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CRM Technology Shouldn't Be an Impulse-Buy -- Even When Heavily Discounted

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Posted April 10, 2001 By Robyn Greenspan     Feedback

META Group predicts that deferred purchasing of CRM solutions could produce deep discounts. However, businesses should still make rational decisions about CRM strategy and not be influenced by the reduced costs.

Don't buy just because it's on sale warns the information technology-centric research and consulting firm META Group. The company predicts that due to current economic uncertainties, major CRM technology purchases will be deferred until the third or fourth quarter of 2001. The lag in sales could result in deep discounts on CRM software licenses as vendors attempt to boost current spending, but META Group advises against impulsive CRM decision-making.

"The discounts will likely be offered again at the end of both the third and the fourth quarters, so organizations should not get caught up in the vendor 'fire sale' hype," warns Liz Shahnam, vice president and director of META Group's CRM Infusion program. "Even with discounts skyrocketing to 60%-70%, savvy organizations should still evaluate the opportunity cost of not making CRM investments impulsively, because implementation and integration expenses, not the license fee, represent the bulk of CRM spending."

META Group has also found that those who spent significant dollars during 1999/2000 without a rigorous business plan and financial justification are giving way to more pragmatic "fast followers" with an increased focus on measurable return on investment (ROI). For the remainder of 2001, organizations must infuse reality-based economics and models into their CRM strategy.

"More than 90% of META Group's clients are examining (or re-examining) the financial justification for CRM, and many are taking a step back in their CRM approach to develop hard business cases," says Shahnam. "There is a need to show actual ROI, but organizations must also be realistic in their ROI expectations."

While META Group believes in a holistic approach to CRM, the current economic climate warrants smaller deployments to take a "guerilla" approach whereby they can generate early successes and demonstrate initial business value.

"Guerilla CRM is characterized by a lack of executive buy-in to the idea that CRM is indeed a business strategy, and is forcing business-savvy CRM teams to go underground and use smaller technology successes to sell the value of CRM to executive management," says Shahnam.

Based in Stamford, Conn., META Group enables organizations to innovate rapidly and effectively via unique collaborative models that help clients succeed by building speed, agility, and value into their IT and business systems and processes. META Group's annual CRM Conference, "Transforming Customer Relationships: The Journey Toward Lifetime Value," April 18-20, 2001, in San Francisco addresses ROI using guerilla tactics and the need for a rigorous business plan.

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