Those on the receiving end of CRM systems, however, may breathe a sigh of relief. Anyone who has suffered at the hands of, for example, telecoms firms that rely on automated CRM systems that cannot even answer the phone let alone communicate properly, will wonder how CRM managed to gain a foothold at companies at all. It often seems that many of these systems are based on the assumption that the customer is always wrong, especially if customers step one inch outside the bounds of an on-screen script.
Niche markets
One of the problems with CRM systems, as outlined by Gartner analyst Ed Thompson, is that many come from software vendors that want to sell applications as off-the-shelf products. Speaking at Gartner's recent European Symposium, Thompson suggested that there are several hundred companies in Europe that call themselves CRM suppliers, but only about 200 of them actually justify the term. By 2003, he estimated only 50 of them will still be in business.
Most of those 50 will be in niche market sectors, specialising in delivering the functionality that well-defined vertical markets require, said Thompson. He argued that few of them would sell broadly-based CRM applications of the Siebel variety.
Thompson said the current problem is that users may think they want a generic CRM solution, but in practice their requirements always end up being specific to their individual business practices and marketplaces. No single supplier comes close to providing such diversity of functionality in a single, generic CRM package, he said.
Thompson added that as a result, most CRM vendors will disappear, either by going out of business or through the process of merger and acquisition.
Gartner research director Andy Kyte said this pattern will reflect a wider trend he sees in the way firms spend money on IT. He said much of their spending will be outside the traditional IT back office, and a good part of it will probably be spent outside of the IT service departments of firms.
Kyte predicted that more money will go to the suppliers of outsourced services. This presumably means the application service providers (ASPs) hosting software online, though Gartner predicts that ASPs will also decline in numbers over the next four years. Gartner's head of European research, Peter Sondergaard, has predicted that 80 percent of existing ASPs will be gone by 2004.
Another market research company, AMR Research, takes a completely different tack, suggesting that the CRM market will grow, as vendors transfer their attentions from the now flattened enterprise resource planning (ERP) market. AMR predicts that CRM applications will account for some 26 percent of worldwide corporate applications software sales by 2004, or nearly US$21bn.
