GROUP Executive Summary THE YANKEE GROUP REPORT · 2014-01-13 · traditional premises-based...

Customer Relationship ManagementStrategies

REPORT Vol. 3, No. 6—July 2001by Sheryl Kingstone

Executive Summary

Companies seeking to document the cost of CRM deployment must understand that softwarefor the enterprise can’t be evaluated in the same way that they evaluate commodity products ordesktop applications. Implementing CRM software and related hardware requires thoroughunderstanding of the business process to be implemented in the CRM solution including theinteraction between sales, marketing, and support so that the business rules create a unifiedapplication environment. Businesses will also need a complete and current grasp of theproducts in question, the vendors that supply the products, and the services that those vendorsprovide. Without a thorough knowledge of the options that are available—all pieces of thesolution along with who will put it together—any cost estimates will likely be incorrect. Yet, no matter how the cost is calculated, CRM is a strategic business initiative that will come at asignificant cost to an organization. The questions constantly asked by many businesses are:How much money is spent annually by businesses to implement and maintain a customermanagement solution? What rationale do companies use when deciding on options? Wheredoes a company begin to look for these costs? How do you manage these costs to deliver acompetitive advantage and drive improved results that affect the bottom line?

In this Report, the Yankee Group addresses general mid-market drivers for adopting a CRMsolution, breaks down and explores factors that affect total cost of ownership (TCO) (see Exhibit1), and addresses key issues for understanding the TCO of a mid-market CRM solution, whilealso comparing different implementation strategies available and the impact these solutionshave on the TCO of CRM.

Exhibit 1Average Mid-Market TCO BreakdownSource: the Yankee Group, 2001

License Cost - 10%

Application Supportand Maintenance - 9%

Professional ServicesImplementation andCustomization - 41%

Hardware - 13%

IT Infrastructure - 9%

User Training - 2%

Data Center andAdministrative Personnel - 16%

Copyright 2001, the Yankee Group

Mid-Market CRM Total Cost of Ownership:Noodling the Numbers

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The Yankee Group Report is published for the sole use of Yankee Group Planning Service subscribers. It may not be duplicated, reproduced, stored in a

retrieval system,or retransmitted without the express permission of the Yankee Group,31 St. James Ave.,Boston,MA 02116. Phone: (617) 956-5000.

Fax: (617) 956-5005. The Yankee Group can be reached by e-mail at: info@yankee group.com. For more information,contact the Yankee Group.

All rights reserved. All opinions and estimates herein constitute our judgment as of this date and are subject to change without notice.

Customer Relationship Management Strategies

2 Copyright 2001, the Yankee Group. All rights reserved.

Table of Contents

I. CRM Mid-Market Dynamics: One Size Does Not Fit All . . . . . . . . . . . . . . 2

II. The Challenge of Measuring TCO for CRM Applications . . . . . . . . . . . . . . 3

III. Available Deployment Options for CRM . . . . . . . . . . . . . . . . . . . . . . . . . . 4

IV. How Much Should CRM Cost?: Running the Numbers . . . . . . . . . . . . . . . 8

V. Conclusion: Turning TCO into ROI Information . . . . . . . . . . . . . . . . . . . . . 10

I. CRM Mid-Market Dynamics: One Size Does Not Fit AllThere have been many reports regarding the benefits the Internet has had on CRM, alongwith discussions about the Internet being the great equalizer for small and mid-marketcompanies. If the Internet truly levels the playing field, mid-sized businesses have neverbeen in a better position to reach a wide audience and grow beyond their wildest dreams.However, one major factor that has slowed the adoption of enterprise CRM solutions inmid-market companies has been the lack of a solution set that can enable the mid-enterprise corporation to compete with its large enterprise counterparts—at a cost structuresuitable for the budget and time constraints of the mid-market pacesetters.

The Yankee Group defines a mid-enterprise business as having 100–999 employees andless than $1 billion in revenues. Key drivers to motivate mid-sized businesses to adoptcustomer relationship management on an enterprise level are not unlike those of thelarge enterprise; they include the key elements surrounding improved customerselection, acquisition, retention, and expansion:

• The need to effectively monitor, manage, and personalize the sales life cyclefrom lead generation to sale;

• The importance of real-time automation and linkage of sales processes withmarketing, channel partners, and distributors;

• The necessity for open communication between sales prospects, customers, andcompany employees to improve prospect engagement, and for bettermanagement and control of information;

• The importance of data-mining customer information for additional salesopportunities and improvement in customer service support; and

• The growing customer expectation of quality 24 x 7 customer support.

As a mid-sized business’s Web presence matures, it will also demand a morecomprehensive solution such as a combined sales, service, commerce, and marketingapplication service bundle that can integrate and interact with its other core businessfunctions. However, even though mid-sized businesses are anxious to automate keybusiness processes and be competitive in managing customer relationships, they donot necessarily have the ability to allocate hundreds of thousands of dollars and ayear’s time to implement a customized solution that fits their business model.

These mid-enterprise companies need a suite of applications that can be easily adaptedto their business dynamics. Yet, as shown in Exhibit 1, software costs actually play arelatively minor role in the total cost of acquiring and deploying the desired CRMfunctionality. The largest component of TCO for an average mid-market enterprisedeployment is the cost associated with implementation and customization.

Since the mid-market does not typically have large systems integration budgets or ITstaff for application maintenance, enterprise CRM applications have been out of reachfor many mid-market companies. Also, it is difficult for companies to measure the totalcost of a CRM application without a thorough knowledge of the options and pieces of acomplete solution. The following section highlights the major challenges thatcompanies face when assessing the projected TCO.

II. The Challenge of Measuring TCO for CRM ApplicationsMany companies are unaware of all the cost components of implementing a CRMsystem, let alone understand that the license cost of the application is only a smallpart of the overall cost of ownership—with costs incurred after the initial licenseconstituting the largest component of the overall cost. Most of the emphasis hashistorically been on the capital expenditure such as the hardware and software costsrather than on understanding the post-deployment costs.

The challenge is to accurately identify and track all of the costs associated withimplementing a CRM solution. TCO for CRM falls into the following major categories:

• Hardware,

• Software,

• Professional implementation services,

• Ongoing application maintenance,

• Training, and

• Ongoing end-user support.

Each category may also vary substantially based on the following factors:

• Vendor and Application Focus. CRM software has historically been brokendown into three basic categories—sales, service, and marketing—along with twoprimary users of the application: employees and customers. More than likely, onevendor cannot supply all of the needed applications for a complete solution. As aresult, multiple license costs are incurred to implement employee-facing andcustomer self-service solutions. There are also different dimensions to thesoftware license cost that are generally associated with server license fees and aper-user license fee. However, in a hosted model, the license fees are generallyincluded in the per-month rental or subscription. (See Section III for more details.)

• Core Technology Type. The type of technology being implemented also affectsTCO factors. The options available today are thin-client, Web-based, andclient/server. Thin-client applications enable an existing client/server CRM

July 2001—Vol. 3, No. 6

Copyright 2001, the Yankee Group. All rights reserved. 3



application to be accessed via the Internet. A Web-based CRM environmentstrictly uses a browser to interact with the application. All three environmentshave different total cost of ownerships associated with implementations. (SeeSection III for more details.)

• Delivery Method Chosen. There are three fundamentally different deploymentoptions available today, which were simply non-existent just a few years ago:traditional premises-based license arrangement, third-party hosted arrangements,and vendor-hosted subscription arrangements. Each offers a set of pros and consfrom a cost, cash-flow, and operational perspective. (See our December 1999Report, “Hosted CRM Solutions: The Future Shape of CRM?”).

• Technical Environment. Different hardware and operating systems can alsoaffect the ongoing maintenance and upkeep of the CRM system. Among theconsiderations are Microsoft NT versus UNIX. While the average UNIXplatform currently offers more features for high-end application environments ata more significant price point, the growing capabilities of Windows NT Serverhave remained focused on ease-of-use and management.

• Existing Resources. The availability of existing IT support for data centeroperations, network infrastructure, and application customization also plays arole in first-year-and-beyond capital expenditures.

• Hidden Costs. Multiple departments incur costs, and some costs, although real,may not be obvious. For instance, some intangible costs are associated with themaintenance and support of remote/mobile users of thin- or fat-clientapplications, along with the cost of maintaining many disparate databasesthrough database synchronization.

Given these challenges, it is clear why companies struggle with understanding theTCO of a CRM application. However, TCO is one of the key starting points in trulyunderstanding the budget requirements and, ultimately, the ROI of a CRM project.

III. Available Deployment Options for CRMEvery company’s CRM implementation is different, but there are several big “take-aways” when evaluating different technology platforms and the associated deploymentoptions and costs. As illustrated in Exhibit 2, the primary deployment options to beevaluated are premises-based versus hosted, along with the type of architecture of thesoftware such as client/server versus Web-based.

CRM in a Client/Server EnvironmentClient/server is still the most widely implemented CRM software architecture model.The user’s PC (the client) is the requesting machine and the server is the supplyingmachine, both of which are connected via a local-area network (LAN) or wide-areanetwork (WAN). Throughout the late 1980s and early 1990s, client/server was the hotbuzzword as applications were migrated from centralized minicomputers andmainframes to networks of personal computers. In client/server, the client processes theuser interface and can perform some or all of the application processing. Servers range

in capacity from high-end PCs to mainframes. A database server maintains thedatabases and processes requests from the client to extract data from the database or toupdate it. An application server performs business rules and other business processingnot specific to the client function.

There are still plenty of client/server CRM software options available today, and it isstill a viable option for companies with centralized applications. However, two of themost common complaints associated with client/server applications that affectoperations and increase the total cost of ownership are:

• Synchronization of remote users. To ensure that mobile workers (such assalespeople and field service representatives) can use the application whiledisconnected from the server, companies need a separate application thatmanages the data changes and ensures the most up-to-date information isavailable on all disconnected clients. If the applications are not synchronized,companies lose the benefit of up-to-date data-sharing and real-timecommunications between the user base and associated server-side business rules.In addition, corporate management runs the risk of not making proper businessdecisions due to aged/unsynchronized data, particularly for management’s abilityto receive accurate reports such as forecasts, pipeline analysis order processing,and the like.

July 2001—Vol. 3, No. 6


Exhibit 2Client/Server vs. Web-Based; Hosted vs. Premises-BasedSource: the Yankee Group, 2001

Premises-Based Hosted

Web-Based

Client/Server

Client

Server

Plenty of Application Options

LAN

Centralized Company

Minimal Remote Workers

Synchronization Issues forRemote Workers

Client VPN

VPN

Leverage Data Center Infrastructure

Webifying TraditionalClient/Server Application

Higher TCO

Firewall

TerminalServer

ApplicationServer

Database

Browser SSL

Site

Remote Workers Benefit

Lower TCO

Application Control

Integration Easier

Firewall

ApplicationServer

Database

Browser SSL

Site

Managed Service

Higher Redundancy

Less Application Control

Less Up-Front Cash

Firewall

ApplicationServer

Database

Firewall

ApplicationServer

Database



• Application maintenance. One cost that is sometimes overlooked is themanagement associated with the upgrade and maintenance of multiple clientmachines. When a client/server CRM application must be upgraded, companiesneed to think in threes—server-side, client-side, and any mobile devices. As aresult, the larger and more distributed the user community, the greater the costand time lag to facilitate such updates and upgrades.

As illustrated in Exhibit 2, the most popular way to offer access to a traditionalclient/server CRM application in a hosted environment is to use a virtual private network(VPN). A VPN is a private network that is configured within a public network, employingencryption-tunneling technology to provide “virtual” connectivity to the server through theInternet. VPNs offer the security of a private network via access control and encryption,while taking advantage of the economies of scale and built-in management facilities oflarge public networks. These deployment methods generally require the implementationof VPN access server or terminal server software, and the type of hardware provided byMicrosoft, Citrix, and Check Point Software Technologies. It is through these solutionsthat organizations can leverage the Internet; however, this adds to the total cost ofownership of a CRM application.

Web-Based CRM: An Alternative ApproachThe Internet has spawned the growth of Web-based environments. Virtually every PCtoday leverages a Web browser that serves as a thin-client shell for all browser-compliantapplications, and Web sites to interact with client desktops without the need for client-deployed software. Because of the Internet, terms such as “Web-based” and “Web-enabled” have replaced the “client/server” buzzword. Users’ PCs are still clients, andthere are tens of thousands of Web servers throughout the Internet delivering Web pagesincluding content, knowledge community, and commerce. Nevertheless, client/server ismostly used to refer to “legacy,” non–Web-based systems. On the Web, the client runs thebrowser, and just like legacy, client/server can perform local processing. Since there is noapplication to install on the client-side of a Web-based application, the advantage is that itcan be run from any computer with a browser; and the software is upgraded andmaintained at a single location, which avoids the costs associated with maintainingmultiple client applications. Web-based applications also have an advantage becauseinherent architectural elements can easily integrate with the rich content, services, andcommunities that exist on the Internet to bring value to a CRM application.

A Web-based application also reduces many of the problems associated with datasynchronization. Until recently, remote workers have found it difficult to use theapplication while away from an Internet connection, but many Web-based applicationshave been enabled or are in the process of being enabled for wireless access (see ourMay 2001 Report, “Mobile CRM: Opportunity or Hype?”).

Another concern businesses have regarding implementing a Web-based application issecurity. However, security should be a priority with either a premises-based or hostedmodel. One method for keeping a network secure is to use a firewall and a SecureSockets Layer (SSL). When an SSL session is started, the server sends its public key tothe browser, which the browser uses to send a randomly generated secret key back to theserver in order to have a secret key exchange for that session. Firewalls (perimeteraccess control security) are also widely employed to give users access to the Internet in

a secure fashion as well as to separate a company’s public Web server from its internalnetwork. Thin-client VPN solutions also require a firewall, as do Web-based solutions.Additional security measures are required in both cases, but the issue is fundamentallythe same—protect the server-side perimeter from unauthorized access (throughfirewalls) and protect the communications session from tampering/altering/viewing(session exchange privacy/security); application and database level security are alsorequired.

Premises-Based vs. Hosted CRM ApplicationsWhether a company decides to purchase a premises-based solution rather than asubscription or rental model of a third-party hosted application is more than just a rent-versus-buy dilemma. The real decision drivers that affect a decision and anunderstanding of TCO are the following:

• Single-tenant versus multi-tenant software. Buying a single-tenant applicationis analogous to buying a highly customized, handcrafted vehicle. Single-tenantapplications are designed to have a single customer for each instance of softwareand hardware—one data model, one customer. The main benefit of single-tenantsoftware is that it is highly customizable. The main drawback is that it has a highTCO. Single-tenant software can be purchased both as premises-based and in ahosted environment. It is important to understand why some hosted software canhave a significantly lower TCO. A hosted application that is designed once andsold to many—or, in other words, offers shared resources versus dedicatedresources—is designed for multi-tenancy.

Buying a multi-tenant application is analogous to buying an assembly-line, mass-produced vehicle. Multi-tenant applications are designed to have all customers onone instance of hardware and software (i.e., shared resources). The main benefitof multi-tenant software is that the average TCO can range anywhere from being 2to 20 times lower than single-tenant applications, depending on how optimized theapplication and architecture are for multi-tenancy. The main drawbacks of multi-tenant applications are their limitations in customizability. Multi-tenant softwarecan only be purchased in a hosted environment.

• Higher up-front investment and variable costs versus predictable costs andlower up-front investment. While most hosted CRM applications might not beless expensive in the long run compared to a license model, for the most part theydo offer a lower cost of entry. Some hosted CRM solutions do significantly lowerthe TCO by enabling their software to be used in a multi-tenant architecture, andthereby lower the monthly license cost. These solutions also offer less expensiveimplementation and customization costs of the software suite.

• In-house expertise versus managed service environment. A hosting providerremotely manages and operates the technology, offering measurement based onSLAs. Data centers have infrastructure redundancy to ensure applicationavailability and to handle the maintenance and operations of the application andinfrastructure. The customer also receives access to trained personnelimmediately, reducing hiring and training costs.

July 2001—Vol. 3, No. 6




• Longer implementation curve versus faster “time-to-customer.” A premises-based model can take anywhere from three months to more than a year toimplement, depending on complexity. However, a hosted model can often reduce the complexity of installing a new solution in-house by bundling software,hardware, systems development, integration, and management into one offering.

• Premises versus hosted—which one? Back to the car analogy: Choosingbetween premises versus hosted and single-tenant versus multi-tenant solutionsdepends on a company’s business needs. Do you want a handcrafted vehicle, oris a mass-produced one good enough? The answer to this question boils downto how much customization you require to accommodate your key businessproblems and requirements:

— If your key business requirements demand a highly customized application,and you believe your return on investment justifies the higher professionalservices costs, then you should choose a premises-based, or single-tenant,hosted application.

— If your key business requirements can be accommodated by a lesscustomizable multi-tenant, hosted application, you will probably want tochoose this solution given the opportunity to reduce the customization,implementation, and maintenance costs.

IV. How Much Should CRM Cost?: Running the Numbers The TCO reflects the total expense involved in purchasing, deploying, and maintainingan enterprise CRM solution. As mentioned earlier, TCO factors include hardware,software, professional services, application maintenance, training, and ongoing end-usersupport. With budgets being more scrutinized now than ever before, many businessexecutives are demanding a better understanding of the TCO before embarking on aCRM initiative. In Exhibit 3, the Yankee Group illustrates the average cost ofimplementing a mid-market CRM application.

The following is a description of the assumptions made in Exhibit 3:

• The software application license model assumes an average cost for a typicalclient/server mid-market employee-facing enterprise application that usuallyranges from $800 to $2,500. In a hosted model, costs can range from $50 peruser per month to $400 per user per month for an employee-facing CRMsolution. Customer self-service software used to directly interact with thecustomer is typically priced by server and can cost $150,000–$250,000 perfunction such as e-mail, self-service, or personalization. These costs are notincluded in the TCO calculation in Exhibit 3.

• Application support and maintenance for a premises-based solution can rangefrom 18% to 24% of the cost of the license. In a hosted model, costs areincluded in the monthly software license.

• Professional service costs associated with the implementation and customizationof the license are the largest TCO factor and are on average four times the costof the license for a client/server CRM application. In a Web-based model,several vendors offer lower customization and implementation costs for bothhosted and premises-based deployment options. Some implementations havebeen documented to be as low as $7,500.

• Hardware costs on average for a premises-based mid-market CRM solutionassumes five to six NT servers from a branded manufacturer. If a company hasfewer than 50 users, only three NT servers are necessary; 50–100 users need fourservers; and 100–200 users need five servers. Also included are the costs toupgrade 25% of existing client computers for premises-based applications to takeinto account the newly added client software. Not included are the remainingpartial costs for the client hardware, such as notebooks or desktop computers,since they are needed for both a premises-based and hosted model. Call centercosts for phone and communication infrastructure are also not included.

July 2001—Vol. 3, No. 6


Exhibit 3Average Mid-Market TCO of a 200-User ImplementationSource: the Yankee Group, 2001

Premises-BasedClient/Server CRM for 200

Users Year 1 Year 2 Year 3 Year 4 Year 5Total Cost/Five Years

License Cost $300,000 $0 $0 $0 $0 $300,000

Application Support andMaintenance $54,000 $54,000 $54,000 $54,000 $54,000 $270,000

Professional ServicesImplementation andCustomization

$1,200,000 $30,000 $30,000 $30,000 $30,000 $1,320,000

Hardware $60,000 $0 $30,000 $0 $30,000 $120,000

IT Infrastructure $85,000 $50,000 $50,000 $50,000 $50,000 $285,000

Data Center andAdministrative Personnel $100,000 $100,000 $100,000 $100,000 $100,000 $500,000

User Training $30,000 $6,000 $6,000 $6,000 $6,000 $54,000

Total In-House Costs $1,829,000 $240,000 $270,000 $240,000 $270,000 $2,849,000

Hosted CRM for 200 Users Year 1 Year 2 Year 3 Year 4 Year 5Total Cost/Five Years

License Cost $240,000 $240,000 $240,000 $240,000 $240,000 $1,200,000

Application Support andMaintenance $0 $0 $0 $0 $0 $0

Professional ServicesImplementation andCustomization

$48,000 $24,000 $24,000 $24,000 $24,000 $144,000

Hardware $0 $0 $0 $0 $0 $0

IT Infrastructure $20,000 $20,000 $20,000 $20,000 $20,000 $100,000

Administrative Personnel $25,000 $25,000 $25,000 $25,000 $25,000 $125,000

User Training $30,000 $6,000 $6,000 $6,000 $6,000 $54,000

Total Average HostedCosts $363,000 $315,000 $315,000 $315,000 $315,000 $1,623,000



• IT infrastructure includes firewall, dedicated Internet access costs, VPN, back-upand recovery, and security and network infrastructure for a premises-basedsolution. The premises-based costs also tend to be on the lower end of thespectrum, since most companies are able to leverage some existing infrastructure.For a hosted solution, costs include a dedicated remote dial-up or T1 line. Thehosting provider carries all costs associated with data center infrastructure.

• The costs for data center and administrative personnel in a premises-basedoption take into account the need for ongoing end-user support and in-houseapplication maintenance. This figure assumes 25% of existing IT staffpersonnel, two full-time employees for application management, and end-usersupport estimated at $80,000 in salary per person. The hosted model assumes25% of an IT administrator.

• Training is needed for both administrator training and end-user training. For endusers, classes can be done on-site for an average of 40 people at $3,000 perclass. These costs are the bare minimum required for training costs. Trainingshould be considered a high priority and can range even higher for personalizedon-demand e-learning capabilities (see our May 2001 Report, “The Emergenceof E-Learning as a CRM Tool”).

V. Conclusion: Turning TCO into ROI Information Over the next four years, an estimated $12 billion will be spent on CRM systems (seethe December 2000 Report, “CRM Megatrends 2001: E-CRM Solutions Evolve andGrow in Diversity”). To understand how to turn TCO into ROI, let’s take a look at afictional mid-enterprise high-technology customer. The analysis performed consists oftwo snapshots of that customer’s sales process efficiency—one snapshot is performedshortly after the go-live date, and the other snapshot is performed three months later—and would effectively measure incremental benefit (and ROI) over a three-month period.

Measurable benefit consists of two components:

• Revenue enhancement, and

• Cost containment.

The ROI is equal to measurable benefit divided by TCO (see Exhibit 4).

Exhibit 4ROISource: the Yankee Group, 2001

Measurable Benefit

Total Cost of OwnershipReturn on Investment=

First, let’s discuss the basics of the company. Again, it is a software company with 200users broken down in the following way:

• 60 sales—Field and inside reps.

• 45 post-sales—Professional services and system engineers.

• 30 account management and technical support employees.

• 30 marketing and management employees.

• 35 other non-revenue-generating employees.

Quarterly revenue for this software company is $50 million, and the average deal size isaround $75,000. This amounts to roughly 667 deals per quarter or 11 deals per sales rep.

If we look at the ability to enhance revenue and we use the average deal size equaling$75,000, and increase the average percentage of qualified leads to increase closed businessby less than 1%, or 0.03% to be exact, the result would equate to pulling in an extra twodeals per quarter—a revenue increase of $150,000 per quarter or $600,000 per year.

Another way to consider revenue enhancement is by taking into account unproductivereps (turnover in salespeople, or new territories assigned). For example, if a companyhas two new reps for a quarter, by understanding the status of any deal at any point intime, new reps can be more productive in less time. The topline impact could equate toroughly $600,000 in incremental deals per quarter if we shorten the ramp-up time.

Let’s look at one more revenue enhancement opportunity—cross-selling/up-selling.The ability to cross-sell and up-sell new products to less than 1% of the 1,000-customer database at an average deal size of $40,000 would result in their accountmanagers and post-sales personnel uncovering around $400,000 of new cross-sell andup-sell opportunities.

As an example of cost containment, assume a marketing budget is roughly $10 millionper year. By enabling better list management, fewer dropped leads, improved leadmanagement, and more knowledgeable campaigns that increase lead count, the bottom-line contribution toward reduced marketing expense to generate leads could equal$500,000 by optimizing expenses by only 0.5%.

If you combine the top-line and bottom-line impact from the revenue enhancements andcost-containment examples illustrated above, a company could gain $2,100,000 inincremental revenue in one year and a potential ROI on the project in that year.

There are also intangible benefits that are harder to quantify, but are nonetheless stillsignificant such as:

• More efficient and accurate forecasting,

• Better coordination of interregional efforts,

• Early warning indicators,

July 2001—Vol. 3, No. 6




• Better marketing feedback (four Ps),

• Reduced administrative work, and

• Improved partner management, leading to improved productivity and mind sharewith the corporate manufacturer.

In conclusion, the Yankee Group believes that CRM offers new options andopportunities since it is now possible to customize products, prices, promotion, and evena place for each individual customer on a profitable basis. Competing means you musthave a customer-focused vision along with a product-focused one. However, as statedthroughout this Report, calculations of TCO and ROI for CRM systems are particularlydifficult since there is no baseline data prior to the use of the system, making before-and-after comparisons impossible. Also, there are too many other independent variableswith many soft or intangible benefits that are hard to quantify. This Report only beginsto analyze how much money is spent annually by businesses to implement and maintaina customer management solution. Yet, no matter how the cost is calculated, CRM is animportant and strategic business initiative.

Further Reading“The Emergence of E-Learning as a CRM Tool,” Yankee Group Report, CustomerRelationship Management Strategies, Vol. 3, No. 5, May 2001.

“CRM Megatrends 2001: E-CRM Solutions Evolve and Grow in Diversity,” YankeeGroup Report, Customer Relationship Management Strategies, Vol. 2, No. 17,December 2000.

“CRM for $29.95: Is it a Sea Change from Traditional CRM?,” Yankee Group Report,Customer Relationship Management Strategies, Vol. 2, No. 3, June 2000.

“Hosted CRM Solutions: The Future Shape of CRM?,” Yankee Group Report, CustomerRelationship Management Strategies, Vol. 1, No. 8, December 1999.

July 2001—Vol. 3, No. 6




T H E

G R O U PYA N K E E

Billing & Payment Application Strategies, Brazil Market Strateerce & Applications, Canadian Market Strategies, Carrier Conveture, Communications Services for the New E-conomy, Consumer Mence, Convergent Communications Asia-Pacific, Convergent Commun America, Customer Relationship Management Strategies, E-Netwand Access, Energy Communications, Energy & Internet Strategietrategies, EuroScope Strategies, EuroScope Communications, Inttrategies, Internet Market Strategies, Internet Strategies Asiegies Europe, Internet Strategies Latin America, Japan Market Entertainment Strategies, Online Financial Services, Online Reand Medium Business Communcations, Telecom E-Business, Wireles-Pacific, Wireless/Mobile Communications Europe, Wireless/MobiWireless/Mobile Services, Wireless, Mobile Technologies, BilliBilling & Payment Application Strategies, Brazil Market Strateerce & Applications, Canadian Market Strategies, Carrier Conveture, Communications Services for the New E-conomy, Consumer Mence, Convergent Communications Asia-Pacific Convergent Communn America, Customer Relationship Management Strategies, E-Netwand Access, Energy Communications, Energy & Internet Strategietrategies, EuroScope Ctrategies, EuroScope Communications, Inttrategies, Internet Market Strategies, Internet Strategies Asiegies Europe, Internet Strategies Latin America, Japan Market

July 2001—Vol. 3, No. 6


Security Solutions & Services

Walls between businesses, their

partners, channels, and customers

dissolve in the age of the Internet.

Unfortunately, security has

dissolved as well.

We focus on the security

challenges faced by enterprises,

ASPs, and network service providers,

and on solutions provided by both

software and hardware vendors.

Visit us at www.yankeegroup.com

for more information.

Australasian Market StrategiesBilling & Payment Application Strategies

Brazil Market StrategiesBtoB Commerce & Applications

Canadian Market StrategiesCarrier Convergence Infrastructure

Communications Services for the New E-conomyConsumer Market Convergence

Convergent Communications Asia-PacificConvergent Communications Europe

Convergent Communications Latin America

For More Information . . . Please call the Yankee Group. Phone: (617) 956-5000, Fax: (617) 956-5005. E-mail: [email protected]. Web site: www.yankeegroup.com.

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The Yankee Group believes the statements contained in this publication are based on accurate and reliable information. However, because ourinformation is provided from various sources, including third parties, we cannot warrant that this publication is complete and error-free. The

Yankee Group disclaims all implied warranties, including, without limitation, warranties of merchantability or fitness for a particular purpose. TheYankee Group shall have no liability for any direct, incidental, special, or consequential damages or lost profits. This publication was prepared by

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Phone: (312) 382-1443, Fax: (312) 382-1706

Denver:600 17th Street, Suite 950 South, Denver, CO 80202

Phone: (303) 820-0850

Plano:5700 West Plano Parkway, Suite 1000, Plano, TX 75093

Phone: (972) 381-2765

Silicon Valley:951 Mariner’s Island Blvd., Suite 260, San Mateo, CA 94404

Phone: (650) 356-1960, Fax: (650) 356-1966

Tampa:2202 North Westshore Blvd., Suite 200, Tampa, FL 33607

Phone: (813) 639-7525

Washington, D.C.:8251 Greensboro Drive, Suite 700, McLean, VA 22102

Phone: (703) 790-7608, Fax: (703) 790-2846

Canada:10 Victoria Ave., P.O. Box 584, Brockville, Ontario, K6V 5V7

Phone: (613) 345-2622, Fax: (613) 345-5681

Mexico:Alfonso Nápoles Gándara, No. 50, Piso No. 4,

Col. Santa Fe, Mexico D.F. 01210Phone: +52-5-261-8776, Fax: +52-5-261-8699

Australia:GPO Box 5438, Sydney, NSW 2001, Australia

Phone: (61) 2-9279-0990, Fax: (61) 2-9279-0995

Europe:Headquarters: 55 Russell Square, London, WC1B 4HP, UK

Phone: +44 20 7307 1050, Fax: +44 20 7323 3747E-mail: [email protected]

Argentina:Paseo del Puerto Center, Av. Alicia M. de Justo 1148

Piso 4, C403 Up, Buenos Aires-Argentina 1107Phone: +54 11 4341 4600, Fax: +54 11 4341 4699

Asia-Pacific:Itochunenryo Bldg., 6F, 1-24-12 Meguro,

Meguro-ku, Tokyo 153-8655, JapanPhone: +81-3-5740-8081, Fax: +81-3-5436-5057

Netherlands:Verdonck, Klooster & Associates, P.O. Box 7360

2701 AJ Zoetermeer, The NetherlandsPhone: +31 79 368 1000, Fax: +31 79 368 1001

Spain:c/o Reuters Espana, S.A.

Paseo de la Castellana, 36-38, 28046 MadridTel: +34 91 585 8294, Fax: +34 91 585 8296

Brazil:Al. Santos, 234-7th floor

01418 000 São Paulo-SP-BrazilPhone: +55 11 3145 3855, Fax: +55 11 3145 3892

E-mail: [email protected]

Colombia:Focus, Cra 7 # 71-21 Torre B, Oficina 1003, Bogota, Colombia

Phone: +571-317-4869, Fax: +571-317-4858

Focus, Calle 77B, # 57-141, Piso 8, Oficina 802, Barranquilla, Colombia

Phone: +575-368-3292

Hong Kong:10/F City Plaza Three

Taikoo Shing, Hong KongPhone: (+852) 2843 6483, Fax: (+1) 617 210 0053

Israel:Foresight Technology Investment & Consulting Ltd.Levinstein Tower, 19th Floor, 23 Petach-Tikva Rd.,

Tel-Aviv 66182, IsraelPhone: +972-3-566-6626, Fax: +972-3-566-6630

GROUP Executive Summary THE YANKEE GROUP REPORT · 2014-01-13 · traditional premises-based...

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