Outsourcing CRM eyed by companies

InfoWorld |  Software

"When we looked at what we wanted to accomplish, we decided outsourcing our telecom operations was the best choice because we don't play in that space as well as an AT&T," said Guy Gray, Cendant's vice president for contact centers and telecommunications. However, Cendant was uninterested in working with multiple players to accomplish CRM integration, he said.

Because of the strong telecommunications element in the Cendant deal, the AT&T choice would make sense for that enterprise, said Sandra Palumbo, a communications analyst at The Yankee Group, in Boston. "A company like AT&T Solutions would be able to offer more than just coordination of a CRM transformation. They would be able to implement a whole infrastructure," she said.

When it comes to designing new CRM initiatives, there are no longer any prescribed paths based on company size, noted Tom Flynn, CTO of Homes.com, an ASP (application service provider) for the real estate industry. "When we looked to outsource, it came down to the fact that we really weren't big enough, and with the time-to-market issues we decided that we just wouldn't have enough control over [outsourced CRM]," Flynn said.

For larger companies such as Cendant, however, outsourcing CRM is becoming a more attractive option, especially because those companies are faced with high costs and steep learning curvess in transitioning legacy systems to newer solutions.

Often it comes down to factoring in previous system investments.

"If you've already got a big investment in ERP [enterprise resource planning], for example, are you throwing that away to outsource it?" asked Warren Wilson, an analyst at Boston-based Summit Strategies. Wilson added that outsourcing parts of CRM systems, but not all, might be a way to go.

Philip M. Littell, president of Electronic Data Systems' (EDS) CRM division, agreed with the partial approach to outsourcing in some cases. He said many larger corporations increasingly are seeing the value in farming out some CRM work to others so they can focus on core competencies.

"Many Fortune 500 companies are saying this is the way to go -- 'I'd rather buy by the drink than invest in a large [internal] five-year program,' " Littell said.

Dallas-based EDS hosts General Motors' OnStar and GM Roadside programs, which allow owners of some cars to link to EDS customer service representatives for directions, roadside assistance, nearby businesses, and other information.

Interelate, of Eden Prairie, Minn., announced a deal two months ago to host CRM applications for Nissan North America.

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