Specialized CRM Deployments by Vendors Now Targeting Government Agencies

By | Sep 6, 2012
Topic: CRM/ERP

CRM deployments are no longer only the province of enterprise-level companies. Both small and midsize businesses can benefit from a robust online customer relationship management solution. But along with commercial deployments, many high-profile CRM firms are developing programs that target specific government agencies in a bid to help them increase citizen satisfaction and lower waiting times for service.

Not the Usual Suspects

A recent CIO Today article talks about the rise of government-focused CRM deployments, led by companies like SAP with their Urban Matters offering and Oracle with their CRM Public Sector solution. While analyst Charles King with research firm Pund-IT says that governments have "not traditionally been the fastest adopters of new technology" and may not be the highest-growth market for CRM companies, many local, state, and federal agencies are now looking for ways to lower costs and improve service delivery models.

SAP's solution, for example, includes preconfigured content and predefined services that can be deployed in less than three months and can also be reused on subsequent projects. Jens Romanus, SAP's senior vice president and global head of Public Services Industry Solutions, says that his company's solutions aim to "achieve quick results while minimizing the risks typically associated with a new software project." Oracle, meanwhile, has its Social Services Suite, which it describes as one of the "first off-the-shelf software solutions created specifically for social services." Instead of focusing on metrics like sales and customer retention, it focuses on determining citizen eligibility, managing cases, and increasing the ability of caseworkers to streamline the application and benefits processes.

Understandably, the future of CRM on the whole looks bright--that even reticent government agencies are now starting to embrace the benefits of customer relationship software means the industry as a whole is on the rise, with steady growth predicted in the next few years. IT pros can be forgiven, then, for assuming that high profile companies like Salesforce.com are on the fast-track to success; despite the increasing demand for solid CRM solutions, the market may not be quite so stable as software sellers want IT admins to believe.

Stock Ticker

As with any predictions for stocks and the stock market it's a far cry from a sure thing, but a blog post at Seeking Alpha recommends steering clear of investments in Salesforce.com despite a strong YTD return of more than 45 percent. This seems odd at first glance--stock forecasts in the last week have been soft but have had virtually no interest on the CRM provider, and a 5 percent loss last Thursday was recouped the next day.

The Seeking Alpha article takes a look at Saleforce.com's comparable peers--notably Oracle, SAP, and NetSuite--and notes that it significantly outperforms all of them in terms of growth potential and has an excellent gross profitability margin at 78.1 percent compared with the 66.5 percent average of its closest competitors. But the problem--and it's not a new one--is that Salesforce.com is spending as much or more in acquisitions, marketing, and attractive pricing packages as it spends overall, meaning its growth may be on shaky ground. Combine this with more pressure from competitors that are now branching into the public sector, and it may be a bumpy ride for Salesforce.com in the next few years.

Increased interest in CRM solutions from government agencies is a good thing for midsize IT admins. Diversification in the public sector means a wider array of solutions that will be available for private consumption as vendors determine what works and what doesn't in the tightly controlled world of government IT. IT pros shouldn't assume, however, that companies currently on top of the CRM pile will stay there, even in the next few years. Increased competition and a higher cost of doing business means even giants may lose their footing.

This post was written as part of the IBM for Midsize Business program, which provides midsize businesses with the tools, expertise and solutions they need to become engines of a smarter planet. Like us on Facebook. Follow us on Twitter.

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