After the Fall: The Future of CRM

By Erika Morphy
CRMDaily.com
November 6, 2001

"Underlying technology must make customer information gathering a simple process, easily accessible by other vendors."

About six months ago, Denis Pombriant, research director of the Aberdeen Group, began pondering what would happen to CRM if the economy tanked.

At first glance, the answered appeared to be not all that earth-shattering. "The outside economy is one factor that would cause change in the CRM industry," Pombriant told CRMDaily.com. But only one. "After approximately ten years of success with this application, today's CRM industry is fostering change back onto itself. Companies' successes are leading them to go back to their vendors and ask, 'What else can you do for me?'"

Pombriant and his colleagues -- Aberdeen analyst Kent Allen and Harry Watkins, research director of Aberdeen's CRM practice -- began to explore these issues in greater depth. The result is a 180-plus-page report entitled "What's Next in CRM?" and set to be released next week.

New Niches, New Companies

Indeed, that is a question most people are asking, especially now as the economy slows. Retaining clients is always good, no matter what the economic environment, and is certainly cheaper than wooing new ones.

In a series of articles that will run over the next few weeks, CRMDaily will sound out consultants, analysts and vendors for their take on this issue.

From the beginning of Aberdeen's analysis, Pombriant said, "there was evidence that there are lots of new niches opening up in the CRM field -- and new companies opening those niches. We wanted to explore both."

One interesting conclusion is the role smaller CRM vendors are expected to play in the development of this industry. "I don't see the tech leadership coming out of the Oracles of the world in the future," Watkins said. "I see it coming from smaller companies."

Relationship Learning

More important is the new role that CRM vendors -- no matter their size -- and their clients will develop. "It will move from a transaction-oriented relationship to one that is mutually beneficial -- where information is freely available," Pombriant said. He called this a learning relationship, a termed first coined in the Harvard Business Review.

"In a transaction-oriented relationship, the vendor and the client do a deal -- the vendor gets paid and the client gets a widget," Pombriant explained. This relationship made sense when vendors could control product information in this space, and hence could control customers.

Those days are over -- and a good thing, too -- and a new dynamic is being created between vendor and client. Now, both parties share information and develop an equal relationship, to a point that whether a transaction takes place or not is almost beside the point.

Future CRM applications will be developed with these new relationships in mind, Pombriant said. Underlying technology must make customer information gathering a simple process, easily accessible by other vendors.

Modularity

Pombriant also focused on the ever-growing complexity of CRM systems and their use in companies. To succeed, vendors in this space will have to build applications on modular architecture, such as the Java paradigm and Microsoft .NET, he said.

"Using modular architecture will enable vendors to separate business processes, rules, data and core processing to allow end-users of these products to effect the kind of rapid change that is required," he said.

"Too often, right now, end-users face the choice of having to adopt best practices that have business methods embedded in them in order to get an application up and running," Pombriant said. "We think in doing that they sacrifice their uniqueness -- a uniqueness that is ultimately better supported by modularity."