CRM Spending on the Rise

AMR Research released a report Wednesday stating that customer management application spending will increase 16% in 2008 to nearly $2,200 per employee. Mid-market companies (<$1B in revenue) will see the greatest spending increase at nearly 22%.

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This year’s report reveals a number of industry positives: 2008 will see the largest average planned increase in CRM budgets to date, and the appeal of software-as-a-service (SaaS) is growing and impacting the industry average for upgrade rates (65% of companies now upgrade at least once a year, with 25% upgrading even more frequently).

But these positives are counterbalanced balanced by a set of somewhat alarming data points:

  • CRM failure rates remain far too high: 29% of companies reported an
    implementation failure that kept them from going live with the software
    versus 31% last year and just 18% in 2005.
  • User adoption remains a challenge, with 33% to 47% of customer
    management applications facing serious adoption issues.
  • Unused seats of CRM remain a challenge, with 25% of all licenses
  • “There is an interesting paradox going on in CRM right now,” explained Rob Bois, research director at AMR Research in a statement. “Spending has reached an all-time high, with expectations nearly as lofty. But implementation failure rates have not improved, nor have ROI metrics. Both buyers and vendors need to figure out how to close this gap soon, or we’re just going to repeat the same mistakes made in the late ‘90s all over again.”