Survey: 42% Of CRM Licenses Go Unused

Jan. 13, 2005
Compiled By Jill Jusko "Buy now, use later" seems to be the tactic of many purchasers of customer-relationship-management software, suggest the results of a recent survey by Gartner Inc. that showed 42% of CRM software licenses purchased by businesses ...
Compiled ByJill Jusko "Buy now, use later" seems to be the tactic of many purchasers of customer-relationship-management software, suggest the results of a recent survey by Gartner Inc. that showed 42% of CRM software licenses purchased by businesses go unused. Some 631 companies worldwide responded to the survey, which was completed in December 2002. "Buying more software licenses than needed may seem like a wise investment in the short term, but over time it costs more," says Beth Eisenfeld, research director for the Stamford, Conn.-based advisory firm. "Through 2005, businesses that continue to buy more CRM software licenses than they need -- and those that deploy less than they purchase -- will incur a 20% to 30% increase in total cost of ownership compared to businesses that carefully plan their CRM software license purchases." Gartner says three primary reasons lead to the purchase of more-than-needed licenses:
  • A software vendor offers a larger discount if a business increases its initial purchase.
  • A software vendor may want to position new modules in the market and offers a reduced license fee to businesses that take additional licenses, and may include free or heavily discounted modules. "Although the business may not need additional licenses for its planned implementation, it may believe the modules could be used in the future, so it accepts the offer not understanding the costly results," Eisenfeld says.
  • The vendor entices purchasing by stating that it is less expensive to buy now than to add on later when the business will need more software. That assumes a business will continue growing and require more licenses, Eisenfeld says. "That may be more of an optimistic rather than a realistic way of purchasing."
"Businesses that carefully select the most appropriate CRM applications, match them to the benefits they are seeking, and purchase the correct number of licenses will experience a faster payback on their CRM investments than businesses that blindly implement CRM applications," Eisenfeld says.

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