CRM goes vertical in search of growth

The customer relationship management (CRM) market is set to boom from its recent trough in 2004, with an increased focus on industry-specific CRM applications and a greater focus on managing customer data, say analysts.

Forrester Research says the CRM market will be driven largely by business growth efforts, and predicts a "breakout" year for CRM adoption by mid-size businesses. Gartner Dataquest says the market bottomed out in 2002, and CRM applications will generate revenues of $2.4 billion worldwide this year.

The move towards providing so-called "vertical" industry functionality has been a significant change in the CRM market. A vertical CRM product is designed with the requirements of a specific set of business users and a specific industry in mind. The focus is on the customer acquisition and fulfilment scenarios that are unique to particular industries.

Delivering vertical CRM capabilities means the customer no longer has to bear the costs normally associated with modifying the package. Implementation and training times are slashed, and budget-conscious organisations are able to maximise their return on their technology investment, says SAP Africa's Simon Carpenter.

"As CRM applications markets mature, we've seen the vendors drive further and deeper into industry-specific application offerings to differentiate their products," says Carpenter.

"Companies are frustrated with applications that expect them to conform to the software, rather than having the software conform to the way their business works. The good news is that one of the major strategy changes occurring in the industry is the move toward vertical CRM applications," says Carpenter. SAP builds on this by ensuring that vertical CRM functionality is fully integrated with its industry-specific ERP, SCM and business intelligence so that it can support the complete CRM business cycle.

This movement towards vertical CRM applications is significant for several reasons. Most importantly, it adds immediate and tangible value to users in the form of best-practice-based functionality that they can recognise and use immediately.

The need for tailoring the CRM application to the needs of the business is reduced, which in turn reduces both the cost and the complexity of the implementation process. The bottom line? The payback period on a CRM investment is shortened, and the ROI is increased.

This is a key factor in the move by the small and mid-size business market segment towards CRM investments.

"Small and mid-sized companies in an increasing number of industry segments require a higher level of e-business sophistication to succeed in today's competitive business environment," says Kris Tokarzewski, CRM subject matter expert at SAP. "Solutions with pre-packaged vertical functionality can help SMBs quickly and efficiently ramp up to world-class capabilities, without the need for customisation or prolonged and costly implementation."

mySAP CRM 4.0, SAP's recently released CRM offering, is a key element of SAP's drive to grab a bigger slice of this market. It is an end-to-end suite targeting 23 verticals, including automotive, consumer goods, hi-tech, professional services, retail and telecommunications.

SAP's new suite uses the company's NetWeaver technology platform to enable multichannel interaction through a collaborative services architecture, improving analytics, marketing, sales and service functionality. In addition, mySAP CRM's channel management capability is designed to let partners manage their end customers and give organisations full integration and visibility into the demand chain.