Enterprises feel that cloud-based CRM  benefits outweigh the shortcomings

ec4u survey: evaluation shows that potential advantages clearly outweigh likely disadvantages

Implementation and cost benefits are among the key reasons for cloud-based CRM solutions

(Karlsruhe, Feb. 09, 2013): Cloud computing is becoming ever more interesting for enterprises, even for CRM services. A survey by ec4u expert consulting ag looked at the pros and cons for such usage and identified relatively widespread acceptance.

Of the 200 sales and customer service managers surveyed, two of five believe that cloud computing could dominate CRM services within the next five years. Yet, a majority of 43% still roots for conventional in-house solutions. Every fifth respondent did not venture a prediction on what the future may bring in this area.

CRM users have interesting views of cloud services, whose pros and cons they ranked on a scale of zero to ten in this ec4u survey. On the benefits of cloud computing for CRM, faster implementation versus a conventional solution earned the highest rating of 7.7, followed by defined operating costs (7.4) and investment savings. In contrast, other facets were rated as far less important: mobile use of CRM got 5.9 points, while a department’s significant independence from the IT unit and easy scalability of CRM apps earned 5.0 points each. Similarly, the managers did not put too much emphasis on issues like the advantages of easier migration later, or relief for in-house IT resources. Overall, the desirable features earned an average rating of 5.6.

On the flip side, the grounds against a cloud solution got an average rating of 4.4, which is clearly far below the reasons for a cloud solution. Data privacy with 6.4 points was ranked at the top of the disadvantages for users, followed by an unknown storage location (6.0). Few of the surveyed considered it a drawback that cloud-based CRM means a standardized solution with limited personalization options, or that one needs to encrypt the data traffic. Similarly, relatively few respondents lost sleep over cloud computing features like the need to have fast Internet access, share the infrastructure with other unknown users, or possibly lose specific IT know-how.

Sabine Kirchem, Senior Manager of Market Research at ec4u explains, “Undoubtedly, cloud computing for CRM is still neither a routine thing nor is it the panacea for every enterprise. But it is growing dynamically in significance.” Ms. Kirchem pointed out that she does not mean to criticize current approaches, but rather sees the underlying causes lying in a general trend in how one deals with software apps and with consumer influences. She goes on to add, “People are getting into the habit of downloading programs from clouds, and this is also impacting how enterprises make decisions.”

Survey findings:

CRM is of similar importance for users as Microsoft Office programs

According to a survey conducted by ec4u expert consulting ag, companies using CRM applications can no longer imagine performing sales tasks today without such a system. They state that lack of a CRM system would be expensive, because it would lead to low success rates for acquisition, unsystematic targeting, and difficulties in handling customer data. For most of the interviewed sales and marketing representatives from more than 200 companies, CRM meanwhile has a similar implicitness like e.g. Microsoft Office applications on their computers or emails.

The fact that CRM systems are rated on par with such established technologies, expresses the opinions of representatives that sales activities can no longer be imagined without CRM solutions. In reply to the question of whether customer management would work without such systems today, the vast majority said no. Two-thirds think that this would result in substantial deterioration in performance. A further 23% did not rate the consequences so negatively, but expects significant disadvantages. Only one in ten thinks that sales activities without a CRM system would not lead to noteworthy changes in such services, with 4% of the respondents projecting positive effects.

Those with a negative outlook, expect mainly sales-related difficulties without a CRM system. According to 77%, this would result in less successful sales efforts, since one would not be able to adequately exploit potential sales without a CRM system. In addition, nearly three-quarters think that they would be lacking systematics in targeting customers and that they would be unable to keep their customer data transparent and in order. Two-thirds of the interviewees named similar problems in lead management and sales processes, which would be much more sophisticated without CRM. Further negative consequences anticipated without CRM include considerable impairment of campaign management and declining customer retention. Moreover, sales forecasts would be possible to a very limited degree only.

“The implicitness of CRM in user practice  is no accident,” said Mario Pufahl, partner and member of the management board of ec4u, when interpreting the survey findings. “By now, CRM belongs to the established set of absolutely essential business tools like mobile phones and the Internet, for example. No one questions the need for mobile phones and the Internet, as their usage results from relevant needs.” Pufahl is referring to complex needs in managing customer relationships versus the dependency of a company’s success on high performance sales. These two needs could not be fulfilled anymore, without powerful  and adequate support.

Social networking functionality becomes a necessity

Since 2008, ec4u expert consulting ag has been doing a comparative study to determine the requirements for next-generation CRM systems. The functional profile of CRM 2.0 is supposed to promote sales support more than control functionalities.

Marketing and sales managers in German companies are increasingly focusing on next-generation CRM systems. According to the CRM 2.0 barometer of ec4u expert consulting ag, more than 70 percent of the 200 interviewees stated that new solutions should be characterized by additional Internet, mobile, and networking functionalities. Two years ago, significantly fewer interviewees asked for these requirements. Nearly one of three companies imagines switching to systems with CRM 2.0 features within the next two years, reflecting the change in demand.

This change stems from a demand for functionalities that former CRM solutions cannot provide or only to a limited extent. Thus, 82% of the interviewees (5% more than in 2009), feel that CRM solutions should be better linked to mobile systems like laptops, PDAs and BlackBerrys, along with better integration of CRM in the Web. Direct access via RSS feeds, iGoogle, newsletters, etc. to information regarding companies of customers, relevant contact persons, and market situations, which can be used for sales purposes, are most important for 83 percent. In 2008, a significantly lower percentage of companies (just 68%) stated this requirement.

The interest in social networking functionalities developed alike: four out of five sales and marketing managers expect CRM 2.0 to provide features supporting business communities. This corresponds to an increase of 17% over the comparative study done two years ago.

At the same time, one expects next-generation CRM systems to offer better sales support than today’s systems. Three out of four interviewees prefer automated order forecasts. Nearly two-thirds also expect sales staff person to be provided specific suggestions for leads. However, the interest in this feature, as well as in the ability to provide follow-ups for individual users, has been declining over the years. In contrast, a bigger interest evolved in comprising data access. Currently 63% want this feature, which is an increase of 9% since 2008. In addition, easier handling and enhanced user friendliness of the CRM system is important to more and more persons responsible for CRM .

“In the end, CRM systems need to be more sales-oriented, using advanced communication channels actively,” said Mario Pufahl, partner at ec4u expert consulting ag, of the CRM 2.0 barometer results. After all, many solutions in use still have more of a control function that sales-orientation. “Therefore, it can be assumed that companies will start switching in the upcoming years,” forecasts Pufahl, the author of several books on CRM. This projection is verified by the results of the current survey, according to which 31% of the companies surveyed intend to replace their solution with a CRM 2.0 system by 2012. 

Still much to do for analysis of sales

Sales managers in companies in German-speaking regions mostly expect significant increases in turnover from professional analysis of sales. However, many still lack the proper framework for maximizing related benefits. The CRM specialist, ec4u expert consulting ag, identified this contradictory situation in its survey covering more than 300 sales managers.

According to the survey, nearly three-quarters of the companies undertake some form of systematic sales analysis, while only 27% of them do so consistently. In one-third of the cases, the sales organization itself is responsible for the analysis, whereas this function is centralized in 21% of the firms surveyed. Other common approaches entail appointing an external sales analyst or using different responsibility models in parallel, e.g. the combination of centralized and decentralized tasks.

An important result of the survey is that in many cases the current conditions for analyzing sales are still inadequate. Thus, more than half of the interviewed sales managers stated that the strategic positioning of the controlling still shows shortcomings. In addition, sales representatives do not welcome the fact that their results are looked at in detail: analysis of sales is viewed positively in only two out of five companies.

A similar number of companies still lack proper control of sales costs and have insufficient staff available for putting this into practice. The ec4u survey also highlighted two other aspects: 1) half the sales managers are satisfied with the quality of the methods applied; 2) 55% of them rate the benefits for sales from such analysis as leading to increases in turnover.

“If the impact on turnover is positive despite an inadequate framework, one can understand the potential that could be realized through optimization the analysis of sales,” says the ec4u partner, Mario Pufahl, with regards to the outlook for significant improvement in sales. This expectation is obviously shared by sales managers, as more than half of them expect an increase of more than 6% as a consequence of optimizing analyses. One-quarter of the interviewees even expects double-digit increases.
According to Pufahl, a distinct strategic orientation is the basis for such figures. “Looking at historical figures using analysis of operating sales, as is often done in practice, leads to a deeper understanding, but this is insufficient,” he points out. “In contrast, more advanced sales analysis should define goals, analyze risks, and offer alternatives. Therefore, analysis of operational sales should get a distinct strategic basis.”

Survey: CRM users complain of deficits in strategies and processes

CRM users complain of deficits in strategies and processes.

Most companies are dissatisfied with the practical applications of their CRM programs, even if they consider them slightly better than in the year before. According to a comparative survey conducted by ec4u expert consulting ag, the main problems are unclear CRM strategies and weak CRM processes. More than half of the users interviewed want to focus on and optimize these issues.

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