CRM News: The Business Of Information Technology Is Changing

CRM Applications May Move In The Cloud
CRM Applications May Move In The Cloud

With all of the changes that are once again starting to happen in IT, can you imagine how the big boys at SAP/Oracle/etc. (the traditional CRM vendors) are starting to feel? There is starting to be more and more talk about cloud computing and folks are even starting to play around with it — a clear sign of a potential disruptive influence if ever there was one. The arrival of this type of web-based computing threatens to change their business model. We can learn a lot from taking a moment to study their situation.

We’ve talked about the fact that most firms don’t seem to get the biggest bang for the buck from their expensive implementations of CRM systems. As time marches on the IT department is going to get hit with another change when folks start thinking about moving these big applications out to the cloud. In a recent interview with the Wall Street Journal, Henning Kagermann (CEO of SAP) said that he doesn’t see IT departments making this kind of move anytime soon because they are too conservative. The difference between “traditional” CRM and “web-based” CRM is that the web-based solution is designed to make it easier for the sales folks, purchasing folks, etc. Henning points out that traditional CRM solutions are really designed to be used by the management team — not the front line workers. These workers value system security and reliability over everything else and so he anticipates no significant changes soon.

Henning is a bright guy and I’d tend to agree with his view of the world if it were not for three things:

  • Options: New firms will no longer HAVE to deploy CRM applications on their own servers — they can use a cloud. If any of these firms turns into the next Google, then there will be a mad rush to be more like them and that could cause a quick change,
  • Pricing: if because of competition between Amazon, Google, and IBM it suddenly becomes so cheap to deploy an application in “the cloud” everything could move out almost overnight.
  • CIO Innovations: ultimately a CRM system is only as good as the date that is entered into it. If CIOs take the lead and assume ownership of the quality (and quantity) of data that is entered into the CRM system, then suddenly the value of the system goes though the roof. In order to make this happen, CIOs will need to make the application easy to get to and easy to use — both characteristics are features of web-based applications.

Nothing ever seems to happen overnight; however, a great deal can happen in just a single business quarter. Henning is betting that IT won’t see any of these three events happen before SAP has time to create a web version of their product. Let’s see how things go…