Gartner's 2002 European CRM Survey: As Projects Progress, Challenges Abound

Transcription

1 E. Thompson, J. Davies, N. Frey Strategic Analysis Report 4 September 2002 Gartner's 2002 European CRM Survey: As Projects Progress, Challenges Abound Gartner presents detailed findings from its survey of European CRM Summit attendees, and offers recommendations keyed to the survey findings. Management Summary Gartner surveyed attendees of its 2002 European Spring Customer Relationship Management (CRM) Summit conference, posing a range of questions on the status of their CRM initiatives, the challenges they faced, the benefits and investment returns they achieved, and the software vendors they were using or considering in their efforts. This Strategic Analysis Report presents detailed analysis of the survey results, along with recommendations keyed to each of the survey's subject areas. Highlights of the survey findings include: The IT function governs relatively few (8 percent) of respondents' CRM efforts, with organizations such as sales, marketing and customer service more commonly in charge. One-third of respondents' CRM initiatives are governed at the CEO or board level. Retaining and improving the profitability of established customers are the leading goals of respondents' CRM initiatives. Most respondents failed to begin using metrics before implementing CRM and are unable to report their return on investment (ROI). More than half of those that do know their CRM ROI report that it has failed to meet expectations. Each of Gartner's Eight Building Blocks of CRM was ranked "difficult" to "extremely difficult" to achieve by more than two-thirds of respondents. CRM vision, strategy and technology infrastructure were viewed as the least difficult, while metrics, organizational restructuring and process re-engineering were cited as the biggest challenges. Enterprises are apparently doing a poor job of rewarding staff for increasing customer satisfaction, and of measuring their progress in serving customers better. They claim to be much stronger at knowing their current customers and defining those they want to target. Most respondents are now engaged in strategization, evaluation, selection, testing or deployment of CRM, while a minority have gone fully live with their CRM projects. Stand-alone projects and departmental- or channel-specific initiatives still dominate these efforts. The majority of respondents are currently involved in more than one CRM project, but over half of these multiproject efforts lack enterprisewide coordination. The major functional focuses of the CRM projects under way include customer service, sales effectiveness and operational analytics. Gartner Entire contents 2002 Gartner, Inc. All rights reserved. Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice.

2 Enterprises are relying heavily on best-of-breed and software suite vendors, but framework vendors are not yet a major focus. Siebel was the vendor most commonly cited, reflecting its leading market share position in the European CRM market. Many other vendors were cited, however, suggesting that the CRM software market remains somewhat fragmented in Europe. 4 September

3 CONTENTS 1.0 About Gartner's Spring 2002 European CRM Survey Status of CRM Initiatives CRM Governance Deployment Challenges Enterprise CRM Performance Goals, Metrics and Return on Investment CRM Functional Maturity Application Sourcing Software Vendors Summary...18 Appendix A:Acronym Key September

4 FIGURES Figure 1. Respondent Demographics...5 Figure 2. CRM Implementation Status...6 Figure 3. CRM Project Stages...7 Figure 4. Governance of CRM Initiatives...8 Figure 5. Difficulty of the Eight CRM Building Blocks...9 Figure 6. Addressing Customer-Focused Issues and Taking Key CRM Steps...11 Figure 7. CRM Objectives...12 Figure 8. Measuring CRM Benefits...13 Figure 9. Achieving Predicted Return on Investment...14 Figure 10. CRM Maturity by Functional Initiative...15 Figure 11. CRM Solution Sources...16 Figure 12. Software Vendors Used in CRM Initiatives September

5 1.0 About Gartner's Spring 2002 European CRM Survey This data examined in this Strategic Analysis Report was culled from the results of a survey conducted at Gartner's European CRM Summit, held May 2002 in Paris. A total of 65 conference attendees participated in the survey. The total sample size of 65 respondents has a sampling error margin of plus or minus 12 percent at the 95-percent confidence level. However, because not all survey participants responded to every question, readers must exercise caution in interpreting results in cases where response numbers are low, as they may not represent statistically valid samples. (Response numbers are indicated in each figure.) In addition, because the participants were all attendees of a CRM conference, their attitudes and project plans likely reflect a higher focus on, and engagement in, CRM compared to the average enterprise. In general, given the characteristics and size of the respondent pool, readers should not interpret the survey results to be a scientifically accurate reflection of all enterprises. However, we do believe they provide a useful and roughly accurate "snapshot" of the attitudes and plans of enterprises with characteristics similar to those surveyed primarily large, European enterprises with a vested interest in CRM (that is, enough of an interest to send representatives to a CRM conference). A summary of survey demographics is shown in Figure 1. Sales (5%) Customer Service (9%) Marketing (12%) Respondent's Functional Department Within Enterprise Other (9%) CRM (20%) Information Technology (45%) Industry Sector Transportation Other (7%) Retail (3%) (3%) Telecommunications Pharmaceuticals (19%) (3%) Insurance (3%) Energy (5%) Information Technology Government (7%) (16%) Consumer Packaged Goods (7%) Manufacturing (12%) (58 responses) Figure 1. Respondent Demographics Banking/Financial Services (14%) million (8%) million (13%) Enterprise Size (Annual Revenue in Euros) Less than 100 million (10%) Billion (13%) Rest of World (4%) Global* (16%) Billion (12%) (56 responses) (52 responses) Enterprise Location More Than 10 Billion (29%) Billion (15%) Europe (80%) (56 responses) (* Rather than specify a headquarters location, these respondents merely described their enterprises as "global" ones.) 4 September

6 Respondents' enterprises represented a broad range of industries and a variety of company sizes ranging from under 100 million to more than 10 billion euros in annual revenue. Large enterprises were heavily represented 69 percent of respondents' enterprises made over 1 billion euros in annual revenue, and 29 percent made over 10 billion. (At the time of the survey, the value of one euro equaled 0.92 U.S. dollars.) More than three-quarters of respondents' enterprises are headquartered in Europe. Within the enterprise, the IT function was also heavily represented among respondents. Nearly half said they worked in an IT-based functional department in their enterprise, with the remainder representing non- IT organizations such as CRM, sales, marketing and customer service. 2.0 Status of CRM Initiatives We asked survey participants to select one of five options to describe the status of CRM implementations within their enterprises. The results are shown in Figure 2. How would you describe the status of CRM implementations in your organization? A coordinated, enterprisewide program of projects (29%) No implementation planned (2%) No implementation underway, but planning (15%) A single project (15%) Separate departmental or channel-specific initiatives (38 percent) Figure 2. CRM Implementation Status (65 respondents) That the vast majority of respondents are implementing or planning CRM projects is not surprising, given that the survey participants were attendees of a CRM-themed conference. What is striking, however, is that single projects and departmental or channel-specific initiatives are still dominating investments. The majority of respondents are involved in multiple CRM projects, but more than half of these multiproject efforts lack true enterprisewide coordination. During the 1999-to-2001 period, there was a large increase in number of CRM program managers in Europe, but the situation in 2002 appears to have remained the same as Without a systematic approach to coordination of CRM projects, the likelihood of failure rises. 4 September

7 Recommendations: Choose the right framework from which to manage your CRM initiatives across the enterprise. Proper planning paves the way for a shorter implementation timetable and earlier realization of overall benefits. Understand that CRM is not simply the implementation of technology. It entails changing behaviors and attitudes through positive reinforcement, a process that takes time and requires political skills. Pilot your CRM projects. They are centered around your customer, and are very public. Anything that goes wrong will become visible very quickly. Develop key metrics to measure results, and pilot them to ensure the solution will provide the desired benefits. (For more information, see "Implementing CRM: Business Change Program Not Project," TU ) When asked to identify the current stage of their CRM projects, the vast majority of respondents indicated that they had reached or passed the planning phase. However, about two-thirds were still engaged in strategization, evaluation, selection, testing or deployment, while only about one-third had gone fully live with their CRM projects (see Figure 3). What stage have you reached with your CRM projects? Not Started Strategizing (Planning) Evaluating (Requirements Definition) Selecting Executing (Implementing) Testing/ Deploying Live 2% 15% 14% 3% 25% 8% 34% (65 respondents) Figure 3. CRM Project Stages Operational CRM technologies, such as call center and field sales applications, have been heavily implemented in the United States since the mid-1990s, and in Europe since around The responses to this question suggest that, even now, many companies are still in the early stages of their CRM projects. For these enterprises, the steps involved in developing a CRM vision and strategy are critical (see "Developing A CRM Vision and Strategy," TU ). Recommendations: Enterprises that have yet to embrace CRM need to do so at the board level; otherwise, they risk being left behind as their competitors optimize customer relationships and gain competitive advantage through customer centricity. When choosing a CRM vendor, the selection process should follow a structured methodology that examines six fundamental criteria: vision, viability, technical architecture, functionality, services and cost. This approach will ensure that critical requirements are met, reduce the complexity of 4 September

8 multicriterion decisions, ensure a consensus among different constituencies and provide a foundation for securing management approval. Enterprises in the process of implementing a CRM initiative must ensure that it aligns with the company's CRM strategy, and be aware that the true benefits of CRM will only be achieved through the unification of such initiatives as part of an enterprisewide CRM program. CRM is a journey, not a destination. As business drivers change to reflect market trends, enterprises with "live" initiatives must not only ensure these initiatives continue to align with the overall corporate strategy, but also be aware that other initiatives will continuously be required to fulfill enterprise requirements. 3.0 CRM Governance We asked survey participants to identify the primary owner of the CRM initiatives in their enterprises (see Figure 4). The results reveal that, among enterprise departments, the IT function governs relatively few (8 percent) of respondents' CRM efforts, and that organizations such as sales, marketing and customer service are more commonly in charge. Who is the primary owner of your enterprise's CRM initiative? Executive Committee, Including Board or CEO (32%) Sales (14%) Marketing (17%) Enterprisewide Project Team (14%) Figure 4. Governance of CRM Initiatives Chief Customer Officer (5%) IT (8%) (63 Respondents) Customer Service (10%) What is more striking, however, is that more than half of these efforts are governed not by an individual department or organization, but instead by an executive committee (32 percent) or enterprisewide project team (14 percent). This suggests that, during the past two years, many European enterprises have learned how critical effective, cross-organizational collaboration is to the success of a CRM initiative. Recommendations: Enterprises should escalate CRM responsibility to the board or executive-team level to enhance the success of their CRM initiatives. 4 September

9 Sales, service and marketing departments seeking to embrace CRM should be encouraged to work with the IS organization (for technical input) to put a joint business case together. Create mechanisms for joint decision making and responsibility that recognize the contributions of individuals to the whole. Key areas in this effort include: Organizational changes Decision making must come closer to the customer and allow for greater speed of action. New organizational structures should use communities and virtual teams. Knowledge sharing Sharing knowledge builds collaboration and innovation, but political barriers are high. The evolving tools and techniques of knowledge management should be employed. Incentives To start, align targets with customer goals, but recognition and the celebration of contributions are more motivating. There are numerous ways to recognize people. (See "True CRM Requires Organizational Collaboration," DF ) 4.0 Deployment Challenges Survey participants were asked to indicate whether they had considered each of Gartner's Eight Building Blocks of CRM and, if so, how difficult each was proving to be. The participants had a good understanding of the Eight Building Blocks because they took the survey after having listened to a 90- minute presentation that introduced the framework. The results show that most respondents had considered every building block, and were finding all of them to be tough going (see Figure 5). Every building block was ranked "difficult" to "extremely difficult" by more than two-thirds of respondents. CRM vision, strategy and technology infrastructure were viewed as the least difficult, while metrics, organizational restructuring and process re-engineering were identified as the biggest challenges. To what extent is deploying each of the eight CRM building blocks challenging your enterprise? Customer-centric metrics Not Considered Easy Difficult Very Difficult Extremely Difficult Average Difficulty Rating* 2.8 Organizational restructuring 2.7 Customer process re-engineering 2.6 Customer experience and value analysis 2.3 Customer-centric data management 2.2 CRM strategy 2.2 Technology infrastructure 2.1 Customer-centric vision 2.0 (59-62 Responses) Figure 5. Difficulty of the Eight CRM Building Blocks 0% 20% 40% 60% 80% 100% * 1 = easy 4 = extremely difficult 4 September

10 Recommendations: Vision: The board must take leadership in creating a CRM vision (the "what" and "why") for the enterprise. The CRM vision should be used to guide the creation of CRM strategy (the "how"). Strategy: The CRM strategy is all about how to build and develop a valuable asset the customer base. It must set objectives and metrics for succeeding in that goal. It directs the objectives of other operational strategies and the CRM implementation strategy. Customer Experience: The customer experience must be designed in line with the CRM vision and must be constantly refined, based on actively sought customer feedback. Organizational Collaboration: Changes to organizational structures, processes, metrics, incentives, skills and even the enterprise culture must be made to deliver the required external customer experience. Ongoing change management will be key. Processes: Successful customer process re-engineering should create processes that not only meet customers' expectations and support the customer value proposition, but also provide competitive differentiation and contribute to a designed customer experience. Information: Successful CRM demands the creation of a customer information "blood supply" that flows around the organization, and tight integration between operational and analytical systems. Technology: CRM technologies form a fundamental part of any enterprise's application portfolio and architecture. CRM application needs should be considered as the provision of integrated functionality that supports seamless customer-centric processes across all areas of the enterprise and its partners. Metrics: Enterprises must set measurable CRM objectives and monitor all levels of CRM indicators to turn customers into assets. Without performance management, a CRM strategy will fail. (See "The Eight Building Blocks of CRM," DF ) 5.0 Enterprise CRM Performance Survey participants were asked to rate how well they believed their enterprises performed in addressing eight customer-focused issues, as well as nine key CRM initiatives (see Figure 6). The results suggest that enterprises are doing a poor job of rewarding staff for increasing customer satisfaction, and of defining measures to monitor progress in serving customers better. Respondents are most confident about their enterprises' performance in knowing who their customers are, and in defining the key customer groups they want to target. However, this question is a measure of survey participants' confidence and perception, not their actual competence at the various skills. So the results should not be misconstrued as hard evidence that the enterprises have great strengths in understanding their customers. 4 September

11 On a scale of 1 (poor) to 5 (excellent), please rate your company's performance in the following areas: Average Rating: Rewards staff for increasing customer satisfaction 2.2 Manages resources against key customer groups according to their value Encourages staff to deliver customer satisfaction in everything they do Has useable records on all customers (at the individual customer level) Makes it easy for customers to Communicate with the enterprise Has specific operational staff responsible for customer management Understands the link between customer satisfaction and profitability (61-63 respondents) Understands exactly who its customers are 3.4 On a scale of 1 (poor) to 5 (excellent), please rate how well your company has done the following: Defined measures to monitor its progress in serving customers better 2.1 Coordinated its CRM initiatives Defined a contact strategy for each customer group Established a board-level champion who actively encourages good customer management or CRM Defined an IT architecture for customer-facing systems Defined a strategy for dealing with key customer groups Defined the business opportunity within each customer group Defined the key product and service needs of each customer group Defined the key groups of customers the company wants to deal with (63-65 respondents) Figure 6. Addressing Customer-Focused Issues and Taking Key CRM Steps September

12 Recommendations: Build customer satisfaction metrics into employee incentive compensation policies. Install processes such as online surveys or scripted questions during inbound interactions to monitor customer satisfaction and automatically act on the information gathered. Skimp on a change management plan at your peril start by politically mapping the landscape and creating CRM understanding. Build a staff role and competency matrix. Redefine brand values and audit staff behavior against them. Set up brand coaching systems. Experiment with mechanisms for joint decision making and knowledge sharing for example, intranet communities. Spread customer understanding around thickly. Use communities of practice for example, customer insight. (See "True CRM Requires Organizational Collaboration," DF ) 6.0 Goals, Metrics and Return on Investment Attendees were asked about the goals of their CRM implementations, and how they measure the benefits achieved. Among respondents' CRM objectives, retaining their current customers and increasing the profit derived from each are far higher priorities in their CRM efforts than acquiring new customers (see Figure 7). These results are not surprising and reflect the economic downturn, where a focus on retention for both marketing and sales functions becomes more critical. Please rank the following CRM objectives in terms of their importance in providing benefits to your organization: Customer retention Increased profit per customer Cost reduction and efficiency Most important Second most important Third most important Enhanced cross-selling and up-selling opportunities Acquisition of new customers Figure 7. CRM Objectives No. of Responses 4 September

13 To gauge their success in meeting their objectives, most respondents are measuring benefits at some point, whether before, during or after implementing CRM (see Figure 8). However, about one-quarter of those who are gathering these metrics only started doing so after their CRM implementations went live, suggesting that they may have insufficient data to make meaningful comparisons. About one-fifth of respondents aren't measuring benefits at all, and have no intention of doing so. Are you measuring the benefits of your CRM initiative? We started measuring after we went live (19%) We are not measuring and do not intend to (21%) We started measuring during implementation (36%) We started measuring before we strategized (24%) Figure 8. Measuring CRM Benefits (58 respondents) Recommendations: Use metrics to: Set and gauge the level of success in meeting CRM objectives. Provide feedback on the CRM strategy. Monitor customer experience. Act as a tool for change management. Change the ways employees are compensated. Communicate externally as a loyalty instrument. Structure CRM metrics in a hierarchy: Corporate metrics should be set by board-level executives and have a direct bearing on the CRM strategy. They should be simple, understandable and aimed primarily at shareholders or dominant stakeholders. Customer strategic metrics should monitor the success of the CRM strategy (for example, customer lifetime value and profitability). There should be clear links between customer metrics and corporate objectives. The most important ones are connected to the customer life cycle. Operational process metrics should measure tactics and feed customer strategic metrics. There are many of them. Establishing the right ones requires working out what are the most important drivers of the strategic measures. 4 September

14 Infrastructure metrics measure efficiencies of specific processes and provide input to the operational/process metrics. Infrastructure metrics can be extracted from systems such as call center logs, Web site analytic systems, human-resource systems (for example, for employee qualifications), and enterprise resource planning (ERP) systems (for example, for manufacturing defect rates and delivery dates). A wealth of metrics is available in this category, and these metrics are often the easiest to obtain. (See "Getting the Best Out of CRM Performance Metrics," DF ) Judging from survey participants' feedback, determining CRM return on investment (ROI) and achieving predicted ROI are still proving to be major challenges for enterprises. Close to 80 percent of respondents did not specify whether they had met their ROI objectives, either because they could not do so or were not yet ready to (see Figure 9). Among those that could answer the question, the majority had failed to achieve their predicted returns. Are you achieving your predicted ROI from your CRM efforts? Yes (8%) Don't know or are not that far into the implementation (57%) No (13%) In the process of measuring (22%) (63 respondents) Figure 9. Achieving Predicted Return on Investment The results raise the question: Is measuring ROI too difficult to achieve, is it not useful in the context of CRM projects, or do enterprises merely have poor controls on investments of this nature? Recommendations: Do not over-focus on direct ROI analysis drive investment through benefits realization. Define businesswide IT value standards. Apply these to CRM and other IT-intensive business strategies for consistent and insightful benefits realization. Establish a "whole of life" benefits realization process, which incorporates the full spectrum of activities from initial investment assessment through ongoing value extraction to retirement. Clearly allocate roles and responsibilities for benefits realization it won't happen by simply relying on traditional project management techniques. 4 September

15 Accountabilities, IT value metrics and IT project management are prerequisites for delivering and sustaining business value from CRM investments. Continually question the assumptions on which the project was based. (See "Ten Steps to Forecasting and Achieving CRM ROI," TG ) 7.0 CRM Functional Maturity We asked survey participants which CRM initiatives were completed, in progress or planned in each of nine functional categories. Call or contact center enhancement, e-commerce and marketing campaign management are the maturest of respondents' initiatives (see Figure 10). Which of the following CRM initiatives are completed, in progress or planned for the future? Completed In Progress Future Initiative Call or Contact Center Enhancement (60 respondents) E-Commerce (e.g., online interactive selling solutions) (51 respondents) Marketing/Campaign Management (58 respondents) Sales Effectiveness (e.g., opportunity management and incentive compensation solutions) (55 respondents) Self Service (e.g., online problem resolution) (55 respondents) Operational Analytics (58 respondents) Integration of Partners and Suppliers (54 respondents) Real-Time Predictive Analytics (e.g., propensity to churn) (49 respondents) Multichannel Integration (58 respondents) Figure 10. CRM Maturity by Functional Initiative 0% 20% 40% 60% 80% 100% Respondents were asked to respond only to the functional areas that applied, so those with no deployment plans in a given category should not have selected it. However, in some categories (notably "real-time predictive analytics" and the "integration of partners and suppliers"), a surprisingly high percentage selected "future initiative," leading us to suspect that some respondents used that response as a proxy for "no plans," rather than skipping the category. Readers are cautioned, therefore, that some of the "future initiative" percentages in Figure 10 may be inflated. As for CRM initiatives now being implemented, the ones in progress in the highest percentage of respondent enterprises involve customer service and support (CSS, that is, call or contact center enhancement), sales effectiveness and operational analytics. 4 September

16 Recommendations: Customer Service Before making CSS investments, involve customers in a survey to determine the top drivers of customer satisfaction. Create service-level agreements with the customer base for selected key processes, and provide customers with clear, unbiased mechanisms to communicate their true experience and level of satisfaction. Sales Aim for improvements in sales effectiveness rather than efficiency when deploying applications. Beware of underestimating the implementation of field sales applications, which have the highest rates of failure in CRM. When successful, however, these applications can deliver a substantial competitive advantage. Operational Customer Analytics Reconcile needs-based and value-based segmentation schemes in the enterprise's customer relationship strategy and tactics to optimize customer relationships. Limit the effects of customer dissatisfaction and increase customer retention by adding triggers based on customer dissatisfaction with event-driven campaigns. (See "Customer Service and Support: Perspective," DPRO-98631; "Supercharge the Sales Effort: Sales Applications for Large Enterprises," R ; and "Customer Information Is the Lifeblood of CRM," DF ) 8.0 Application Sourcing We asked survey participants to specify the types of vendors from which they were sourcing their CRM applications, or whether they were building these applications themselves (see Figure 11). Which of the following sources are you using, or planning to use, for your CRM solution? CRM Vendor ERP-and-CRM Suite Vendor Best-of-Breed Vendor Framework Vendor Build It Yourself Figure 11. CRM Solution Sources No. of Responses 4 September

17 As Figure 11 shows, the build-it-yourself approach is still being used by a significant number of respondents. The self-build approach, however, has been in decline in recent years had this survey been conducted three years ago, we suspect that more than 30 percent of respondents would have reported this approach as an application source. Among those using software companies, CRM vendors remain the most popular choice, although ERP suite vendors appear to be making rapid headway. The responses suggest that framework vendors are not yet being considered seriously by the majority of enterprises. Recommendations: CRM suite vendors should be considered when a strong functional CRM capability is required across sales, marketing and customer service. Enterprise suite vendors should be considered when tight integration across the primary enterprise software building blocks ERP, CRM and supply chain management is of paramount concern, and when adequate CRM functionality is sufficient. Best-of-breed vendors should be considered only when departments demand the "best" functionality available and can justify the additional integration efforts needed to deploy a complete CRM solution. Framework vendors should be considered when process flexibility is the primary driver. The build-it-yourself option should be considered as a last resort by enterprises that either require ultimate control of the solution's architecture and functionality, or cannot afford expensive suite alternatives. (See "Technology Decisions Are Key to Enabling CRM Strategies," DF ) 9.0 Software Vendors We asked survey participants to indicate which vendors they were using in their CRM efforts. The results are shown in Figure 12. In interpreting the results, readers are cautioned that the numbers of responses for each vendor are lower than the total sample size, and are less statistically reliable than the survey as a whole. (For a more accurate measure of CRM vendor market shares in Europe and other geographies, see "CRM Software Growth Remains Stalled," SWSA-WW-MS-0112.) Given the high number of vendors cited, however, the results do indicate that CRM market shares remain fragmented in Europe. Siebel was the vendor most commonly cited, reflecting its leading market share position in European CRM. 4 September

18 Which vendors' software are you, or will you be, deploying in your CRM initiatives? (Select all that apply.) Siebel SAP SAS (and Intrinsic) PeopleSoft Oracle Amdocs (Clarify) NCR Peregrine (Remedy) E.piphany Kana Chordiant Other Figure 12. Software Vendors Used in CRM Initiatives Recommendations: Number or Responses A technology acquisition decision is only as good as the structure that underlies it. Success in selection will directly impact success in implementation. Follow a structured, consistent methodology. Invest time in identifying key differentiating criteria. Determine the strengths and shortcomings of products by validating vendor performance. Appreciate services-related requirements. Understand the market and recognize potential compromises. (See "CRM Software Requests for Information and Requests for Proposals," R ) 10.0 Summary Most respondents to Gartner's 2002 European CRM Survey are now in the process of planning or implementing their CRM projects. Although individual, departmental- or channel-specific initiatives (as opposed to enterprisewide coordination) still characterize the majority of these projects, about one-third are governed at the CEO or board level. 4 September

19 Survey feedback suggests that enterprises are facing numerous implementation difficulties, including all of the Eight CRM Building Blocks, determining ROI and achieving expected ROI results. On average, respondents believe that their enterprises are doing a poor job of rewarding staff for increasing customer satisfaction, and of measuring their progress in serving customers better. Respondents' are much more confident, however, about their enterprises' ability to know their current customers and define those they want to target. It bears noting, however, that this confidence may be misplaced. Retaining and improving the profitability of their current customers, rather than acquiring new ones, is a major focus of respondents' CRM initiatives. The major functional focus of CRM projects now under way includes customer service, sales effectiveness and operational analytics. In their software sourcing for their CRM efforts, some survey respondents are still delivering their applications through in-house development, but most rely heavily on best-of-breed or software suite vendors. Framework vendors are not yet a major focus. Siebel appears to be holding its market share lead in the European CRM software market, which remains highly fragmented. 4 September

20 Appendix A:Appendix A: Acronym Key CEO CRM CSS ERP IS IT ROI Chief executive officer Customer relationship management Customer service and support Enterprise resource planning Information systems Information technology Return on investment 4 September