Companies should take "a surgical view" of their investments in Customer Relationship Management (CRM) based on carefully defined risks and rewards, according to AMR Research analyst Laura Preslan.

Recognizing there are hundreds of technology investments that can be made in CRM, the analyst firm provides a risk-reward framework to help companies prioritize based on business value.

Technology investments are divided into four groups: Foundation, Advantage, Tactics, and Compliance.

Foundation (high reward, low risk). According to AMR, these are "core applications that every company should use for great benefits at low risk. These investments typically do not cost buyers a great deal of money to initiate nor do they have high penalties for failure. In CRM, Web self-service is the best investment across all customer management areas based on the risk-reward equation....AMR Research surveys show that only 47% of companies have invested in Web self-service to date. However, the majority of those companies have launched basic Websites rather than implementing integrated knowledge management, natural language processing search abilities, and strategies to deflect calls into Web self service. This has reduced the reward of the investment."

Advantage (high reward, high risk). These are applications that "can deliver a competitive advantage and great market distinction. They carry great risk for failure, however, and must be carefully considered and executed." As AMR sees it, "price management falls into this category. Price management is the end-to-end process of optimization, execution, and enforcement of prices...Even though every company can benefit from improvements in price management, only those companies with a high risk tolerance should invest in price optimization and price enforcement today. Companies that are ready to tackle the business process issues that lie at the heart of price management problems reap significant top-line and bottom-line improvements."

Tactics (low reward, low risk). These are applications that "can be executed fairly easily and inexpensively. They are not essential to a business, but represent the type of functionality to deliver operational blocking and tackling....In CRM, a customer knowledgebase is a good example of such a technology. A customer knowledgebase is a database that stores information about customers and the products that they have purchased. It is typically a stand-alone database for one product line or division and is not integrated with other customer data sources. A customer knowledgebase is often confused with Customer Data Management (CDM). CDM is an enterprise-wide strategy for storing, cleansing, updating, and using customer and prospect data. It is much more difficult to achieve and more expensive to implement (high risk, high reward) than a customer knowledgebase, but without it, companies lack a unified view of customers."

Compliance (low reward, high risk). These are applications that "must be executed because of government, customer, or supplier demands. Their nature, cost, and complexity make them high risk...Traditional Sales Force Automation (SFA) implementations are high risk, low reward. With an average implementation price tag of more than $5M for a $1B company, most of the 56% of companies that have implemented traditional SFA have not seen a Return on Investment (ROI) in their implementations because of lack of user adoption, cumbersome interfaces, and lack of integration with other systems. These projects can still be saved, but new investments should focus on ease of use rather than fully-featured functionality. ...Companies that invest in products like those from salesforce.com are finding that less is more with SFA (note that hosted SFA is shown as low risk, moderate reward). Processes for tracking and understanding pipeline activity are important, but ease of use and flexibility of customization outweigh the intended benefits of complicated functionality."

As AMR concludes, companies "should look at each category of CRM technology to identify surgical opportunities that are low to moderate risk, high reward investments... While many companies have already invested in the application categories described above, the investments are not delivering maximum value. Explore opportunities to increase the reward for application categories for which you have already absorbed the risk."