Cost Of
CRM
Let’s
understand Cost of CRM inside out. A new report has revealed that
customer relationship management applications can cost users in
excess of $10,000 ($6,900) per seat. The report alleges that the
majority of CRM implementations are failing to resolve the problems
they were designed to solve. Few, if any, users were found to be
seeing a return on their investment.
A study of 352
call centers worldwide discovered that 23% of respondents who had
deployed a CRM paid around $10,000 per seat. The research was
conducted by Merchants, the call centre outsourcing subsidiary of
Dimension Data. Martin Hill-Wilson, the director of CRM Europe at
Merchants, described the finding as "unbelievable" and speculated
that a return on investment was some way off. "If we have this
conversation in two years' time, we'll probably be able to see the
first groups claiming a return on investment," Hill-Wilson said.
"But the majority will only get to a point of proficiency in five
years due to this higher Cost of CRM."
Analysts and
industry watchers have been warning for some time that Cost of CRM
is much higher and these systems are too expensive and rarely
provide a return on investment. Research conducted by the analyst
group Gartner in 2001 claimed that 80% of all CRM projects in
Europe would fail by
2003.
Greg Gianforte,
the CEO and founder of the CRM entrant RightNow, was not surprised
by Merchant's findings. "CRM is notoriously expensive and hard to
implement," said Gianforte, who believes that £2,000 per seat is a
more realistic price. He also pointed out that the majority of CRM
vendors generate between 40% and 70% of their revenues from
professional services. "You buy the license, but you're less than
half way there then”.
With 23% of
respondents having deployed a CRM system, and a further 36%
intending to do so in the future, Hill-Wilson warned that
organizations should not treat CRM as purely a technology system,
but more as a business strategy. Due to increased Cost of CRM
organizations must be prepared to spend time and energy
personalizing the system and understanding the objectives they want
it to achieve.
Additionally,
when a company is considering a customer relationship management
system (CRM), one important factor is the cost of upgrading desktop
computers so they can run the CRM software. For companies running
Windows 98, the extra cost of using software-based CRM systems that
require Windows XP can be significant. So that directly adds to Cost
of CRM.
If you've
thought that your use of Windows 98 (or Windows 95) put you in the
minority, then think again. A new study on Windows 9X usage by
AssetMetrix shows Windows 9X usage at 39 percent — six times the
Windows XP usage at 6.6 percent. When it comes to running CRM on
Windows 98, it may be just be too expensive to buy CRM software
licenses — but a hosted CRM system that runs in Web browsers usually
has a lower total overall cost.
Undoubtedly,
anybody can get surprised at the 39 percent figure, but it does help
explain why hosted CRM vendors such as Salesforce.com, Upshot, and
Coravue are experiencing tremendous growth compared to the CRM
software vendors. Because they understand how to minimize Cost of
CRM to their customers.
There may be
additional factors that tip the balance toward the hosted CRM
vendors. For companies with field sales agents who are not
employees, the company may not be able to require those field
salespeople to upgrade their Windows 98 laptops to meet the
requirements of CRM software products.
So, if you've
wanted the benefits of CRM but wanted to avoid the cost of upgrading
the Windows 98 computers throughout your organization, take a look
at the major hosted CRM vendors for a low-cost solution that's easy
to implement to minimize the overall Cost of CRM at your
end.
