Note Number: T-13-0753
The 2001 CRM Hype Cycle
03 April 2001
Scott Nelson | Gareth Herschel
Most new technologies follow a typical evolution of early hype, later disappointment and eventual productivity. Here, we position the major technologies that will impact CRM in 2001, along with the concept of CRM itself.

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The 2001 CRM Hype Cycle

Most new technologies follow a typical evolution of early hype, later disappointment and eventual productivity. Here, we position the major technologies that will impact CRM in 2001, along with the concept of CRM itself.

Bottom Line

Key Issue
What architectures, functions and technologies are critical for delivering a state-of-the-art front-office infrastructure?

Most technologies and the strategies that employ them follow a maturity cycle. Today’s hottest technologies may be tomorrow’s forgotten capabilities. Many enterprises are currently asking questions about the customer relationship management (CRM) maturity curve: “What’s hot? What’s mature? And what does the next 12 to 18 months look like for this strategy?”

The Gartner "Hype Cycle" model (see Figure 1) has been designed to bring some clarity to the confusing range of technologies that are discussed in Gartner research, by vendors and consultants, and in the popular and trade press. The Hype Cycle moves through five stages (see Note 1), and at each point, there are critical questions an enterprise must consider before making a commitment.

Note 1
The Hype Cycle Explained
Gartner’s hype cycle is designed to help enterprises make intelligent decisions about when to implement emerging technologies. As is the case with all technology investments, there is no simple answer; rather, business needs should determine when it makes sense to invest in a particular new technology.
•     Technology Trigger: A breakthrough, public demonstration, product launch or other event generates significant press and industry interest.
•     Peak of Inflated Expectations: Overenthusiasm, unrealistic expectations and a flurry of well-publicized activity by technology leaders results in some successes, but more failures, because the technology is being pushed to its limits.
•     Trough of Disillusionment: Because the technology has not lived up to its inflated expectations, it rapidly becomes unfashionable, and the press either abandons the topic for the next hot thing or emphasizes its failure to meet expectations.
•     Slope of Enlightenment: Focused experimentation and solid hard work by an increasingly diverse range of organizations leads to a true understanding of the technology’s applicability, risks and benefits. Commercial off-the-shelf methodologies and tools become available to ease the development process and application integration.
•     Plateau of Productivity: The real-world benefits of the technology are demonstrated and accepted. Tools and methodologies are increasingly stable as they enter their second and third generations. The final height of the plateau varies according to whether the technology is broadly applicable or benefits only niche markets.

Enterprises can (and should) invest in technologies across the entire hype cycle. Some enterprises (especially, Type A companies) will have a bias toward investing early (see Note 2), accepting high risk in exchange for a competitive advantage, whereas others will allow their competitors to make the early mistakes and then rush to catch up (e.g., Type B and Type C are more likely to do this). The point is always to balance risk and reward by understanding the actual benefits the enterprise will gain through implementation, rather than the perceived benefits the "hypsters" are touting.

Note 2
Type A, Type B and Type C Enterprises
Enterprises are identified as "Type A," "Type B" or "Type C," based on the aggressiveness with which they adopt and use technology. Briefly defined:
  • Type A enterprises (pioneers) are technology-driven and are often willing to risk using immature, cutting-edge technologies to gain a competitive edge.
  • Type B (mainstream) enterprises are moderate technology adopters, implementing new technologies once they have proved to be useful and have entered the mainstream.
  • Type C enterprises (followers) are technologically risk-averse and cost-conscious; they are usually among the last to adopt new technologies.

Figure 1

The Gartner Hype Cycle


Source: Gartner Research

The Technology Trigger: Does this really fit into my business strategy? As technologies become visible, and hype starts to grow around them, enterprises need to evaluate new solutions in the context of their CRM strategies (see Figure 2). Some of these technologies will be customer-facing (e.g., wireless CRM), while others will be internalized, but will also have an impact on the customer relationship (e.g., state-based personalization, which should make marketing offers more timely). In either case, enterprises need to think about the new relationship that implementing this technology would enable. They need to determine whether the value that this new relationship delivers to the enterprise is worth the risks associated with working with an immature technology, typically from small and often dubiously viable vendors. In addition, in many cases, these technologies will be problematic to integrate, as standards will be immature at best and nonexistent at worst.

The key to this part of the hype cycle is to realize that the noise generated by these technologies, especially by the vendors, will be out of proportion to their true business value. That is not to say that these technologies are not important. It just means that the hype has outstripped the usefulness.

The key technologies in this segment are VoIP, wireless CRM and state-based personalization.

Figure 2

CRM Technological/Concept Hype Cycle


Source: Gartner Research

The Peak of Inflated Expectations: Will this deliver the claimed benefits to my enterprise? This is the point in the hype cycle at which the roar around these technologies is deafening. Every vendor claims solutions here, the venture capitalists are directing money to these segments and Type A enterprises are deploying applications as fast as they can. The problem is that, although these technologies deliver some benefits, it is virtually impossible for them to live up to the expectations that have been placed on them. In comparison to what is expected, these solutions may appear weak. At this point, enterprises need to be clear about the real benefits gained, not the overhyped ones, and to make sure that expectations are set properly through out the enterprise.

This last point is especially important as the next stage emerges. Overhyped technologies quickly become the victims of cost-cutting when attitudes change.

The key technologies and concepts in this segment are the contact center and CRM analytics.

The Trough of Disillusionment: Why did other enterprises fail with this? This is the period in the hype cycle when the negative publicity begins to emerge, accompanied by the horror stories, the blame and the backlash. Gartner places CRM itself at this stage in its development. The prevalence of stories on privacy, consolidation in the market and the drying up of venture capital all point to this being a period of retrenching of CRM, especially in those markets and industries that are moving into an economic downturn. However, there are two important things to realize about this stage in the hype cycle. First, it is normal and necessary. Expectations get ahead of reality, and the market has to catch up. Second, this does not mean the death of a particular technology, or of CRM in general. Instead, enterprises should use this as a time to study what their competitors have done well, and not so well, in this area. In addition, this can be an important time to gain an advantage over less-adventurous competitors by making key, reasoned investments, while they are cutting back on their spending. The key is to position your enterprise effectively for the inevitable rebound that will follow.

Key technologies and concepts in this segment include rules-based personalization, campaign management and universal queues.

The Slope of Enlightenment: Can we still gain advantage from this? In the last stage, something important has happened: the Type B enterprises (those that use technology when it is in the mainstream) have come on board. This has been the case with CRM overall. It is transitioning from a strategy used by Type A enterprises to one now being implemented by Type B's. When the Type B's discover the technology, and it has become mainstream, enterprises often find it hard to understand how they can use it to their advantage. The technologies' very ubiquitousness makes them seem like examples of competitive parity, rather than competitive advantage. However, in CRM in particular, it is important to remember that technology is only an enabler.

The key is what an enterprise can do with the new technology, i.e., the strategy. The underlying strategy for the deployment of a technology becomes key at this point in the Hype Cycle. Standards are emerging, and it becomes easier to evaluate the vendor landscape, but the real advantage will not come from the technology per se. It will come from how the enterprise chooses to use it strategically.

Key technologies and concepts in this segment are ERMS, EAI and affinity marketing programs.

The Plateau of Productivity: Is it "too late" to invest in this? When a technology reaches the end of the Hype Cycle, it is truly mature. In fact, it may not even be thought about very much at this point. Type C enterprises (which tend to lag technology life cycles) are buying, free-standing vendors have moved to other areas and the capabilities are often being given away as part of broader suites. At this point, many enterprises begin to wonder if it is too late to bother with such products. This is a question that is easier to answer with CRM technologies than with some others. If the technology will facilitate the ability of customers — however you define them — to deal with your enterprise when they want, where they want and how they want, this is still a technology worth pursuing. That is the key to CRM. Once customers can do that, your enterprise can use that capability to further account relationships, making them more profitable and more satisfied. In fact, that is the key to evaluating any technology on the hype cycle. If it helps further those customer relationships, it is worth considering. If not, it is not a valuable area in which to invest.

Key technologies and concepts in this segment include Web measurement, the call center and ACD.

Bottom Line

CRM, as enterprises have known it, is going to change over the next 12 months. That is not a bad development. Enterprises should not automatically adopt or discount technologies along this Hype Cycle continuum. Instead, they need to recognize that most technologies will go through each of these phases at some point, and therefore, they need to focus on a few key questions that will help ensure that their investments deliver the expected benefits.

Acronym Key
ACD     Automatic call distributor
ASP     Application service provider
CMS     Campaign management system
EAI     Enterprise application integration
ERMS     E-mail response management system
IVR     Interactive voice response
SFA     Sales force automation
VoIP     Voice over Internet Protocol
WAP     Wireless Application Protocol
Customer Relationship Management; Technology Radar Screens
Document Type (Strategy & Tactics/Trends & Direction)
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