The Hindu Business Line : Waiting for a thaw

CRM has been through the hype and then the wait-and-watch phase. What's the outlook like now, going by the latest reports? It looks like it will be another spell of waiting for the reserve to melt. But don't miss the ripples in some quarters.

THERE was a time in India, not so long ago, when everything was CRM this and CRM that. The word then was that customer relationship management would revolutionise — nothing less! — the way business is conducted in India. The hype was a bit intriguing in that the average Indian enterprise couldn't (or wouldn't) recognise a customer if one jumped up and bit it in the ankle. But, or so the gurus said, companies had come to realise the importance of consolidating their customer information, mining data, and using it to increase average revenue per customer. And no, these gurus didn't say whether they believed in the tooth fairy or not....

And then, early last year, reports started appearing in the mainstream media and the trades about how CRM wasn't quite dead and about how it was just that most companies in India felt that a business case had to be made for it. Loosely translated, this meant that while these companies were all for continuing to shake down their customers (politely known as increasing revenue per customer), they didn't see why they couldn't do this for free without resorting to some fancy — and expensive — stuff like CRM. The official line went something like this: CRM may enable enterprises to achieve greater efficiency in operations, reduce operating costs, manage customer retention and increase revenue...but, as CRM in the country was in an early stage of evolution (please note...not revolution), firms preferred to adopt a wait-and watch approach. That is, they preferred to see who would be stupid enough to spend first on CRM and then, if the risk paid off, follow them. And then again, some firms took the position that the downturn in the economy had forced them to cut spending drastically and that this was no time to fool around with CRM solutions which, after all, can't guarantee that they would be of any help in holding back fleeing customers.

Predictably, CRM vendors did what the entire IT sector does best: rely on esoteric studies to show that, despite all the evidence, they were not up to their hips in alligators.

Thus, they were thrilled to bits when Jupiter Media Metrix came out with a report last year, identifying India as the emerging call-centre capital of the CRM world, not because Indians are particularly adept at trilling "Hullooooo!! And how may we help you on this lovely day?" even as the guy at the other end goes ballistic but because we are willing to work for subsistence wages.

According to the Jupiter Media report, labour costs account for 80 per cent of a call centre's budget, and attrition among call centre staff averages 40 per cent annually in the US. In this scenario, India, with its quote unquote cost advantages and an attrition rate of about 10 per cent is perceived as a viable hub for outsourcing call-centre services. CRM, somewhere down the telephone line, had become Caller Relations Management!

Nothing new... but wait

For what it's worth, let's go back to CRM as in Customer Relations Management. At the level of CRM technology, is there anything interesting going on globally? The answer, unfortunately, is... nothing at all. According to a February 3, 2003, report in Information Technology Toolbox, the question "What's new in CRM?" elicited a blunt response from Bill Chambers, principal analyst with Doculabs: "I haven't seen anything I would classify as `new CRM technologies'."

The Aberdeen Group's Denis Pombriant was even more blunt: "2002 wasn't a banner year for new anything." And Gary Lemke, President of RealMarket, was especially blunt: "2002 was a year in which vendors did not focus on new stuff." Bluntest — and briefest — of all was the Yankee Group's Sheryl Kingstone: "Nothing new."

However, the reports quote others who were not so...downbeat. For instance, Sheila McGee-Smith, President of McGee-Smith Analytics, acknowledged some extremely interesting developments in natural language speech recognition technology. "In a year when companies are facing the watchful eye of the CFO in order to get project funding," she observed, "speech recognition stands out as a leader in delivering ROI."

One notable company in this area, she observed, is SkyFlow Inc, which offers order status, delivery status, product information, and store locator applications. Skyflow's operation was characterised as similar to that of an application services provider in that it charges enterprises on a per-transaction basis for large-scale speech recognition applications.

Further, natural-language-understanding technologies — as opposed to simple recognition — are emerging from companies like Discern Communications and NativeMinds. These technologies are designed to improve self-service on the Web by providing an understanding of customers' questions, and giving customers access to a deeper level of knowledge-base information.

The Yankee group's Kingstone has been quoted as saying in this context: "Self-service has long provided the promise of reducing costly customer interaction involving CSRs, while delivering greater satisfaction by helping customers help themselves."

Lemke of RealMarket has also been quoted as stating that self-service is one area of CRM technology that has shown `traction.'

You don't have to be Einstein to figure out that all this is extremely bad news for Indian call centres. But there's hope yet...

Analytics, architecture in focus

According to Lemke, companies are now concentrating their self-service efforts only in specific areas, rather than trying to force people to help themselves in all kinds of contexts because "direct contact with a real person" is still valued, "especially in high-value situations." Many approaches to self-service, both over the phone and on the Web, have been clumsy and have left customers frustrated and quickly reaching to dial up a live person instead.

At another level, Lindsey Sodano of AMR Research is gung-ho about `analytical CRM.' Early last year, Sodano interviewed companies that were upgrading to Siebel's new Web-based system "because of new functionality in areas such as analytics."

"Later in the year, I found that basically the only companies who were able to report any quantifiable benefits out of using CRM systems were those using analytics for sales or marketing, especially those who used E.piphany."

The blunt Chambers of Doculabs agrees that expanded use of analytics has been the major CRM trend of the past year, "particularly real-time analytics to capture and analyse cus<147,1,7>tomer interaction information from multiple channels." He points to vendors such as Siebel, PeopleSoft, E.piphany, SAS, and Pivotal as examples. Lemke of RealMarket concurs that analytics have been an important trend. "People aren't sure what they should be doing right now, so they are turning more toward CRM analytics as a decision support tool to help develop future strategies and plans." According to Lemke, most vendors are looking to make more investments in analytics.

As the Indian IT industry is so much into reports, it might be worth the while to look at what a November 2002, Gartner Inc report, by analysts Michael Maoz and Esteban Kolsky, has to say about analytics. They are decidedly downbeat about analytics! "Enterprises are drowning in customer information," they write, "but a lack of effective metrics and accompanying processes will prevent them from making informed, real-time decisions."

Finally, some CRM experts see an emphasis on architecture as a significant trend. According to the Yankee Group's Kingstone, component architectures have drawn interest, though they "don't sell the deal." The more open, Internet-based architectures offered by PeopleSoft, Siebel, Kana, and E.piphany, says Kingstone, "point to a future where CRM applications realise the promise of modularity that is currently only hinted at." However, the short-term reality is that with architectural changes comes a period of transition — "and many enterprises are holding off on migrating to the latest and greatest from most vendors until reliability and scalability can be proven."

Back to crystal-ball gazing

So what's going to happen in 2003? The Information Technology Toolbox report quotes Pombriant as saying: "Consolidation will continue to be a big story in CRM. The prolonged economic slowdown, combined with an oversupply of applications in certain categories, will fuel the consolidation for the lucky companies that can combine. Some will simply disappear." Lemke foresees an emphasis on wireless integration. He also anticipates CRM vendors making very cautious investments during 2003, re-evaluating each quarter based on the last quarter's sales performance. "Any upswing will be moderate."

Chambers predicts that "CRM solutions will increasingly embed analytic functions in their base products — particularly within the customer service application." He says: "This will allow (companies) to capture customer data on all channels (phone, e-mail, Web chat) more effectively and to provide that data to modeling, reporting, and monitoring components for continual readings of customer needs." Chambers further expects greatly expanded use of knowledge-base components in industries such as financial services, insurance, and utilities, where they have not been widely used — not only for supporting agents, but also for direct access by customers. "Portal technology will be used increasingly for customer self-service applications. This will not only provide customers with access to self-service functions (such as initiating service inquiries, checking order status, etc), but will also support broader applications such as online billing or claims submission. Many of the ERP/CRM vendors, such as JD Edwards, SAP, and PeopleSoft, show potential in this area."

pratapravindran@hotmail.com

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