Pricey CRM software victim of economic slump
Customer relationship management (CRM) software is just starting to gain a foothold in Poland as companies show increasing interest in software that allows them to monitor their customers' behavior. Nevertheless, many firms are holding out until the economic outlook improves before they spend thousands of dollars on the technology.
CRM software applications are used primarily by the sales and marketing departments and customer service centers of large firms to accumulate, evaluate and store as much information as possible from each customer contact, such as purchases, payments and queries.
But while prospective corporate customers are packing CRM seminars held by persistent vendors eager to sign contracts, they are postponing decisions to invest heavily in CRM systems, which can cost about $25,000 to $300,000 depending on the level of customization.
"With the (economic) slowdown, there's been a longer evaluation of systems and increased pricing pressure," said Paweł Przźwieźlikowski, a vice president who oversees CRM at ComArch, an IT firm in Kraków.
Other industry professionals said corporations still haven't realized how much CRM can fatten their bottom lines.
"Many companies look at CRM as a luxurious thing, not as an instrument," said Witold Kilijański, the director of business strategies at Wrocław-based software producer Teta, adding that CRM can help firms increase their revenue 100-300%.
About 20% of large and medium-sized companies in Poland plan to implement CRM, but the demand won't come for another year or two, according to a survey published earlier this year by the Polish IT consulting company Process4E. Although the CRM market in Poland is small, it is growing.
CRM revenue in Poland totaled $4.2 million in 2000, according to a recent report issued by the global IT market research firm International Data Corp. (IDC). Revenue from Poland's CRM market this year should reach more than $30 million, largely due to a huge one-time zł. 150 million ($36 million) CRM system contract awarded by telecom giant Telekomunikacja Polska (TPSA).
CRM is a fairly new technology in Poland, which vendors started offering about two years ago. IDC has identified more than 20 domestic and international vendors that sell CRM in the country. Hogart, a Warsaw-based IT consultancy that sells the CRM product of Siebel Systems, the U.S. software vendor that dominates the global CRM market, started installing CRM projects more than a year ago. The firm has six projects underway with all but one worth less than $100,000. While CRM sales do not amount to a significant percentage of Hogart's total turnover, Janusz Fortuna, a vice president in charge of CRM, expects it to account for about 20% of the firm's revenue within three years.
ComArch, which started producing its own brand of CRM software two years ago and is the top domestic producer according to IDC, has had 12 contracts for CRM projects this year out of 25 since it began implementing the technology. CRM sales accounted for 5% of the firm's total revenue this year. Przźwieźlikowski said CRM sales will account for 6% or 7% of ComArch's total turnover in 2002. While sales of CRM accounted for 5% of Teta's total revenue last year, Kilijański said they amounted to a little less than 5% this year. He expects them to account for 5-10% of the firm's total turnover in 2002.
Telecoms and banks are the predominant firms implementing CRM in Poland, planting the technology in their customer call centers. They invest in CRM to retain good clients on whom they spend substantial amounts to find through pricey ad and marketing campaigns.
"Banks and telecoms invest massive amounts of money to acquire customers, and it is very easy to lose them when the services are not good," Fortuna said.
For example, a client of ABC Telecom calls its customer service center to inquire about billing charges. His name, address, spending and payment behavior and the number of calls he places to the firm's customer service center pop up on the agent's computer screen. If he's a good client who spends a lot on telecom services, pays his bills regularly and doesn't call the service center very often, the data system will automatically bump him up to the head of the service queue, while those who don't spend much on ABC's services, don't always pay their bills promptly and bother customer agents frequently with trivial queries will remain on hold for 20 or 30 minutes.
Pharmaceutical companies, producers of fast-moving consumer goods and IT companies in Poland are also installing CRM systems, mainly for their sales and marketing departments to record customer orders and demands and plan marketing campaigns based on clients' preferences.
International CRM vendors have an edge over domestic producers in Poland. IDC noted that the U.S. software producers Oracle, PeopleSoft and Epicore and Swedish producer IFS held a combined 55.4% of the Polish CRM market last year. Unlike local companies, international vendors have better management, strong Polish partners and fat marketing budgets at their fingertips, according to Małgorzata Bartnik, the IDC analyst who wrote the firm's recent CRM report.
Roseanne Gerin
