CRM at the crossroads

The good news is, it’s February! OK, that may not seem like much, but think of it: This means you’ve survived the Big Holiday Shopping Season (such as it was), New Year’s Eve, and the entire month of January. And now, here we are, poised on the precipice of our shortest month, yet one that manages to hold the birthdays of two of the presidents whose faces grace our currency.

Which brings us to the topic that I know is now foremost in everyone’s mind: What’s up with customer relationship management technology? To find out, I gathered together (though not in the same room, of course) some of the most prominent CRM experts, and asked them all the same question: “What’s new in CRM?” After they pondered this with all due diligence, the answer that came back forcefully, decisively, and nearly unanimously was: “Absolutely nothing.” That’s when I started to think February was going to be a long month after all.


Bill Chambers, principal analyst with Doculabs, was blunt: “I haven’t seen anything I would classify as ‘new CRM technologies.’” Aberdeen Group’s Denis Pombriant was even more blunt: “2002 wasn’t a banner year for new anything.” Gary Lemke, president of RealMarket, was especially blunt: “2002 was a year in which vendors did not focus on new stuff.” Bluntest — and briefest — of all was Yankee Group’s Sheryl Kingstone: “Nothing new.”

Aberdeen’s Pombriant points out that “the flip side is that economic downturns are the time when innovators get busy building the new new thing. It shouldn’t be surprising that when smart people get laid off, they open their garages to innovation. That said, it wasn’t a big year for innovation, but 2003 probably will be.”

Not everyone agrees with this rather empty assessment of CRM. Sheila McGee-Smith, president of McGee-Smith Analytics, actually notes some extremely interesting developments in natural language speech recognition technology. “In a year when companies are facing the watchful eye of the CFO in order to get project funding,” says McGee-Smith, “speech recognition stands out as a leader in delivering ROI.” One notable company in this area, she says, is SkyFlow Inc., which offers order status, delivery status, product information, and store locator applications. McGee-Smith describes Skyflow’s operation as similar to that of an application services provider: “They charge enterprises on a per-transaction basis for large-scale speech recognition applications.”

In a similar self-service vein, natural-language-understanding technologies — as opposed to simple recognition — are, according to McGee-Smith, emerging from companies like Discern Communications and NativeMinds. These technologies are designed to improve self-service on the Web by providing an understanding of customers’ questions, and giving customers access to a deeper level of knowledge-base information.

“Self-service has long provided the promise of reducing costly customer interaction involving CSRs, while delivering greater satisfaction by helping customers help themselves,” says Yankee Group’s Kingstone. Yet many approaches to self-service, both over the phone and on the Web, have been clumsy and have left customers frustrated and quickly reaching to dial up a live person instead.

RealMarket’s Lemke agrees that self-service is one area of CRM technology that has shown “traction,” but he believes that most companies are now concentrating their self-service efforts in specific areas, rather than trying to force people to help themselves. In fact, “there are those that are now encouraging direct contact with a real person,” he says, “especially in high-value situations.”


“In my research,” says AMR Research’s Lindsey Sodano, “analytical CRM has been the name of the game.” Early in 2002 Sodano interviewed companies that were upgrading to Siebel’s new Web-based system “because of new functionality in areas such as analytics. Later in the year, I found that basically the only companies who were able to report any quantifiable benefits out of using CRM systems were those using analytics for sales or marketing, especially those who used E.piphany.”

Doculabs’ Chambers agrees that expanded use of analytics has been the major CRM trend of the past year, “particularly real-time analytics to capture and analyze customer interaction information from multiple channels.” Chambers points to vendors such as Siebel, PeopleSoft, E.piphany, SAS, and Pivotal as examples.

Lemke concurs that analytics have been an important trend. “People aren’t sure what they should be doing right now,” he contends, “so they are turning more toward CRM analytics as a decision support tool to help develop future strategies and plans.” According to Lemke, most vendors are looking to make more investments in the analytics area. Still, in a November 2002 Gartner Inc. report, analysts Michael Maoz and Esteban Kolsky are decidedly downbeat about analytics. “Enterprises are drowning in customer information,” they write, “but a lack of effective metrics and accompanying processes will prevent them from making informed, real-time decisions.”


Several CRM experts see an emphasis on architecture as a significant trend. Yankee Group’s Kingstone says that component architectures have drawn interest, though they “don’t sell the deal.” The more open, Internet-based architectures trumpeted by PeopleSoft, Siebel, Kana, and E.piphany, says Kingstone, “point to a future where CRM applications realize the promise of modularity that is currently only hinted at.” However, the short-term reality, Kingstone observes, is that with architectural changes comes a period of transition — “and many enterprises are holding off on migrating to the latest and greatest from most vendors until reliability and scalability can be proven.”

Chambers sees support for open-architecture environments, particularly those running on a J2EE application server platform (such as WebSphere or WebLogic). “Chordiant, E.piphany, Kana, and Amdocs/Clarify are some examples of vendors that are already there or moving in that direction,” says Chambers.


Among other, less dramatic CRM trends, Chambers says, is enhancement of process management functionality (graphic process design, business rules, monitoring and tracking of work items) by such vendors as Chordiant, Siebel, Amdocs/Clarify, and Genesys.

Another CRM-related trend, according to AMR’s Sodano, is a wide interest in service lifecycle management. “Manufacturing companies with services businesses are pulling together technology strategies that include ERP, CRM, field service, and best-of-breed vendors,” says Sodano.

Lemke has seen more applications focusing on mid-range companies among vendors such as JD Edwards, FrontRange, and Epicor. “Mid-market companies’ needs are perhaps even more demanding than those of larger enterprises,” he says.


I gave our experts an opportunity to play at being Edgar Cayce, Jeane Dixon — or Miss Cleo; in other words, to forecast the major trends in CRM technology for 2003. Here are some of their predictions.

“Consolidation will continue to be a big story in CRM,” says Aberdeen’s Pombriant. “The prolonged economic slowdown, combined with an oversupply of applications in certain categories, will fuel the consolidation for the lucky companies that can combine. Some will simply disappear.”

Lemke foresees an emphasis on wireless integration. He also anticipates CRM vendors making very cautious investments during 2003, reevaluating each quarter based on the last quarter’s sales performance. “Any upswing will be moderate,” Lemke says.

Chambers predicts that “CRM solutions will increasingly embed analytic functions in their base products — particularly within the customer service application. “This will allow [companies] to capture customer data on all channels (phone, e-mail, Web chat) more effectively and to provide that data to modeling, reporting, and monitoring components for continual readings of customer needs,” he says.

Chambers also expects greatly expanded use of knowledge-base components in industries such as financial services, insurance, and utilities, where they have not been widely used — not only for supporting agents, but also for direct access by customers. “Portal technology will be used increasingly for customer self-service applications,” Chambers says. “This will not only provide customers with access to self-service functions (such as initiating service inquiries, checking order status, etc.), but will also support broader applications such as online billing or claims submission. Many of the ERP/CRM vendors, such as JD Edwards, SAP, and PeopleSoft, show potential in this area.”

Erin Kinikin of Giga Information Group thinks that “the two most interesting new CRM trends will actually be people- and organization-oriented, not technical.” One trend, she believes, is a shift “back toward smaller and more focused CRM projects led by business owners.” A smaller deployment, notes Kinikin, has a lot more chance of success (and with the right architecture, can be a building block to a complete solution).

The other key trend Kinikin sees is organizational: determining the right balance between centralized planning and customer coordination, and local, sometimes deeper, knowledge of the customer. “We’re starting to see CRM show up in bank branches, retail stores, and field marketing organizations, as companies realize that systems can’t always anticipate local preferences and face-to-face communication,” she says.

Jeff Morris is a freelance writer whose birthday is also in February, though he still awaits his own national holiday.

Once and Future CRM

  • CRM was developed during the last recession, in 1993.
  • Look for more CRM integration capabilities using J2EE, XML, and .NET.
  • New technologies to improve customer self-service options include advanced IVR, Web knowledge bases, and virtual agents.

Yankee Group’s Sheryl Kingstone predicts:

  • Analytics will deliver on the CRM promise of an improved customer experience. Despite major disappointments with past solutions, the growth of customer analytics and marketing will occur with data-intensive environments as well as sales- and channel-driven environments.
  • Enterprises will demand effective information distribution and exchange, along with pragmatic analysis.
  • Dialogue and personalization platforms such as ATG and Vignette will play a more integral role in CRM success, as real-time analytics becomes a more effective marketing communications vehicle to improve the customer experience and increase customer loyalty.
  • The concepts of customer dialogue and engaging customers in the form of a more targeted series of communications will continue to define the next generation of technology-based approaches to marketing and CRM.
  • Various technologies and business approaches toward fostering customer dialogue, from rules-based approaches built on customer context, to dynamic scoring approaches using predictive analytics, to community-based approaches based on customer conversations with other customers, will begin to move from experimental to operational.
  • Best-of-breed vendors will continue to gain market share as suite vendors continue to enhance their marketing application modules.
  • Customer self-service will drive new CRM licensing revenue.



Aberdeen Group,
AMR Research,
Gartner Inc.,
Giga Information Group,
McGee-Smith Analytics,
Yankee Group,


Amdocs ClarifyCRM,
Chordiant Software,
FrontRange Solutions,
Genesys Telecommunications Laboratories,
J.D. Edwards,
Microsoft Great Plains Business Solutions,
Pivotal Corporation,
SAS Institute,
Siebel Systems,
Vignette Corporation,

Other companies/products

Apple Computer,