The Year of CRM, With a Twist

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Some acronyms never die, even if in many ways their time has come and gone. CRM – or customer relationship management – is one such dinosaur.

To be sure, working more closely with customers is something that every company wants to do more of, and lots of software and services are being bought with that goal in mind.. Nonetheless, I’m ready to declare the end of CRM again, even if the quantity of financial, economic, and buyer activity around CRM is making it look like 2006 is going to be the Year of CRM, once again.

The problem is the following: As the breadth of customer-related activity – and software sales – grows, it’s becoming harder and harder to use the over-arching term CRM to compare one vendor’s offering to another. What SAP, Oracle, Salesforce.com and Microsoft, not to mention Onyx, Rightnow and others, call CRM is rapidly becoming more different than anyone wants admit. So different that we’re not just trying to compare apples to oranges – it’s looking more like apples to walnuts, or oranges to orangutans.

Sure, it’s all about the customer – that’s the easy part. But, if you really look at what’s happening in enterprise software, everything is all about the customer. It’s hard to find software that doesn’t impact the customer relationship: working with customers imbues activities in every part of the organization, from sales, service, support, marketing, and product development, to finance, supply chain, document management – and on and on.

Where the rubber hits the road today in the competitive CRM market turns out to be all about the non-CRM parts of a vendor’s offering. Tom Siebel talked about an important version of this issue in what I call his concession speech – the speech he made when the deal for Oracle to buy Siebel was announced. Remember, Siebel was always the CRM feature/functionality leader, and there was Tom saying he was selling out to Oracle because it was in that non-CRM domain, called connectivity to the back-office, where his company had failed to thrive.

More Than Just Customer Management

Similarly, Microsoft just had a blow-out quarter for its CRM product. But the reason is not because it’s the best CRM product in the business, but because it connects so well to Microsoft Office. SAP comes out with a CRM On Demand offering that is genuinely good at customer management – but the best reason to buy is that it connects seamlessly to the SAP back office. And now that the Siebel deal has closed, Oracle is out pushing Siebel’s vertical functionality, its analytics, and its on-demand offering. And, by the way, its CRM feature/functionality too.

In other words, what’s really important in the world of CRM is not the traditional CRM functions of sales-force automation, contact management, call center operations, and the like. What’s important about CRM turns out to be what has always been important to business users: connectivity, low-cost, industry-specific functionality, and usability.

This give some color to the efforts of Salesforce.com to move beyond its once pioneering point of differentiation, now that everyone is doing on demand. Ironically, this is the company that was among the first to understand that CRM is more than just customer management. Now it’s a company trying to find the next big non-CRM thing that CRM customers are looking for. Before someone gets there first. Hence its multiple attempts to be a platform supplier, to grow beyond on demand and become something bigger, and hence something more strategic.

So as the latest “Year of CRM” unfolds, keep an eye on the part of every vendor’s offering that’s not about CRM. The CRM hype will always be there, but the real points of differentiation will be seriously far from the old CRM that we worried about during the last Year of CRM, whenever that was.

Meanwhile, I’m going to spend the year trying to think of a new acronym to describe what’s going on in the market today. Because if everything is about managing customer relationships, then CRM is an increasingly redundant term, and those vendors that rely solely on their pure-play CRM capabilities will begin to become redundant too. It’s 2006 and CRM is dead. Meanwhile, for those managing customer relationships, it’s going to be a great year.