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Social Networks Among Trends in CRM for 2009

Customer relationship management (CRM) projects in 2009 will be all about business value, and that includes adding social networks to the mix, according to a report from analyst firm Forrester Research.

An increased emphasis on business value will see enterprises focusing on customer retention and creating dynamic solutions to support customer facing processes.

"During this economic downturn, customers tell us they need bulletproof financial arguments to get funding for their projects," William Band, Forrester vice president and principal analyst, said in the report.

It is not enough to ensure business value in new projects; enterprises will begin focusing on customer retention instead of customer acquisition to stay afloat, Forrester predicts. "During an economic recession, sustaining revenue growth - or forestalling revenue erosion - becomes even more critical," the company wrote.

But customers are getting harder to win and keep, Forrester said, and the solution is improved customer experience. "Good customer experience is highly correlated to customer loyalty," Forrester said.

To improve the customer experience, enterprises will integrate CRM functionalities better with their back end enterprise resource planning (ERP) and supply chain management (SCM) systems, Forrester said. They will focus more on agile and usable solutions tapping these back end systems to support customer-facing applications.

Smaller vendors will take the lead with targeted offerings, while larger vendors like Microsoft, Oracle, SAP and IBM (NYSE: IBM) will focus on cross-functional applications with more flexible process definitions, Forrester predicts.

Another way to improve customer experience will be to incorporate social networking capabilities in CRM applications, and Forrester predicts that enterprises will begin doing this in 2009.

This will be the expansion of a trend kicked off by Salesforce.com (NYSE: CRM) when it implemented social networking features, in Force.com for Facebook recently.

Working hard for the money

CRM professionals must build a sound business case for projects, Forrester said. They must answer questions about the project's business benefits, its impact on IT or project costs, whether it increases or decreases future flexibility, and how risks will be mitigated.

Getting business value includes reducing the risk of implementing CRM projects, and Forrester predicts that risk proofing will be near the top of the list of priorities for CRM professionals in 2009. Following a recent survey of technology, business and IT leaders at 133 organizations, Forrester identified 27 risk areas that could impact CRM projects.

That focus on business value will trickle down to hit vendors. Enterprises will demand that their CRM vendors provide clear and specific data about the business value their solutions deliver, Forrester predicts.

In 2009, CRM professionals will continue to focus on how enterprises collect, distribute and use data to create value, Forrester predicts. "CRM professionals tell us that poor customer data management is one of the biggest barriers to getting value from their CRM programs," the report said.

Enterprises will look at trends like service-oriented architecture (SOA) and software as a service (SaaS) to bolster negotiations with vendors on pricing and licensing in 2009, while key vendors such as SAP (NYSE: SAP), Oracle (NASDAQ: ORCL) and Microsoft (NASDAQ: MSFT) will be pressuring them to upgrade, Forrester predicts.

Issues with software licensing and pricing are not limited to CRM vendors; they affect enterprises using all types of applications, and they have given rise to companies like Acresso that offer license management products.

The increasing use of SaaS is going to pose a threat to CRM vendors offering traditional on-premise solutions, as it does to vendors offering other applications. SaaS solutions reduce up-front costs for hardware and software and trim maintenance costs, providing CRM projects more business value.

Several CRM vendors offer SaaS options, Forrester said, and this will add to the pressure on vendors offering on-premise solutions. Salesforce.com, the leader in SaaS CRM, has racked up record results, and its feisty CEO, Marc Benioff, has often pointed to the recession as a driver for strong growth among SaaS vendors.