SINGAPORE: Software spending by medium businesses (MBs, companies with 100-999 employees) in ASEAN (Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam) reached US$233 million in 2008, with $24 million coming from CRM solutions. The spending is nascent across ASEAN countries but its growth rate has been impressive. CRM software spending grew by 21 per cent since 2007 and is set to continue growing even in the current economic situation.

“Medium businesses (MBs) in ASEAN are beginning to look at CRM software as a tool to enable their companies to be more competitive – especially in the current recession,” says Daniel Sim, Consulting and Research Manager for AMI-Partners.

About 80 per cent of MBs have rated “competition” as highest among the list of challenges they face. “Next to competition, the next most challenging area is improving profitability. In addition to generating new sales, companies are paying more attention to retaining existing customers and not losing them to competitors. “Companies with CRM deployment are in better position to compete given the access to customers’ information and fine tuning the information into actionable plans,” maintains Sim.

Comparing across countries in ASEAN, Singapore has the highest penetration of CRM at 18 per cent. Singapore’s high level of ICT adoption and its strong global business relationships are key reasons for the high adoption of CRM solutions. In terms of CRM modules adopted by medium businesses in ASEAN, sales force automation is currently the highest. Call centers are the next highest in demand. Businesses are looking to understanding their customers’ preferences in greater detail. As companies generate lesser sales in the current economic climate, businesses are increasingly focusing on retaining existing customers to generate sales.

As AMI intelligence points toward greater relevance of CRM deployment in helping businesses stay competitive, CRM vendors would do well to capitalize on this opportunity. Vendors should look at their product offerings and determine the right product mix for medium businesses yet to deploy CRM solutions. Vendors should also be aware that more than half of the currently deployed CRM solutions are home-grown solutions. These home-grown solutions differ from solution to solution and do not necessarily have the capabilities of industry-proven solutions from the likes of Microsoft, Oracle or SAP. CRM as SaaS is still in its infancy at this moment.

SaaS-based CRM contributed more than one per cent of total deployed SaaS solutions in ASEAN. Although unchartered waters for most medium businesses, respondents are telling AMI-Partners that the low-cost and hassle-free setup are worth considering.

CRM is expected to grow in 2009 at a slower rate of 18 per cent over 2008. Vendors focusing on new accounts from medium businesses will face more challenges. Creative selling is needed to sign up new customers from the 88 per cent non-CRM businesses and convincing users of existing CRM-deployed solutions to switch to a better product.

Developing relationships with the right channel partners with a good understanding of their customers’ business development requirement may hold the key to success in selling CRM solutions.