Companies Take Phased Approach to Customer Relationship Management Projects With Average Investment of $3.1 Million.

NEW YORK--(BUSINESS WIRE)--June 16, 1999--

Cap Gemini/IDC Study Identifies Customer Retention as Primary CRM

Driver; Firms Expect Immediate 8% Revenue Increase

After Implementing CRM

A Cap Gemini/International Data Corporation (IDC) survey released today shows that large U.S. and European companies engaged in customer relationship management (CRM) projects spend an average of $3.1 million on CRM hardware, software and services, and expect annual revenues to grow by eight percent within one year of CRM implementation.

Spending is focused on a step-by-step integration of CRM-related elements within organizations, such as the field sales force, call centers, Internet/web sites and front office solutions.

The survey of 300 enterprises reveals that companies are utilizing CRM tools primarily to enhance, protect and retain relationships with current clients.

"Companies are saying 'Stop the churn' by investing in a CRM strategy," said Andrew Wilson, director of CRM at Cap Gemini America.

The top four reasons cited by enterprises for implementing CRM are:

--  gaining customer fidelity
--  providing personalized service to customers
--  acquiring better knowledge of customers
--  differentiating from competition

"Successful corporations see a direct link between CRM tools and revenue generation, and are taking a step-by-step approach to putting the tools in place and integrating them," said Wilson.

A Step-by-Step Approach to CRM

A majority of companies planning CRM investments within two years already have major building blocks in place. Seventy-three percent of the surveyed companies have call centers, 69 percent have web sites and 61 percent operate front office software applications, such as sales, marketing and after-sales support automation.

More sophisticated CRM technologies, such as interactive web sites, data warehousing and Computer Telephony Integration systems are on the CRM "wish list" for the next two years. Notably, 79 percent of enterprises plan to construct interactive web sites within the next two years, and 68 percent are planning to implement data warehousing.

"Customer-focused enterprises now realize that success in CRM is contingent upon successful data warehousing and data mining," said Wilson. "More than two-thirds of the companies we surveyed will invest in decision-support technology within two years."

CRM Complements Current Channel Strategies

As companies continue to proliferate to the Internet, CRM-specific functionality will be broadened within organizations, although new electronic tools will not replace traditional channels. Survey findings suggest that the role of traditional channels will begin to emphasize direct marketing and support functions while communication and order processing responsibilities will begin to migrate to the Internet.

Of the U.S. companies surveyed, 77 percent utilize corporate web sites primarily as a communication vehicle with customers. Over the next two years, however, a majority of firms will expand the functionality of their web sites to offer direct marketing and electronic commerce opportunities.

Online payment processing will also see increased spending over the next two years. Currently, only seven percent of the 300 companies surveyed are equipped to process electronic payment transactions. Within two years, 28 percent plan to transact payments electronically.

Aligning Business Processes to CRM Methodology is Largest Barrier

Surveyed companies described four obstacles most often encountered in CRM projects. Difficulties in changing business processes to align with CRM methodology were named as the biggest challenge for companies in all the industries surveyed.

"Cap Gemini has helped clients extract the most from their CRM strategies by integrating business and technology expertise in each CRM consulting engagement," said Wilson. "This blend of experience is best suited to overcome the largest CRM challenge within companies -- business process change."

Banking and insurance firms outlined barriers with integrating legacy data throughout operational divisions, while manufacturing and utilities companies face obstacles in calculating the appropriate budget size and expected return on investment from a CRM project.

About the Survey

The survey was jointly sponsored by IDC and Cap Gemini. It was completed by 200 European companies and 100 U.S. companies in the following industry sectors: banking, insurance, wholesale and retail commerce, utilities, automotive, life sciences and telecommunications. Companies participating in the study employ at least 500 people.

International Data Corporation is the world's leading producer of information technology data, industry analysis and strategic and tactical guidance to builders, providers and users of information technology. IDC is a global organization with offices in more than 40 countries and nearly 500 analysts worldwide. IDC Consulting provides customized, proprietary strategy solutions to the world's leading IT suppliers as well as IS professionals in finance, insurance, entertainment, advertising, consumer goods and publishing.

Cap Gemini America LLC is an information technology and management consulting firm with 4,500 employees at 35 locations throughout the United States. Cap Gemini America is recognized as a leader in providing IT services to clients on issues like Year 2000, electronic commerce, applications management, enterprise resource planning and customer relationship management. Cap Gemini America is a member of the Paris-based Cap Gemini Group, one of the largest IT and business consulting firms in the world with 38,000 employees in 20 countries and 1998 revenues of approximately $4.4 billion. Cap Gemini's 1998 North American revenues are approximately $623 million. Cap Gemini's mission is to design and deliver strategic change through ideas, people and technology.

More information on Cap Gemini America is available at http://www.usa.capgemini.com.