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 Alison Diana CRM Software Adoption Surges in Asia Pacific

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 By Alison Diana

On-Demand CRM Systems Accelerate in Southeast Asia, Australia and New Zealand

Building on the successful customer relationship management (CRM) software implementations within the telecommunications and financial services sectors, CRM adoption throughout much of the Asia Pacific region is accelerating in many vertical markets. In fact, CRM software is a top organisational priority, according to a 2009 study by Springboard Research.

Many Asia businesses adding CRM systems to their enterprise applications are selecting software as a service (SaaS) solutions, according to “Cloud Computing in Asia Pacific 2010, End-User Adoption Trends" by Springboard Research. In fact, on-demand systems represented 48% of CRM software implementations in the Asian region, excluding Japan (APEJ), the research firm found. The research report also forecast that on-demand CRM application sales are expected to grow to US$570 million by 2012, compared with US$183 million in 2008 and US$460 million in 2010.

“APEJ organisations are particularly keen to exploit the cost savings potential of cloud solutions, with 49% viewing the cloud as primarily a cost-savings measure, versus only 23% who view it as a strategic investment”, said Sanchit Vir Gogia, associate research manager, software, at Springboard Research.

In Australia and New Zealand, 61% of research participants planned to purchase web-based CRM solutions within the next 12 months. Other top adopters included India and the Southeast Asia region, Springboard Research said.

CRM Software Vendors Target Asia

Lured by a growing Asian software market, many U.S. and European CRM vendors are targeting Asia, and particularly China and Australia. But according to research firm Datamonitor, these global software manufacturers face stiff competition from local Indian and Chinese providers. In the Asian software market, aggressive pricing and keen knowledge of local business are critical criteria, often even more important than software functionality, the research firm said. Government regulations and policies also may stunt Western companies' efforts, it noted.

“Software as a service has high potential in Asia Pacific; however, it is still at the emerging stage. Both SaaS providers and users are still in the learning curve,” Twiggy Lo, principal research analyst at Gartner, told Enterprise Innovation. “A lot of fine-tuning is required, for technical issues, pricing and engagement models that comply with legal requirements in Asia Pacific countries. Providers must be more transparent in meeting user expectations.”

Malaysia and China, which, with India, make up the top three growth markets, are likely to be dominated by local software suppliers, according to Datamonitor.

But that doesn't mean Western companies aren't trying to lure clients in this heavily-populated region, often through business partnerships.

When China Resources Vanguard (CRV) wanted to install a CRM system to enhance business and financial management across its retail stores, it selected Oracle Gold Partner Noahark Consulting to install a budgeting system based on Oracle's Hyperion. "Oracle’s Hyperion system has eased the task of managing budgets and monitoring the performance of our 2,600-plus stores. The system also allows us to spot and act on market trends, which enables us to stay ahead of our rivals in the highly competitive retail sector” said Jie Yang, Senior Manager, China Resources Vanguard Co.

Looking to further expand its global footprint in the region, in September 2009, HCL Technologies and Microsoft partnered to offer FinEdge, a financial services and retail banking CRM application. The banking solution, built on Microsoft Dynamics CRM platform, is customisable and scalable, designed to help banks increase productivity and revenue, promote financial products cross selling, enhance service and attract and retain high-value clients, according to HCL.

Salesforce.com added more than 1,800 net new on-demand customers in the Asia Pacific region during its fiscal year ended January 31, 2010, bringing the total customer base for its hosted CRM solution to almost 7,000 organisations in the region. Salesforce.com dominates SaaS and hosted CRM systems in the region, due to its relatively long history in the region and global reach, according to Springboard Research.

"Asia Pacific was the fastest growing region for Salesforce.com globally in FY10," said Marc Benioff, chairman and CEO of salesforce.com. "Total revenues for the full fiscal year 2010 in the Asia Pacific region were up 36% year-over-year, demonstrating significant interest from large and small organisations in Asia Pacific for cloud computing based enterprise applications."

Other SaaS-based CRM vendors that are successfully targeting Asia-Pacific include Digital China, Gate 13, Netsuite, Siebel and SugarCRM. SAP also has a history in Asia Pacific, signing its first CRM customer in 2001, said Cathy Ma, product manager, SAP CRM Interaction Center, in a company blog.

India Becomes CRM Software Growth Region

India's CRM software market will see significant growth this year, Clint Oram, co-founder or open source software provider SugarCRM told Biztech2.0.

"Today’s business executives recognise that after investing in back-office systems like Enterprise Resource Planning (ERP) and Supply Chain Management (SCM), now is the time to invest in front-office systems like CRM applications to make their sales people more effective and responsive to customers. Indian companies recognise that more efficient and effective sales people translate very quickly to more revenue growth," he said.

Indeed, CRM systems in India are expected to grow at a compound annual growth rate of 12% between 2008 and 2012, according to research by Frost & Sullivan. The Indian subcontinent represents the second largest CRM market in the region, after Australia and has the second highest CAGR after China, Gartner said.

“The primary business driver is the need to change tracks to be able to grow in the current economic environment. The growth in the previous year's meant focus on increased production and enhancing services delivery. This focus has now changed to customer need and customer retention and the ability to cross-sell in an identified target customer base," Maninder Gerewal, managing director of Religare Technova told ChannelWorld.

China alone offers CRM developers, hosting companies and solution providers a veritable treasure trove of customer opportunities. The nation's CRM growth rate surpasses 30%; by comparison, almost all other Asian Pacific countries have growth rates between 4% and 9%, according to Frost & Sullivan. But its geography and regional differences, language and culture, can make it challenging for Western companies to target.

"China is a big and complicated market, where economic growth, customer maturity, and culture vary from region to region. Further, we cannot overlook the fact that China's current marketing environment and management culture is quite different from that in Western countries," said SAP's Ma, in her blog. "As a consequence, software vendors need to develop a deeper understanding of what Chinese companies actually need rather than merely introducing one dazzling technology concept after another, and it seems likely that this must happen before a profitable CRM business model can be developed."

Because the Asia Pacific region encompasses so many differences, vendors are wise to target each nation as an independent market, as opposed to a broad cohesive region. Selecting the right business partners, dedicating ample resources to localise the CRM software solution, and marketing and supporting customers in a culturally appropriate manner can translate into a sustained business model, and transform the Asia Pacific market into a CRM jewel. End

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China is a big and complicated market, where economic growth, customer maturity, and culture vary from region to region. Further, we cannot overlook the fact that China's current marketing environment and management culture is quite different from that in Western countries."

Cathy Ma, SAP Product Manager

 

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Asia IT Forecasts

Industry research and analyst projections suggest continued advancement of customer relationship management strategies.

  • In its research report titled "SaaS CRM in Asia Pacific: Strong Growth Despite Market Concerns" Springboard Research predicts the Asian SaaS Customer Relationship Software market at US$183 million for the year ended 2008 and forecasts the market will grow to US$570 million by 2012.
  • The Asia Pacific research also found that CRM systems are a top company priority, with 40% of participants stating a preference to purchase SaaS CRM systems in the next 12 months. The demand for hosted CRM applications is highest in Australia and New Zealand, with 61% of participants planning purchases in the next 12 months, followed by India and Southeast Asia.
  • Frost & Sullivan projects that CRM software spending in Asia will reach $408 million, an 8% growth rate, going into 2010. They also comment that Japan will continue to incur the majority of total CRM system investment while China and Korea will be close behind. The analyst firm also points out that CRM analytics capabilities will be a driver for regional CRM software adoption.

 

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