Current Status of CRM Deployment in Competitive Strategy and Lessons for Vietnamese Enterprises

CHAPTER 2: CURRENT STATUS OF CRM IMPLEMENTATION IN COMPETITIVE STRATEGY AND LESSONS FOR VIETNAMESE ENTERPRISES

2.1. CRM application in competitive strategy of enterprises in the world

2.1.1. Overview of CRM development in the world

Although it has only been around for nearly 30 years, CRM has quickly become a familiar concept and is being applied worldwide. When it first appeared, about 50% of the CRM software market (hereinafter referred to as the CRM market) was a competition between five main suppliers: PeopleSoft, Oracle, SAP, Siebel, Telemation.

As the US, the main market for CRM products, approaches saturation, CRM software and service providers are looking for new opportunities. Many are tapping into regions such as Asia, Europe, India, and Latin America. Many businesses and organizations in these regions have fully embraced CRM, while others are just beginning to explore its capabilities. According to research by IDC, a US-based provider of information technology and telecommunications consulting and events services, the CRM solutions market in Asia-Pacific maintained an average growth rate of about 30% over the five years from 2000 to 2005. Market shares in countries and regions in Asia-Pacific are shown in Figure 2.1.

Worldwide, CRM has evolved into one of the most important and fastest growing software segments. Investments in CRM and related software, hardware, and services exceeded $8.1 billion in 2007. Information technology research and consulting firm AMR

(USA) has shown that this investment volume has increased by an average of more than 30% annually since 1999 (Chart 2.2).

Figure 2.1: Asia-Pacific CRM Solutions Market

Australia and New Zealand 43%

ASEAN 24%

Mainland China 11%

India 5%

South Korea 13%

Source: IDC

Chart 2.2: Growth of the global CRM market

Source: AMR Research According to Gartner, the leading US information technology research and consulting firm (Report “CRM Software Worldwide 2006-2011”), in the context of the focus on developing customer relationships being continuously emphasized, the CRM market is expected to maintain its growth rate until 2012, with an annual growth rate of 11.7%, reaching an estimated figure of about 13.3 billion dollars in 2012. The market is continuously expanding, contrary to

in contrast to the situation in the first half of the decade.

Although overall growth will remain strong, market conditions

The current market conditions will cause a short-term slowdown and have a slight impact on the long-term picture. The economic volatility in 2008-2009 has caused the 2007-2012 compound annual growth rate to decline from 11.9% to 11.1%.

Geographically, sales were largest in North America, with $4.3 billion in 2007 revenue compared to $2.6 billion in Europe.

Emerging markets will become more attractive and important in the coming years. The Asia-Pacific region will have the strongest growth trajectory, with a forecast increase from $410 million (2007) to $840 million (2012). Latin America will see a 16.6% growth rate over the same period, from $131 million to $282 million, and the Middle East will see a 12.9% increase from $95 million to $174 million.

Chart 2.3: Global CRM software revenue in 2007 and forecast for 2012

5000

4500

4000

3500

3000

Million dollars 2500

2000

1500

1000

4800

4300

2900

2600

840

2007

2012

500

410

282

131

95174

North America Europe Asia-Pacific

Binh Duong

Area

Latin America Middle East

Source: Gartner

A study by Access to Markets International (AMI) shows that the majority of growth will come from the mid-sized enterprise market. Businesses with 100-900 employees will spend more than $1 billion on CRM applications this year. Only 35% of mid-sized businesses currently have

using CRM solutions, and the investment will grow at a rate of 9% annually.

In terms of vendors, SAP and Oracle have maintained their market leadership since their inception. These two companies account for nearly half of the world's CRM revenue and market share.

Table 2.1: World's leading CRM vendors 2006 - 2007

Supplier

Revenue 2007 (million dollars)	Market share 2007 (%)	Revenue 2006 (million dollars)	Market share 2006 (%)	Growth '06-'07(%)
SAP	2050.8	25.3	1681.7	26.6	22.0
Oracle	1319.8	15.3	1016.8	15.5	29.8
Salesforce	676.5	8.3	451.7	6.9	49.8
Amdocs	421.0	5.2	365.9	5.6	15.1
Microsoft	332.1	4.1	176.1	2.7	88.6
Other	3289.1	40.6	2,881.6	43.7	14.1
Total	8089.3	100	6573.8	100	23.1

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Source: Gartner

2.1.2. Level and scope of CRM implementation

A characteristic of the CRM revolution in each country is that multinational companies are always the first to grasp and deploy it , they have used this technology in the main markets and are penetrating new markets. In nearly every business sector and every region of the world, multinational organizations and enterprises are investing in CRM technology to support the implementation of more customer-centric strategies in the domestic market.

As CRM functions have become familiar to the business community, domestic companies have also begun to learn and promote the development of CRM.

Most CRM activity is occurring in large firms rather than small and medium-sized firms, which are also typically the ones with the strongest financial resources and highly skilled staff. However, according to AMR research, CRM implementation is actually more successful in mid-sized organizations, but they are more cautious in adopting CRM than large corporations.

Table 2.2: Multinational companies investing in CRM technology

Branch

Company
Automation	GM, Ford, DaimlerChrysler
Chemical	Dow, BASF, DuPont
Contact information	BT Retail, TIM, Deutsche Telekom
Consumer goods	Maytag, Nesle, Dial, Hershey Foods, Quaker Oats, Coca Cola
Energy	Schlumberger, TXU
Financial Services	JPMorganChase, FleetBoston, Society General, AXA
Health care	Blue Cross Blue Shield
High technology	IBM, Sun
Pharmaceuticals	Bayer, Boehringer
Public area	New York City 311, Consignia (UK Post Office)
Travel and transportation	Marriott

Source: Oracle CRM Operational CRM, with features such as sales force automation and call centers, has been implemented in most companies. A key focus is to integrate different channels such as the Internet and call centers. For example, Shell Oil Products uses a CRM system

PeopleSoft to European customers to provide single points of contact and allow their customer service representatives to have a holistic view of each customer. TIM, Italy's leading mobile call center,

Use Siebel eCommunications software to gain a unified view of customers across call center, Internet, and retail channels.

Analytical CRM, which helps uncover purchasing patterns and identify valuable customers, and collaborative CRM, which helps improve customer and internal interactions, are not yet widely adopted. However, the extensive data collected throughout operations is much more valuable when converted into meaningful summaries to support strategic decision making. At the same time, communication channels become more effective when there is cohesion and coordination. Therefore, analytical CRM and collaborative CRM are likely to receive more attention in the coming years.

2.1.3. General results in CRM implementation

2.1.3.1 . Businesses are increasingly aware of the importance of CRM.

According to a report by PMP, a technology research and consulting organization in the US, surveyed businesses are aware that an effective customer relationship strategy is more necessary today than ever before to increase competitiveness. Up to 44% of companies consider CRM “much more important” and 39% consider CRM “somewhat more important”. And no business thinks CRM is not important. These are positive statistics that demonstrate the level of recognition of CRM in business.

Respondents reported their reasons for adopting CRM technology on a scale of 1 (“not important”) to 5 (“very important”). The results showed the following common motivations:

 4.4: Desire to provide better strategic information to functional areas of the business, such as Sales and Marketing.

 4.2: desire to improve customer satisfaction.

 4.1: Desire to lengthen customer cycle.

 4.0: Desire to retain existing customers.

It can be seen that the above indicators are all relatively high, proving that many businesses have assessed CRM as important to their goals. However, it is also necessary to note that the highest index is in the aspect of providing better strategic information within the business, higher than the indicators related to customers, proving that businesses are mainly interested in operational CRM, but have not approached analytical CRM and collaborative CRM.

Besides, realizing the value and fully understanding CRM are two different things.

Figure 2.4: CRM application dynamics

Source: PMP Research

2.1.3.2. Many businesses still confuse the concept of CRM.

Due to the excessive propaganda of CRM software vendors, many businesses do not understand the core concept of CRM and have excessive expectations.

Many companies want CRM to solve all their problems, but they do not know how to implement the software system in their organization. These companies do not study their workforce and do not analyze the characteristics of their activities, so they cannot choose the right software. In fact, CRM is a management system reform. The organizational structure, management regulations and values of the company must change along with the implementation of CRM. Most companies want to find suitable available software without improving the old management system. But no software system can be suitable for all companies.

2.1.3.3. Some businesses do not have a clear purpose when implementing CRM

CRM only works best, helping businesses compete effectively when it has a clear and specific purpose. For example, an individual owns a PDA worth $500 but hardly uses it. Instead of the convenient support functions of the PDA such as saving names, phone numbers, and scheduling work, this person always has to carry traditional tools such as a diary, watch, etc. to plan or schedule work for himself. In short, that person buys a PDA just because it is a popular trend in the community. Thus, spending $500 is a complete waste, because the purpose of use is not reasonable, the PDA has gone from being a support tool to a decoration that does not bring any benefits. This is similar to CRM, a company may have to spend $500,000 to own a CRM software. Whether this investment is right or a waste depends entirely on whether the business knows how to use it or not, and what the purpose of use is. In fact, not every business has a clear and scientific CRM solution.

Many businesses, especially small and medium enterprises, cannot build a specific competitive strategy, including vision, values, goals, necessary resources, etc. Therefore, implementing CRM is like building a

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