Europe Remains a Global Leader for CRM Software Adoption
Recognizing software technology's ability to cut costs, improve marketing performance, grow sales win rates, improve support and enhance customer relationships, European businesses will continue to maintain their investments in customer relationship management (CRM) even as the economy continues its slow rebound.
Despite the economic pressures, CRM adoption throughout Europe will stay flat or grow slightly - about 0.7% - according to a January 2010 report by Gartner. This compares well to other business-critical applications that have seen severe dips in spending, experts said. Overall, 45% of poll respondents do not plan to select new CRM technologies this year, said Chris Pang, principle research analyst at Gartner. This is up 5% from last year - but still leaves 55% who will or may invest in new CRM software solutions.
“In terms of growth opportunity in the market, SaaS solutions, e-commerce and CRM analytics will continue to see strong demand in 2010,” Pang said. “Overall CRM investments are subject to heightened levels of scrutiny and executive-level involvement, and as a result, we are seeing an increasing need for support and guidance in measuring and assessing the business value and return on investment of CRM. However, we foresee the CRM software market returning to single-digit growth beginning in 2010."
Other studies mirrored Gartner's expectations.
"The CRM application market in Western Europe was remarkably resilient during the 2009 economic downturn and ended with a total value of $4.7 billion," said Bo Lykkegaard, research director in IDC's European Software and Services expertise center. "Some of the key trends in IT today, such as SaaS, online channels of customer interaction, unified communication, the Social Web, and smart phones, are opening up new ways of managing customer relationships as well as revenue possibilities for packaged CRM applications."
And 46% of CIOs and end-users among 500 EU organisations want to invest in their CRM applications, according to a survey by telecommunications firm Vodaphone that appeared in MyCustomer.com. In addition, 45% plan to enhance their data-collection applications and 44% will upgrade their database-management solutions, the study found.
"From the front line to the board room, apps that can improve customer service are the killer apps," said Jonathan Rutherford, Vodafone UK’s head of large business marketing.
Six out of 10 companies with more than 10,000 employees planned to integrate their CRM applications with other business tools and applications such as ERP software systems, but only 45% of businesses with fewer than 1,000 employees expected to take similar steps, the study showed.
European CRM Growth
Within western Europe, leading CRM adopters include Germany, the United Kingdom, Scandinavian nations, Italy, France and Spain.
More segmented areas appear in eastern Europe and former Soviet nations. However, new businesses in these nations may be starting their CRM implementations from scratch, without the need to deal with the investments - and headaches - often associated with legacy infrastructures. These nations also show a higher propensity to adopt open source CRM software systems, based largely on their lower acquisition costs.
In Slovenia, for example, the overall software market was estimated to be worth about $226 million in 2008, compared with $200 million in 2007, according to a May 2009 report by Business Monitor International. Through 2017, software was expected to enjoy a compound annual growth rate of 10%, BMI predicted. However, software piracy is a major concern in Slovenia and many other former Soviet nations; in 2007, 48% of the software was estimated to be illegal, according to the Business Software Association.
But CRM and other business applications are far from saturated, researchers found.
"In the enterprise segment, the saturation (79%) of the large-enterprise market in terms of essential business applications should encourage vendors to look to other areas such as CRM software and business intelligence, or to focus more on vertical customization," BMI wrote in its report. "Vendors are now looking more to other areas such as CRM, and business intelligence, where faster growth is possible."
European CRM Software Requirements
Unlike single- or dual-language nations, European businesses and their CRM software systems are challenged by multiple languages and currencies. While the advent of the Euro has decreased some currency complications, companies transacting with the United Kingdom and other non-Euro nations also must ensure their CRM solution can manage multiple currencies and the associated exchange rate gains and losses.
In addition, Europe as a union has strict privacy laws surrounding how companies safeguard consumers' information. And businesses should be aware of how their CRM vendors protect and adhere to European Union and individual nation's laws. This is of particular interest with software-as-a-service CRM solutions where the hosting may originate within data centers outside Europe.
Likewise, CRM technology must seamlessly cope with the multiple languages potentially spoken or written by customers, partners or employees via phone, letter, e-mail or social network. Since the CRM software system will capture, share and analyze this invaluable data, it's critical this information is understandable in the necessary languages and formats.
SugarCRM, for example, is available in 75 languages while Microsoft’s new Dynamics CRM 2011 is offered in 42 languages. Salesforce.com's site includes a menu of about 17 languages, including European tongues ranging from British English to Spanish, Italian and Swedish. And Convergys Multishore Solutions offers services in 35 languages, according to the relationship management service and software provider.
In many instances, developers - whether European or foreign - have won kudos from local publications or government agencies. NetSuite’s flagship ERP system and NetSuite OneWorld have been certified by the German Institute of Auditors, which validated the company's suitability for use in regional divisions of multinational companies with operations in Germany or for use by companies with headquarters in Germany. Salesforce.com and other SaaS CRM vendors have earned ISO 27001 certification for their service availability, information security and data privacy processes.
SugarCRM partner 3Dconnexion won the CRM Best Practice Award at CRM Expo in Nuremberg, Germany, and Salesforce.com took home four awards from the UK Software Satisfaction Awards, including Enterprise CRM Software of the Year and SME CRM Software of the Year.
Companies also are considering and adopting CRM solutions from regional developers. One 2008 report by IDC included SAP; Oracle; SAS; Salesforce.com; Amdocs; Microsoft; Cegedim; SuperOffice ASA; Choridant Software, and Sage Group, among the top 10 Western European CRM applications. But there are many other developers of hosted and on-premise CRM applications, some designed for specific regions or industries, and others targeting the more general business market.
Throughout the diverse European business landscape, across national boundaries, spanning multiple languages and vertical markets, businesses continue to invest in CRM software systems, recognizing that the dedication to improving operations and productivity, cutting costs and enhancing customer service are prerequisites to sustained business success.
Some of the key trends in IT today, such as SaaS, online channels of customer interaction, unified communication, the Social Web, and smart phones, are opening up new ways of managing customer relationships as well as revenue possibilities for packaged CRM applications."
Bo Lykkegaard, IDC Research Director European Software and Services
Customers and the vendors which serve them exist from Austria to Zimbabwe and everywhere in between. CRM strategy and supporting CRM software systems must adapt to differences in culture, data structure, business processes, privacy and views of the customer relationship by region and country.
Software as a Service (SaaS) CRM continues to be the highest growth sector channel in the customer relationship management software industry, however, few of the SaaS CRM data centers reside in the EU, which poses both regulatory and data privacy concerns. Our next EU CRM article will highlight the issues and alternatives for SaaS CRM adoption in Europe.