CRM Offers Opportunity in Recession

by Sonal Desai    Apr 21, 2009

In an era, where issuing pink-slips, talking of cost cutting and re-thinking IT strategies have become the norm, one question that is constantly disturbing the CIO, or the IT organization in any enterprise, is: Should I opt for an on-demand or on-premise CRM solution?

Anthony Lye, senior vice president, CRM, Oracle Corp, offers some insights. "We are at our best in challenging times. APAC has seen no slowdown in the CRM business. People have to focus on loyalty, customer satisfaction and margins. By loyalty we mean replacing in-house or legacy with Oracle, and we are seeing a lot of traction in airlines, banks, retailers."

Lye said that Seibel CRM is installed in 5 million applications in the telecom, BFSI, pharma and energy sectors, and that the company will tap opportunities in the retail and PSUs. "CRM does help with retention as much as acquisition."

On a questioning look, he said, "Oracle has deployed Seibel across geographies. One of the things with AIAA is that it enables customers to run on hybrid environments."

And how important is Siebel for Oracle? "Seibel, post-acquisition, is the dominant source of revenue for Oracle. Bulk of new CRM business (90%) is from on-premise and on-demand. We are also leveraging Oracle database inside the applications (AIAA) and exploring how best we can attach those to other Oracle products."

The company is, however, aware that it faces stiff competition from Salesforce on-demand, and arch rival SAP in the on-demand space.
Agrees Lye, "Yes, we had to do some catching up. But look at their strategies now. Salesoforce has some cloud based strategy. It is moving investment from CRM. We are developing vertical solutions with pre-build applications. These can also be integrated with ERP. On the other hand, Salesforce has a bunch of Web services. Oracle offers pre-packaged services with e-business suite to enable business processes, something that Salesforce does not do. It relies on third party or consultants."

SAP said Lye, as a strategy, develops modules around ERP, which are built one on top of the other. He alleged, "When somebody says, I want an upgrade, they (SAP) says it is not possible, because there is no integration at the back-end."

Be that as it may, the CRM technologies are here to stay. Lye lists four different buyers for the same:

1. Front office site buyer: telecom, retail, BFSI, PSU, automotive (b-c industries)

2. Back-end: SMBs, SMEs

3. Build vs Buy: customized, departmental or divisional, on-demand (sales), hi-tech, wealth management, corporate banks

4. Hosted: customer buys

So there will be a market for both. The mixed models will work for some years to come. The CRM market contributes to 16% of overall revenues, and there is enormous market for on-premise. In India, too, the combination of on-premise and on-demand will work.

Quoting Jacke Welch - "Recession is a terrible thing to waste" - Lye said use the opportunity to analyse customers.

Here are few of his recession tips:

-  Analyse who your good and bad customers    are

-  Listen and communicate through them

-  Understand who is profitable, and who is not

-  Plan for inflection

-  Develop relationships with  customers. That is how you will retain loyalty

-  Products can be copied. Relationships can’t be.

On its part, Oracle does not see a decline in spend on CRM. And to quote Paul Romer, Stanford economist, "In crisis, there is opportunity."