believe that greater and better possibilities to access CRM will continue to evolve, and thereby more and more users will start deriving value from CRM systems.
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    2. Vijay Vijayasankar Post author
      Thanks for the information, Gaurav. Email/SMS/form based access to CRM is a great step forward for SAP. I strongly believe that greater and better possibilities to access CRM will continue to evolve, and thereby more and more users will start deriving value from CRM systems.
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  6. Stephen Johannes
    Vijay,

    A few thoughts on each of your points in the article.  Each response corresponds to the topic number in the blog.

    1) Well I never thought CRM or SD were generic implementations.  I think the better term is that CRM will become more malleable.  How many SAP customers use CRM without adding in one user exit or custom field?  SAP really needs to acknowledge that the CRM package is “business process templates” and provide more templates to choose from.

    2) Definitely.

    3) Let’s wait till Hasso’s Plattner’s research becomes available to everyone. 

    4) See response #3

    5) See response #1

    6) Amen!

    7) See response #6

    8) I see the smaller companies using “public clouds” and the larger companies building internal clouds to maintain “control”.  Need a new SAP sandbox for a project, instead of having to buy hardware, etc, you’ll just request cloud space.  

    9) Social CRM definitely for B2C, not so sure how B2B will do.  There are some doubts about B2B and social CRM in the June issue of CRM magazine.  B2B will lag due to demographic issues.

    Take care,

    Stephen

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  7. Nanda Kumar
    Hi Vijay

    Nice update, personally may take is that Industry specific CRM along with  strong analytics and mobile(PDA) capabilities will drive this market..

    success of the CRM will be more determined by the analytics we can generate and the “intelligence” we can derive from it..

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