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Study: Manufacturers are fed up with CRM overruns

CRM is missing the mark with manufacturing companies.

Based on your findings, what are the most significant issues facing the market for CRM in manufacturing industries?

Well, Siebel is the 800-pound gorilla with 30% of the market. That hasn't changed. What has changed is that companies are spending even less on CRM, based on the economy. On a lesser level, people are coming to grips with the idea that the vendors' definitions of CRM encompass a lot of different concepts, some of which aren't yet going to be a good fit for manufacturing customers. Can you provide an example of this?

Product configurators are a prime example. The software that is used on Dell Computer's Web site to let customers design and buy computers doesn't mesh as well with CRM applications, or even other customer info they collect, as you might think. The long and short of it is that companies have found they need to draw a line someplace with CRM. You can try to incorporate so many kinds of data to create the customer view [that] it can lead to endless customization or it can muddle the overall picture. There are similar feelings from some users around data analysis and mining as well. It's a question of putting parameters on CRM until the applications are truly ready to deliver as promised. What sort of concerns did you hear from users that the vendors haven't addressed yet?

The biggest hype anywhere in the market for enterprise applications, CRM or otherwise, remains the time frame and cost structure for implementation. If you talk to Siebel or SAP, they're preaching how quickly users can get up and running. But for companies with big legacy applications, it still takes a long time. Certainly the experience that Boeing had with Baan helped tipped the cart over. Boeing had to write 5 million lines of custom code to make Baan work with their systems. The CRM players are all in this position with some customers. They need to grapple with the functionality of their products. This includes the issues related to linking up product configurators to CRM. A lot of this is being rolled up into the promise of Web services, which of course, remains to be seen. What kinds of companies were telling you this?

We spoke with end users and suppliers of CRM for manufacturing industries. We heard it from both sides. People are looking for a more concise guideline as to where they put CRM to work and where they don't need to. What are you hearing the most about Web services from manufacturers?
People are looking at it as a great tool for integration. They're hoping it will allow reduction of custom coding for CRM and ERP applications. However, from what we hear about the vendors, including SAP, who we've followed closely, it has been a struggle to try to bring Web services to market. Part of the problem is that for manufacturing to adopt Web services they will need to be pretty polished applications. If a salesman doesn't get a new lead this instant, it isn't necessarily a big deal. On a manufacturing floor, you don't have that kind of room for error.


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What are some of the trends you see looking at CRM as it relates across the tier 1, midmarket and small market sectors?

Like the market for CRM at large, the tier 1 space appears to be more saturated. Larger players like Siebel are looking downstream to the midmarket. We're also seeing that Web-hosted applications are making some inroads from the bottom up. Hosted applications are playing particularly well in warehouse management and transportation management. It's been a stormy road, but we see more adoption of the ASP model across market sectors.

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