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CRM, customer service still driving technology spending

Business users are planning to increase their spending on CRM and customer service technology next year, particularly e-service, a new survey finds.

The market for CRM technology is alive and kicking and the same is true for the service side of the equation, according to a recent customer service association report.

In its first market sizing and spending plan survey, the San Diego-based Services & Support Professionals Association (SSPA) found that organizations with more than $1 billion in revenue will next year spend approximately $565 million on e-service, CRM, contact center and field service technology. Small and midsized businesses (SMBs) will spend around $884 million.

The SSPA's results complement recent reports from other analyst firms, which predict a rise in spending on CRM overall and on its supporting technologies. Boston-based Forrester Research predicts that the CRM market will reach $10.9 billion by 2010.

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The reports differ in their methodology, approach and findings, but they point to healthy demand for a market hit by consolidation and a wave of high-profile failures in its early years.

"Typically, the numbers we get are from IT and not business users," said John Ragsdale, vice president of research at the SSPA and a former Forrester analyst. "You get a slightly different picture when you talk to business users compared to Gartner or Forrester, which are interviewing CTOs for what IT directors have the budget for."

On-demand or Software as a Service (SaaS), for example, becomes even more prevalent among business users because it is often deployed departmentally, with little IT involvement.

Despite the spending plans, satisfaction levels were low, according to Ragsdale.

"Based on my experience, a lot of this is because business users have had solutions shoved down their throats by IT," he said. "There's no business user controls. Now we're seeing, especially in the on-demand world, business users have far more clout. I'm hoping that's going to drive satisfaction levels up."

For many organizations, the budget is there. According to the report, 17% have a budget of more than $10 million for new service and support technology, and 31% have a budget between $1 million and $10 million. The majority of that is earmarked for contact center (36%) applications and CRM (26%).

"The surprise to me was B2B companies were spending more on quality monitoring and workforce optimization, which normally we thought of only as high-volume contact center priorities," Ragsdale said. "In the interest in optimizing operations, they're looking to the consumer world."

SSPA members are also planning to spend on chat technology. The report states that 22% of large enterprises plan to purchase Web chat and collaboration, 21% plan to consolidate customer interactions into a single 360-degree view of the customer, and 20% will buy tools for proactive Web chat.

CRM spending is being driven by the midmarket, according to the survey. At the enterprise level, where CRM is fairly mature, the focus has turned to infrastructure. SAP and Oracle have turned their efforts toward integration with their respective NetWeaver and Fusion initiatives.

"With the multi-channel world, everyone has picked a CRM vendor, especially at enterprise level -- NetWeaver, Fusion -- that is driving CRM there," Ragsdale said. "We're not seeing innovation out of CRM, they're working on infrastructure; e-service vendors are filling the void with better call tracking, contact center desktops and guided selling that previously was in SFA and CRM marketing modules. You no longer have to go with a multi-million CRM purchase for functionality you need to be successful."

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