Three Key CRM Trends for 2008

CRM, as a concept and as an industry, continues to grow and change. Here are three trends that we feel will be particularly significant in 2008:

Trend #1. The growth of automated sales compensation.
The Trend: According to the market research firm IDC, the market for automated sales incentive compensation management applications will continue to increase its profile and growth. The reason for the sudden interest among CRM buyers appears to be that companies of all sizes are increasingly driven to accelerate their corporate performance. As such, they require new tools to enable synchronization of selling strategies with execution.

The Background: Sales incentive compensation is one of the many subtle areas of an organization’s processes that has been overlooked in deference to more pressing automation requirements, according to Mary Wardley, research vice president of CRM Applications at IDC. "As organizations’ enterprise applications environments evolve and become more sophisticated, automating specific processes, such as sales incentive compensation, is needed to create the vital link between an organization’s internal processes and those of its front-office employees," she says.

Why It’s Important: The major organizational strength of the sales department is that the compensation plan largely determines day-to-day behavior of the sales reps. Rather than an afterthought, CRM vendors are now taking compensation seriously, which will increase the usefulness of their applications.

Trend #2. More CRM usage in the financial industries.
The Trend: Another IDC report describes the resurgence of interest in CRM among banks and credit unions in the United States. The research found that financial institutions are moving to a more customer-centric product and delivery model, forcing companies in that industry to beef up their CRM capabilities. Numerous institutions are implementing improvements in the support of multi-channel strategies as well as integration of other enterprise applications and processes including loan originations, fraud management, deposit account opening, payments, and document management.

The Background: "While more than 60 percent of respondents said that their CRM solution had been in place for more than two years, many indicated a new urgency to make greater strides that had very little to do with customer satisfaction or building relationships, but instead was all about organic growth and the challenges posed by a lackluster economic environment," says Christine Pratt, an analyst at Financial Insights, an IDC company.

Why It’s Important: Financial institutions are extremely sensitive to ROI. The fact that such companies are gravitating to CRM strongly endorses the idea that the new breed of CRM applications actually can deliver both revenue increases and cost savings.

Trend #3. Midsize enterprises increasing ERP budgets.
The Trend: The market research firm AMR Research recently released a report indicating that medium-sized businesses are taking Enterprise Resource Planning (ERP) more seriously. Nearly 40 percent of larger midsize companies (500-999 employees) are planning to purchase SaaS or on-demand software in 2008. AMR Research predicts that over the next three years these new purchasing models will become a mainstream purchasing method. In addition, by 2010, 43 percent of companies would like to employ a single, global financial and shared services ERP system.

The Background: As midsize organizations fight for market share against increasingly diverse global competition, increased profitability, revenue growth, and customer satisfaction become priorities. With globalization, the pool of potential customers is ever growing, creating a need for streamlined processes to help meet demand.

Why It’s Important: ERP generally encapsulates CRM as an element of a larger, more integrated system. This suggests that medium-sized firms are moving upward to the kind of computing model held by large enterprises rather than the alternative view (common in small firms) that CRM is a standalone application.