The global economic ship is starting to right itself and navigate into less turbulent waters, though not without organisations placing more importance on customers. Nathan Statz investigates how CRM is faring in the current climate.
For many organisations, the warmth under the customer relationship management (CRM) blanket is a familiar feeling, particularly as the technology bundles together sales leads, contacts and customer information. This is particularly relevant in the Middle East, where CRM has emerged from its role as an IT system to being viewed by many as a core business technology, without which they would be left out in the cold.
This was not always the case, especially before the global economic turbulence hit the region. Growth was rampant and many organisations began struggling to satisfy the exploding demand and were not as concerned with maintaining customer relationships.
"I think the crisis has been good from that perspective, in that it has made many organisations focus more on the customer. The old adage that it is far cheaper to keep a customer than it is to win a new one is correct, and certainly in these times I think that it has been driving the uptake of CRM," says Kevin Scott, vice president of industries for South East Europe and the Middle East at SAP.
Scott believes that the most successful technologies are the ones that are not pushed up into the business realm by the IT department, rather that a technology really only becomes successful when businesses start seeing value in it.
From a vendor point of view it makes sense to push CRM as a core business technology, as when a product leaps out of the realm of being some back-end system that only the computer science graduates understand to being a mainstream system, more businesses will be buying it. Beyond the financial results, there is a noticeable improvement in sales volume when CRM is utilised effectively.
Deepak Katyal, vice president of information technology at Bahrain's TAIB Bank, explains that CRM is an integral technology for any sector. This stems from knowing that any business is driven by customers and you have to obtain proper organised information about customers to make this work.
"If you don't treat customers well, how will you serve them? From a technology standpoint, the technology is a support mechanism to drive the business. Obviously [CRM] is one of the initiatives that any organisation must have if they want to take the full benefit out of their customer database," he says.
According to Katyal, CRM is an integral piece of technology for TAIB bank as just like any other type of business, the organisation needs to maintain databases and manage how and when representatives are going to touch base with the customers.
"CRM is definitely a business initiative, but one that is driven by technology. I would say that it goes hand-in-hand with technology and the business, obviously, has to be driven by IT but it is a business strategy to have CRM," he adds.
Katyal explains that with CRM, you need to be careful with what technology the organisation is buying. This is due to the potential for one vendor's offering to look good on paper, but be completely different when it is actually implemented. Evidence of this will show up most strongly when it comes to the user experience where it can often translate into a system that the sales team does not want to use.
"When the user comes into using it, that's where the whole thing comes up and at times we need to push them. I would say that if our placement or marketing guy is a forward-looking or progressive kind of guy, he will definitely make use of CRM to its full extent for the business," adds Katyal.
Besides making organisations more aware of the need to retain customers, the economic conditions of the past 12 months have caused many CIOs to rethink their plans for technology refreshes. On the one hand it means potentially causing problems by lagging behind in upgrades, but in the short term it means saving costs by not having to part with any capital.
When it comes to planned technology refreshes, Katyal explains that it depends upon the CRM you have chosen, as some vendors have mechanisms already in place whereby the system will be updated every month or every quarter, while others compile all these changes into a big release which is pushed out yearly.
"Either way it doesn't matter, because from the organisation's point of view you definitely need to update because there are some benefits that these companies bring into the [software]. My demands today or my requirements today might be different than other organisations, but by looking into different segments of customers then they will have some different requirements. Obviously if I have a customer belonging to that segment coming into my fold I will require the same kind of thing, so even if I'm not using a feature it's good to have that kind of thing available in the form of an update," adds Katyal.
This isn't to say that CRM is suffering a noticeable decline in the region thanks to the repercussions of subprime mortgage lending on the other side of the world. SAP's entire business posted 49.7% year-on-year growth in the Middle East for quarter two, while Microsoft's CRM business is growing at a rate of 75%, so things are not exactly on a downward slide.
Tamer Elhamy, business solutions manager at Microsoft Gulf, explains that the software giant's growth in the region can be seen by the high-profile organisations that have implemented its software in the last year. That list includes large companies like the RTA, Mashreq bank, Dubai Bank and the regional chapter of Barclays.
"There are a lot of interesting points for organisations to deploy CRM, like maintaining customers and up-selling. It's becoming harder and harder to sell during the current economic situation so I want to be very close to my customer. I want to service them better so I can earn their trust and I listen to their feedback and maybe sometimes change from my product in order to accommodate that need," he says.Elhamy uses the example of the United States Air Force, as it is using CRM for the deployment of troops: "Basically they put their resources [into CRM] and see when the resources are needed and what the best way to deploy them is. There is a lot of creative ways of using the CRM platform in order to manage and automate a lot of business needs."
For Navneet Tandon, vice president for ERP and services at Raqmiyat, CRM is important for all organisations, even those that aren't sales-driven - such as government institutions.
"You could [go] with an absolutely structured CRM package that would give you all the bells and whistles, or you could say I want a portal to be built where customers can interact with me and if you wanted to you could have a particular municipality form where you could go down to my website, click a button, and the website can take them through what they have to do," he says.
"This is also definitely part of the definition of CRM, but a lot of government organisations might do it on their own with their own portal, which would be with web technology or whatever portal they use. All government departments need a CRM, but the way they go about it is different to what a purely sales-driven organisation does," adds Tandon.
Vikram Suri, managing director of Sage Software in the Middle East, points out that most organisations will adopt some or most parts of the CRM process, but as you start to get forward and backward-linkages to the CRM, you start establishing trends such as what was done in a previous quarter or a previous year. This allows the company to better qualify the customer landscape and deliver highly-targeted marketing messages to specific customers. As a result, the organisation can reduce the customer cost per segment, per lead, and these reductions only come when you are using a CRM system, according to Suri.
"I think in the early stages people look at CRM to increase their operational efficiency, but I think what would dramatically drive CRM growth would be integrating the technology with the business," continues Suri.
Sage is also seeing an increasing interest in a complete solution, involving ERP and CRM all linked in together. This is something that many organisations have on the radar as often you bring up elements of the ERP conversation and CRM as a consequence is also dragged into the implementation discussions.
"Imagine if an executive or an operational manager, accounts receivable staff, purchase manager or service staff member - all these people - have something that the CRM has to offer to their functional roles. That's the type of integration [rather] than just a standalone ERP or standalone CRM for their functional area."
That isn't to say that organisations should go out and bundle a huge ERP system on top of a pricey CRM system, rather that for many enterprises the two go hand-in-hand. This can be evidenced in the way many vendors will market CRM and ERP offerings, often asking consumers what problems they are looking to solve rather than what software they want to buy.
For the time being there may be more time spent in unchartered waters with the global economy only making its first course correction towards calmer conditions. Though the wave of turmoil that the financial crisis unleashed has forced many organisations, to sharpen their gaze on customers and CRM is looking to help them do that. While it may be a while before the Middle East is in completely smooth sailing, the uptake of CRM is coming off no worse for wear.
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