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Research: CRM spending boost will outstrip those for productivity suite, ERP apps

Just how important is it for businesses to fix customer service and overall customer relations now that the economy is showing signs of improvement? Important enough for the CRM (aka customer relationship management) category to emerge as the top focus of spending increases in a new survey about software applications by market research firm Gartner.

According to Gartner’s survey of 1,500 IT decision makers worldwide, 42 percent are planning increases in their CRM spend during 2011, compared with their 2010 budgets for software applications. That compares with 39 percent of survey respondents who expect to boost spending on office productivity software and 36 percent of respondents who anticipate increasing the amount of money spent for enterprise resource planning (ERP) software.

Overall, Gartner projects that worldwide spending on software applications will grow by 31 percent in 2011, an increase of 9 percent over 2010.

There are two things that make this CRM information interesting.

First, the focus in deployments isn’t going to be on cutting costs, its going to be on customer retention, customer loyalty and so forth. Which means technology solution providers need to bring a different mindset to CRM-related sales calls. They will need to think about being business process consultants, and they will need to take time to understand the revenue-generation needs of their customers and customer prospects.

Second, and probably more significantly: CRM is the category where software as a service (SaaS) really made its mark several years back with and, more recently, with Microsoft’s push on Microsoft Dynamics CRM Online.

In other words, if your organization isn’t prepare to represent, integrate and support a SaaS CRM option, you could be missing out on a market transition. Gartner figures out that 32 percent of CRM applications will be delivered in the SaaS form, approximately $4 billion in revenue by 2014. Marketing automation functions and lead generation will be big sub-categories for the CRM market, as well. How familiar is your organization with the processes and decision makers in the marketing discipline? Based on the fact that marketing is one of the weakest internal functions for many technology solution providers — something they haven’t traditionally focused on — this could be a serious skills gap in the months ahead. Microsoft partners, in particular, need to spend some time thinking about this.

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