Customer relationship management (CRM) has weathered the credit crunch better than many other enterprise software applications over the last two years, according Gartner. A recent European survey of 302 European business and IT professionals conducted by the analyst firm predicts European CRM software sales in 2010 will increase 0.7 per cent, year on year.
The main technological driver behind this growth is the move towards cloud computing, according to Clive Longbottom, service director of analyst group Quocirca: "The principal point to take on board, if you are thinking of buying a CRM system at the present time — is don't. The era of big CRM applications, such as ERP is dying because of the changes to the underlying architectures. Put simply when cloud computing comes through properly, it is the game changer."
Dominic Shine, group CIO Reed Exhibitions, who has moved to cloud-based CRM after a recent global enterprise architecture review, explained that the drivers behind his company's migration were to find a flexible and easily implemented platform that would give out of the box capability to support 2500 users globally.
"I did not go out with a shopping list headed with 'I need a cloud computing app'. We selected the product based on those drivers and the additional benefits of being in the cloud, as well as the complexities, flowed from that. We wanted a really top-tier application that would be very flexible moving forward and that's how we landed with Salesforce.com." Shine told CIO.
Despite these benefits, data security in cloud computing environments can create issues, warned John Heald — head of CRM, SAP UK and Ireland: "As with all cloud based solutions, there is always the question of data security and physical location — this will not change. Many organisations, especially governments, military and increasingly financial institutions, require that the data is held in specific locations. With cloud based solutions this is a very hard guarantee to give because most information is virtualised and hosted wherever is most convenient for the host."
Although accepting that security is a critical factor, Shine explained that he was comfortable moving to a hosted service: "I don't see many dangers. We went through a very detailed due diligence process looking at security, operational stability and reliability and concluded Salesforce was far more capable of running top tier application then we would be within our organisation. We got an external review of the security and it was top tier."
These sentiments were echoed by Tim Barker, VP of EMEA strategy at Salesforce.com: "One thing is clear: the market has tipped towards cloud computing as the dominant delivery model."
Steve Fearon, vice president, Applications Sales Development, Alliances & CRM On Demand, EMEA, Oracle, advocates a more pragmatic approach. "In reality, cloud computing has existed, in one guise or another, for almost 10 years. Despite this, there remains significant hype around the cloud as well as confusion as to exactly what it involves," he said.
"Both on-premise and on-demand solutions have their own benefits, and every business should assess their needs properly before making a decision as to which to adopt."
Despite this hype surrounding cloud computing, Forrester's latest CRM rankings show that SAP and Oracle's Siebel application still dominate the enterprise CRM market. However, its new report, entitled Forrester Wave: CRM Suites Customer Service Solutions, Q3 2010, also indicates that the margin between these two CRM giants and the rest of the CRM pack is narrowing. Those applications gaining ground include Salesforce.com, CDC, RightNow and Microsoft.
"Leader solutions CDC Software, Microsoft, Oracle CRM On Demand, RightNow, salesforce.com, and SAP Business All-in-One offer flexible and quick-to-implement solutions. Other leaders, like Oracle Siebel CRM, Pegasystems, and SAP CRM, offer solutions with deep and broad customer service functionality and business process management acumen," according to the Forrester study.