An IDC Viewpoint
The World is Changing — Are You
Changing Enough?
David Bradshaw
Research Manager, Applications and Solutions, IDC EMEA
Giuliana Folco
Research Vice President, European Industry Solutions
In a period of increasing economic uncertainty, the short-term FIGURE 1
business imperative for many organizations is to cut spending
Responses to the Question, “Which of the Following Business
and reduce budgets. Yet customer retention and acquisition Initiatives Are Leading Your Company Business Strategy Agenda?”
are still necessary to keep revenue flowing in an environment
of increased competitive and budget pressure. How can Sales
organizations focus on both their customers and their costs? productivity/performance 4.78
improvement
Customer relationship management (CRM) technologies provide
Customer care/service
a compelling, proven approach to improving customer acquisition 4.71
enhancement
and retention. Yet in many companies, there is a disconnection
between the business imperative of CRM and IT initiatives to
IT organization
responsiveness and 4.63
support it. In order to survive in these in tough times, it is time efficiency improvement
for organizations to evaluate how cloud-based CRM can help
Product or services
adapt to the new “business as usual” without incurring the risk 4.54
innovation/development
and cost of traditional CRM software.
Efficient sourcing and
4.50
procurement
Adjusting to the new “Business as Usual”
We know that these are tough economic times, and no
1 2 3 4 5
companies are exempt. In the U.K., the CBI’s latest quarterly
(n = 250, business size 50–300 employees)
small and medium-sized enterprise (SME) trends show a drop
Source: IDC 2009
in employment, contracting orders, and overall sentiment falling
at its fastest rate since October 2001. Business conditions
The CRM Imperative for SMEs
are similar in other European countries. While the economic
predictions are still uncertain, organizations must adapt to this
From the first two priorities, we can conclude that that there is
new environment until late 2010 or beyond. But what does this
a significant opportunity for CRM technology to play a strong
new “business as usual” look like?
role in modernizing and improving sales and support operations
In the current environment, companies face increased competition in SMEs.
in both customer acquisition and retention. IDC survey results
The third priority, improving IT responsiveness, also appears to
show that only 27.4% of SMEs with 50–300 employees are
be served by effective application of CRM technology. Moreover,
anticipating an increase in their sales, while only a year ago,
the effective use of technology can be very cost-effective in
57.2% of SMEs were anticipating an increase.
this area, reducing costs while improving performance. We
In response to the shortage of customers in the market, the top conclude that IT should play a major role in shaping technology
business priorities for companies in this segment are improving to support CRM initiatives in SMEs.
sales productivity/performance and customer service/care, as
shown in Figure 1.
Interestingly, the third priority is focused on improving IT
responsiveness. Clearly, organizations recognize the role that IT
has in enabling them to respond to change. If ever there was a
call-for-action for IT to help, now is the time.

However, alarmingly, IDC found that CRM was the seventh IT The differences between cloud-based and on-premise software
priority, behind security, business process management (BPM), begin at the very start of the buying process. Because software
enterprise resource planning (ERP), and other initiatives. Why does not have to be loaded onto the customers’ servers and the
should this be? Figure 2 shows the responses to the question, clients typically run in browser windows, prospective buyers can
“Why is your organization currently not using or not considering try the full system before they buy at the very start of their buying
a CRM solution?” process. There are significant benefits to this. A wide range of
users can try out the system, and this use of the real system can
educate users. Also, it can significantly reduce the requests for
FIGURE 2
changes to the software (via configuration). However, perhaps
Responses to the Question, “Why is Your Organization Currently Not
the most important benefit is that it significantly reduces the
Using or Not Considering a CRM Solution?”
risks involved in purchasing, as the buying company is buying a
known set of services not a promised set of specifications.
Not part of organization's
Cloud computing has another important advantage, it reduces
strategy/business model
much of the need for upfront spending on applications software
Project doesn't demonstrate strong
licenses, infrastructure software, and the servers needed to run
ROI
the system. Instead, customers pay a monthly subscription fee
Not gaining executive management
that is a fraction of the license fee on competing on-premise
support or organization buy-in
products. Another key benefit is that implementation time is
generally very quick — subject to the amount of data that has
Lack of technical expertise/skilled
to be uploaded and the amount of configuration users choose
personnel in-house
to do.
Lack of project funding/high cost
It is also a great leveler — small and midsized companies can
get the same capabilities as the large companies at a price per
Not enough scale in sales activity to
user that they can afford. Also their users can get the same
justify project
capabilities wherever they are located as long as they have an
Lack or insufficient acceptance in the
Internet connection or a reasonably capable mobile device.
customer base
Yet, many SMEs feel uncomfortable with having their data and
0 5 10 15 20 25 30 35 40 45
processes running on someone else’s system, particularly in the
(%)
midsized sector. Companies need to trust that their data will be
safe in the cloud. Leading cloud providers have invested heavily
(n = 240, size of business 50–300 employees)
in secure systems and processes to manage confidential data. In
Source: IDC, 2008
addition, vendors can achieve independent certification against
ISO 27001 and SAS 70 Type II standards to ensure they comply
with information security best practices.
Clearly, the perception is that CRM has no role in business, is
expensive to purchase and implement, and is complex to deploy,
and as a result, has a poor ROI. This perception of CRM is driven
Summary
by companies’ early experience during the initial growth of CRM
in the 1990s. IDC believes that small and medium companies need to think
seriously about whether they are doing enough to keep their
The failures of big-bang, large-scale CRM deployments and
customer relationships going through the crisis, while at
complex IT projects have been well documented, analyzed,
same time increasing efficiency and reducing costs. For some,
and understood. As a result, CRM is now far more effective at
introducing or upgrading their CRM systems will be a necessity.
enabling organizations of all sizes to improve the performance
The good news is that software as a service makes this far
of their marketing, sales, and customer service functions by
more manageable and affordable, even in the current economic
providing tools, automation, and centralized access to customer
situation.
information across the business.
To quote from Charles Darwin, “It is not the strongest of the
species that survives, nor the most intelligent that survives. It
It’s Time to Re-Evaluate how CRM can Help you —
is the one that is the most adaptable to change.” In practical
In the Cloud
terms, it will be the businesses that continue to innovate that
will survive and potentially thrive in and beyond the economic
In our view, cloud computing is well suited to SMEs, as it
downturn.
typically reduces overall costs while delivering high levels of
usability and functionality. With cloud-based CRM applications,
Having the right CRM capabilities can not only help retain
CRM capabilities are accessed over the Internet, in the same way
customers and maintain sales in the downturn, but also inform
that you access Google or Amazon.com. This addresses many of
and enable innovation while helping companies do more
the issues that have dogged CRM in the past.
with less. It is therefore our view that small and midsized
organizations seeking improvements in the way they manage
customer relationships for profit are well advised to evaluate
cloud-based CRM as a potential solution to these requirements.

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