For the past several years, I've been writing annual predictions for the CRM industry.

It's all been good fun and forces me to sit down once a year and think about important developments.

How did I do last year? Judge for yourself by reading my CRM Industry Predictions for 2005.

It's far easier to write predictions for the CRM technology industry than for the business strategy of CRM. So this year, for a change of pace, I'm going to present my five-year vision of CRM, from both a business and technology perspective. Here are seven trends that I believe will define CRM for the next half decade.

Trend No. 1: Customers Rule!

Sure, we all say that already, but if you think customers are in charge now, you ain't seen nothing, yet. Over the next five years, customers will gain even more power because of the convergence of three forces: globalization, the Internet and the development of China and India.

Globalization is an unstoppable force. Short-term, some countries will attempt to slow progress with trade barriers to protect jobs and local economies. But there's no doubt that global trade will continue to grow, with help from trade initiatives like the EU, NAFTA, the WTO and three acronyms to be named later.

OK, so it's not much of a stretch to say the Internet will reshape our buying habits. But think past Googling suppliers. That's so 2005. The new news will be integrated supply chains where Web Services standards will help link organizations more seamlessly than they do today. Information will flow faster, and high prices will have nowhere to hide.

Finally, China and India will have an enormous impact, first as suppliers and then as consumers. Today, nearly 2.4 billion people combine to take an ever-growing role as the world's manufacturing (China) and service (India) suppliers. In addition, their growth of affluent local consumers will mean that CRM will become a critical strategy within these countries, too.

Wherever you live, your customers will have more choices for products and services. Companies with lean, responsive and customer-friendly business models will prosper.

Trend No. 2: "CRM Is My Job"

CRM must, and will, become more of personal commitment by all employees, and not just a corporate philosophy or a technology initiative. But this begs the question: Why should employees care?

If you can't answer employees' WIIFM (What's in it for me?) question, then good luck getting them to make CRM (or whatever you decide to call being customer-centric) a part of their job. My guess is that less than 5 percent of companies have a customer-centric business strategy that's imbedded in the jobs of frontline workers, including how they are rewarded.

Here's a quick test. Are you rewarded in any way for customer satisfaction, retention, loyalty—or anything that remotely has something to do with how the customer perceives your performance? No? Then get ready, because you will be.

Customer-centric strategies are being developed, and performance management tools are available. My prediction is that by the end of the next five years, companies will "connect the dots" and realize all employees must do the "CRM" job and be rewarded for doing it well.

Trend No. 3: Curing the Quick-Fix Hangover

In the past five years, tactical CRM programs and point solutions have proliferated. It's completely understandable. To start this decade, large/complex CRM projects had a troubled track record, and a weak economy forced executives to throttle back spending.

Now hundreds of thousands of customers have implemented solutions that solved one particular problem well—and could be implemented quickly. Niche and on-demand vendors have prospered because they offered a clear benefit for a reasonable cost. And many others have invested in "voice of customer," service training and other programs designed to fix specific problems.

The problem is customers don't care about projects or ROI. That's your problem. If you aim for a competitive advantage and not just a simple return on a (CRM) IT investment, then you'll need to focus on the value and experience your organization delivers to your customers.

Leaders that emerge over the next five years will find that the cure for the "quick-fix hangover" lies in breaking down the program/project silos. The process will start with the customer experience and work backward, instead of merely automating an existing departmental process. Fortunately, technology will help, as "composite applications" become the norm. And integrated suites will take the lion's share of CRM industry revenue.

Trend No. 4: Integration of the Customer Value Network

Every company must compete within an ecosystem of buy-side suppliers and sell-side distributors and partners, which collectively form a Customer Value Network.

In addition to breaking down silos internally, industry leaders will realize the CVN must be optimized to deliver what customers want, when they want it at a competitive cost. It does no good, for example, to operate a customer-centric retail store when the suppliers are unreliable. Or to have a "customers first!" slogan at a bank when the outsourced call center saves money but loses customers with bad service.

Technology can play a huge role in stitching together processes that span companies. And yes, here, again, is where Web Services can help.

But remember, it's not just about whether your sales automation tool can talk to your customer service application. It's about whether your CRM system can exchange information with your suppliers so that frontline employees can do their jobs better. It's about arming your distributors with better information and tools, so they want to represent your products or services—not those of your competitors.

In short, in five years, it will be more commonplace for organizations to think "outside the box" of their own organizations and build a strategy with systems that help key players in the CVN collaborate to deliver what the customer wants.

Trend No. 5: Steady Growth of CRM Solutions Market

In 2005, according to Forrester Research, the CRM software license market exceeded $3 billion worldwide, and triple that amount was spent on related services and products. Over the next five years, barring a global economic meltdown, I think the CRM software industry should enjoy steady growth in the range of 5 percent to 10 percent annually.

Oracle and SAP will dominate in the large enterprise arena. No surprise there. And who knows? Maybe Oracle's new converged Fusion product will be available five years from now. I see SAP keeping a lead position in annual software license revenue.

SMBs will enjoy an unprecedented array of high-quality options, ranging from the traditional software to on-demand solutions. Microsoft and Sage are well positioned to lead the charge globally, but the No. 3 spot is up for grabs. My prediction is that we'll see either a new entry or a roll-up of a number of smaller SMB vendors. SMBs will continue to have many excellent choices from regional and niche vendors, too.

By the end of the decade, the red hot growth of on-demand solutions will have slowed to industry norms, and all of the current leaders will be acquired. Salesforce.com has the largest customer base and weakest long-term strategy, so it will be snapped up first, within the next 24 months. RightNow and NetSuite should hang on a bit longer. The big story, however, will be the emergence of a new on-demand leader that crosses over from a related industry. Overall, CRM software-as-service will take about 25 percent of the CRM industry revenue.

Trend No. 6: Technology Turns Strategic, Finally

Where is the innovation going to come from in CRM technology? The core operational processes have good automation tools available. Do we really need to re-invent SFA again? Let's hope not.

Instead of more old wine in new bottle, I believe we'll see an emergence of integrated voice-of-customer and customer experience management applications, aimed at listening to customers and delivering the experience that they value. Increasingly, real-time analytic applications will guide decision-making.

These operational "sensing" systems will be tied to customer value management applications so that businesses can focus on higher-value customers. And performance management (Balanced Scorecard and the like) will be an integral part of most CRM applications. The results of performance metrics will be linked to employee rewards, instilling that all-important "CRM is my job" mentality.

Trend No. 7: Chief Marketing Officer in Charge

The journey to customer-centric business strategy started more than 50 years ago, as marketing researchers noticed that "industrial" (business-to-business) relationships were driven by more than the classic marketing "four Ps" of Product, Place, Price and Promotion. That eventually spawned relationship marketing and direct marketing in the 1980s.

Then the technology industry took charge, as sales force automation (SFA) tools were introduced in the 1980s to early 1990s and eventually became incorporated into the term "CRM" by around 1995, with marketing and customer service applications joining the fun.

This software vendor-driven view of CRM brought the term high visibility—but at a price, as CRM software customers discovered that tools do not make the carpenter. Fortunately, the past five years have seen the black cloud over CRM dissipate, as we've learned that the keys to success lie in strategy and organization.

The CRM trend started with marketing, so I think it's fitting that it come back home. In five years, I believe Chief Marketing Officers will clearly be the driving force in CRM strategy.

This is not to say that CRM should become just the job of marketing. Far from it. The CEO must create and nurture a customer-centric culture, and break down fiefdoms. But the marketing executive is best prepared to develop customer strategies, which is still the missing ingredient in most CRM programs.

Who else but the CMO is going to analyze customer needs, define segments and assign value to customers and segments? This customer strategy can then be executed with tactical marketing and sales campaigns and customer service operations.

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Well, that wraps up another look at my CRM crystal ball. I'm very excited and optimistic about CRM's development as a successful business strategy. And I'm pleased to see the progress of the CRM software industry, which is working harder than ever to deliver tools that are usable and effective, in more customer-centric business models.

Enjoy the CRM journey the next five years. Good luck!