Cloud Computing and Enterprise CRM: The Way Forward

To remain successful against the backdrop of complex market dynamics and increased competition, it has become critical for organizations to offer more evolved products and services that are not only cost-effective, but also extendable, scalable and focused on improved customer experience. Cloud computing, in its maturing stage, is seen as a very promising technology of the future that can be critical to lower investment and maximize ROI in the enterprise CRM space.

Cloud computing has so far been very effective in hosting applications among smaller CRM players. We believe there is significant opportunity in the enterprise CRM space to leverage the benefits of this technology.

The target has so far been only the SME and users of simple/ less-complex applications that need minimal customization. With time, there will be demand for and inclination toward an offering that will help even bigger players move onto the cloud to effectively reduce infrastructure spend and license costs. However, the solution of providing full-fledged applications/services hosted on th cloud will not come without posing a range of challenges.

Cloud CRM: Where We Are

Gone are the days when customer relationship management was a simple repository of customer information with a capability to access the information with ease. In today’s world, the basic DNA of CRM remains the same, but a lot more boundary elements have entered the picture.

Enterprise CRM products are available in the market in many different flavors — integration with social media, sales forces automation, analytics, marketing, campaign management, support capabilities, customer experience, and the list goes on. Along with CRM, provisioning and delivering media for enterprise CRM is moving from a more traditional on-premise setup toward cloud-based services on an enterprise scale. Cloud computing is combining CRM markets for the consumer and enterprise services for information access and delivery.

Cloud computing has gradually evolved through a series of innovations in various products and services and has paved the way for future growth.

Cloud-based services, social networking tie-ins and device-agnostic tools are rapidly gaining ground.

With the rise in social media, the CRM space has evolved from the traditional contact center model to support in real-time on social networks. Customers are no longer interested in calling the help line to report a problem, but would rather tweet about it or discuss it on Facebook.

The Enterprise Cloud Vantage Point

Apart from the customer pull, the most notable tick on cloud computing is the price; affordability of CRM is inversely proportional to the underlying hardware. Vendors can take large servers and run many self-encapsulated “virtual” servers on top, renting or leasing each.

Since many cloud-based services, such as servers, can be allocated, decommissioned and upgraded on demand, enterprise CRM organizations should look to the cloud for the cost advantage. Along the same lines, cloud CRM is free from location constraints and provides flexibility to users to subscribe or unsubscribe according to their business requirements.

Freedom from responsibility for backup, physical security of the computing infrastructure and other hardware-related concerns have long been used as selling points, even by SaaS CRM vendors like Oracle On-Demand and Salesforce.com.

There is already a level playing field, since the smaller players working around the cloud are offsetting the major investments in fixed capital costs (servers, storage, networking components) as well as operational costs (administrators for various software components, operating systems, ever-growing databases, secure configurations and processes, etc.). Hence, enterprise CRM users are already under heavy pressure to embrace the cloud to remain competitive and avoid the bleeding caused by smaller players.

The Other Side

The other side of the coin is also worth consideration. Neither vendors nor consumers have warmed up to the idea of the cloud yet, and both currently prefer on-premise and licensed fee- based enterprise CRM applications.

In the initial phases of CRM implementation, companies will likely prefer private clouds to public ones. Further, public clouds are not fully enterprise-focused. They are vulnerable to security breaches and are less appealing to organizations in which customer data is key to the business. The movement toward public cloud offerings will be gradual — not hassle- free in a single go.

There are certain CRM implementations where cloud computing will still pose serious challenges and will not be the right fit:

• Integration woes: Integrating and moving a multitude of business functions (ERP, HR, compensation & benefits) into the cloud, and integrating with the existing ownership model implementations will be a less-attractive option than easy-to-use integration frameworks like Netweaver, Fusion, etc.
• Shortfalls in complex processing: The ability to manage customer interactions with advanced processes and workflow is strategic to creating competitive advantages and growth (such as cross/up-sell opportunities, customized service offerings, efficient lead management, or a tight quote-to-cash process.)
• Security Threats: Considering that customer data is proprietary, with strong emphasis on internal security infrastructure and procedures as well as ability to perform advanced analytics to identify key customer trends, transacting data through the cloud is seen as a threat to security.
• Adaptability Issues: CRM vendors that survive on the licensing business model will have difficulty adapting to a rental model (from ownership model) overnight.
• Optimization of OPEX: Long-term renting might incur a relatively higher cost for implementations (OPEX) where the subscription rates are relatively high and bound to increase with demand.

Most CRM implementations have huge customer bases requiring access to critical data. Apart from the cost savings and seamless integration benefits offered by the cloud, data security still poses questions and challenges for large enterprises. Extensive R&D and innovation in the cloud arena should be the way forward to offset these limitations.

The Next Step for Enterprise CRM

With economies struggling or in recession, enterprise application makers are facing increased pressure to provide customers with products that help them conduct business with greater cost efficiency and low maintenance, coupled with the latest technologies and software available.

CRM cloud computing is a promising field, but it has yet to be efficiently explored by enterprise-level players. Companies still have apprehension over issues such as integration, availability, security and costs. How these concerns are addressed by IT vendors will dictate the path of adoption for cloud computing solutions in the enterprise CRM world.

Investment in Cloud Offerings

It is the right time for large enterprise CRM vendors to invest in the cloud, as it is still in a nascent stage of evolution. It will be very difficult to adapt to the cloud when the market is near saturation, as the entry barrier will be very high without a significant investment.

Oracle CRM, SAP CRM, etc., have started moving toward providing CRM offerings on demand, which has already given them a first-mover advantage vis-a-vis a player like Amdocs CRM, which will have to realign its CRM strategy and invest more at a later point of time.

Robust Integration Platforms

The key to extract the full benefits of cloud computing at the enterprise level is to invest in robust integration platforms.

The Amdocs integration framework, Oracle Fusion and other integration layers provided by different vendors should evolve to minimize the integration woes caused due to offering cloud services.

Multi-Flavored Offerings Based on Domain

Enterprise CRM vendors should devise strategies to provide multi-flavored CRM offerings across domains. Certain modules should be provided via the cloud, while more sensitive and complex modules should be available through an ownership model within the same CRM suite. The benefits would be two pronged:

• The consumers would be able to pick and choose their CRM portfolio based on the domain of implementation;
• The CRM vendors would be able plan their portfolio offerings on the cloud based on market demand.

For instance, in the Amdocs product suite, the logistics module, which would be primarily used in the transportation domain, could be offered over the cloud, whereas the sales module of the suite could be provided on a traditional model, as it would be consumed by the banking sector with sensitive customer data.

The future of the Enterprise CRM market will be based largely on the ability of enterprise CRM suite vendors to balance their offerings across a license fee-based, or ownership, model and cloud services to achieve optimal ROI.