Will AI Agents Replace Your CRM?

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- Agents are about to do to CRM

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what CRM did to the Rolodex.

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- Welcome to "The So What from BCG,"

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the podcast that explores the

big ideas shaping business,

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the economy, and society.

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I'm Georgie Frost.

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For years, CRM has

been the backbone

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of how businesses manage

customer relationships.

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But with agentic AI, is CRM

about to become obsolete

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or more important than ever?

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And who will be in charge of it?

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Joining me today is Bryan Gauch,

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who leads commercial

tech topic at BCG.

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Bryan, welcome.

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The term CRM, I imagine, is

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quite a familiar one to most of us,

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but just explain what exactly it is

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and how significant it is to business.

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- Well, let's start with

the business definition,

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as the acronym and definition

have become so overloaded

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that people forget what it's

actually supposed to do

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and what it means for a business.

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CRM or customer relationship management is

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the strategy and set of practices

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for managing, hopefully coherently,

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a company's relationships and interactions

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with customers across the

entire customer life cycle

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and to do so in order

to maximize value.

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Whether you're in One Cards

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and you're writing

things down in a Rolodex,

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or you're into technology,

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that customer information

is that backbone.

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And I think that evolution is

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where organizations

have fundamentally gone

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from "I need to use

this as a business"

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to IT and tech teams

need to actually manage

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and harness it from a

security lens to help,

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help drive secure discussions

with your customers.

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- What about from my perspective,

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my perspective being

a customer perspective?

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What does it look like to me?

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- You want the company

to actually understand

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what you spend with them.

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What, what should they

offer you from a discount?

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Who is your sales rep?

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So when you talk

to your sales rep

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or you talk to the actual company

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and asking for information,

you want both of those parties

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to be on the same page.

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So you as a customer, you want

to know that they know you

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and show that they know you

through every interaction.

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- There is a lot of talk at

the moment about the impact

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of agentic AI, with

some people arguing

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that it could replace

CRM altogether.

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Firstly, why are they saying

that? How would it do that?

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And what is your view about this?

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- When companies get it right, regardless

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of the technical architecture, is

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that the results speak for themselves.

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Just like the story of L'Oreal.

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When they shifted 28 brands

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to purely digital brand during COVID,

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it fundamentally saved the company.

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This is information anyone can

go look at and read online.

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It was a spectacular story

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of how CRM can really help

innovate into problems

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of, of opportunity.

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And, and so I think it's a good story.

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However, most stories we hear

nowadays are the opposite:

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legacy workflows, too hard to

modernize to detect that,

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and expensive license costs.

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So we see things on social

media all the time about

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companies that, "I don't need CRM anymore.

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I can just use agents to build things,

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and it retires my license costs."

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And I think that we're going to be running

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into really interesting,

difficult conversations

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as those, those archetypes

come to, come to bear.

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I think that people are conflating

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"let's replace the CRM interface"

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with the underlying data

backbone and the capability.

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What agents in, in our view

are replacing is the screen,

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the different ways in

which humans are meant

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to interact with technology.

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But when you think about

it, agents aren't meant

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to replace the one

coherent governed

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compliant record of the customer.

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In our take, I think there's

four fundamental reasons

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why you wouldn't replace

a CRM with agents,

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and we can get to that

one whenever you're ready.

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- We will get into it, but I do just want

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to return right back to the start.

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Is CRM about to become obsolete

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or more important than ever?

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What is your take on that?

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- Is CRM going away?

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That's a question I, I get

asked on a weekly basis.

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In short, no. Will it change? Absolutely.

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I believe and fundamentally

how we engage our,

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our clients on this topic is

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it's a nuanced conversation.

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I was talking to

a CEO of a company.

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He said, "Why can't I just stitch together

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multiple bad CRMs with agents

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and, and go faster?

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And the answer wasn't you can't.

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The answer really wasn't

even you shouldn't.

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The answer was cost,

resources, and innovation.

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At some point, CFOs, CEOs, CIOs,

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and the business owners of

the applications actually have

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to go through a, a thorough discussion

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and internal investigation to

see what part does CRM play?

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What, what parts do agents play?

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Where, how do I work and,

and figure out my data?

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I always say data is a journey.

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It's, it's not a destination.

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And, and where,

who plays which role?

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And right now, I think that's

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where a lot of

the discussion is.

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Why would CRM not go away?

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So whether you buy

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a commercial off-the-shelf platform,

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whether you build it yourself

with your own infrastructure,

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or whether you leverage

agents in a hyperscaler,

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CRMs still require

four things and,

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and support four parts

of the business

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that will be incredibly

difficult to replace

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and do so at the speed

and cost that you need.

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One, your data backbone.

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Two, scaling your

business processes

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needed to run your business.

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Three, verticalization

by industry segment,

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by regulatory industry,

and by local country law.

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And number four,

the security posture

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and investment to secure

your database and your data.

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Number one is it, it serves

as your data backbone.

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Organizations have spent

years building up data,

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good or bad, that allows

them to run their business

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and support their customers.

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Number two, it actually

scales business processes.

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Number three, how

do you industrialize

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for regulated industries

as well as for countries

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that have local

data residency laws

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that require these

platform providers

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to actually have their,

their customers' data resident

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in the country,

such as Australia?

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Those types of regulations as

well as industry-specific ones

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for financial services,

public sector, healthcare,

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they require a constant investment

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and alignment to

changing laws that have

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to be cascaded down

into the technology

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within a certain

period of time.

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Having a partner like

a platform partner

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that invests in that

with you are advantageous

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for these CRM companies.

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And the last one, I think is,

is pretty simple is security.

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They've invested in

the security posture

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that agents right now

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from what we're seeing are

still relatively gapped

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and don't even make up the full,

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what I call agentic app

ecosystem that you need to,

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to build, run, secure,

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and observe your entire

application landscape.

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- What about cost?

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- Cost isn't just the cost of

the agent or the license fee.

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Cost is also time to value.

How fast can you get it?

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Agents win a lot when you have

embedded tech debt in CRM.

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We talked about the problems,

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but cost also exists when

it comes to the number

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of resources that are

available in the market

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that know how to do

things at scale.

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- Tell me more about that.

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- The pace of change will never be as slow

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as it is today, right?

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That, that is astounding.

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The Stanford AI Index

of: 2025

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that there are 90,000

agentic AI jobs out there.

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In our perspective, that was

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five to seven times lower

than the actual number

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just for last year alone.

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And this year, we think that

is actually three times

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from the actual number

that's required,

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so not 90,000

times five or seven

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but 90,000 times eight

to 10 of what's required

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to support the agentic

job factory

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that customers are actually needing today.

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I think the last

one is innovation,

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which is how fast

can you innovate?

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And I think this is

where agents have

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a really cool

opportunity to help.

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But if you think about it,

cost will continue to be

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a governing function

for companies

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because cost is

a lot like a balloon.

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You can squeeze one side,

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but the air just moved

to the other, right?

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There's not infinite amounts

of cost that you can apply

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to technology and innovation,

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especially as humans still

want to talk to humans

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for a majority of the customer life cycle.

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And as we look at companies

that have spent

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two to four times the rate

that they expected of agents,

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that cost is unknown.

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So we're talking to

CEOs and CFOs saying,

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"Hey, we can get to the

architecture options,

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but fundamentally, you

also have to understand

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what are you going to

spend and where, right?

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If agents are five times

as expensive as CRM,

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the math doesn't math anymore."

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And that's where I think

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that the really rich

conversation of the nuance

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between the different models

and options are really going

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to take place over the

next six, 12, 18 months

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as the technology

continues to evolve

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at an incredibly fast pace.

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- Something that comes up time

and again, whatever industry

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or whatever guests that I'm

talking to, is this promise

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of AI helping businesses

to do more for less,

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but actually that danger of

companies underestimating

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what it actually costs to

get to where you want to be

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to use AI at scale.

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You speak to leaders all

the time in this space.

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Is there, do you think

that danger is alive

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in this particular space?

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- Absolutely. I think CEOs,

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heads of sales,

CIOs especially

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are under immense pressure

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to jump onto the

marketing bandwagon,

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all really good intentions

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and targets that have

to be interrogated

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with, with intent

and I think nuance.

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And so I think organizations

are looking at this,

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and they're struggling

with how to get

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what I call their

wallet put together.

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How do I actually look at the

expected cost that I know?

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How do I project out

if I start to unleash?

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And then what

are the guardrails

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I have to put in place?

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And those guardrails aren't

just you can't use it,

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but it's which model do you use?

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Which model do you

allow people to use?

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Here at BCG,

I think we did it.

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We've been, I think,

pretty thoughtful about it.

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And it hasn't been perfect,

but it's been thoughtful,

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which means when we

actually run into a cone,

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kind of like when you're learning to drive

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and you run into a cone,

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you back up, no harm, no foul.

It hasn't been another car.

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We're intentional who gets what,

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and we're intentional at

which model they can use.

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And I think organizations

are going to start

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to create simulations of cost

that allows them to compare

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the cost against what they plan for,

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and then what is the actual

result of the investment

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against their, their

technology, their CRM.

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- Bryan, we've spoken a

lot about, understandably,

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the technology,

but what about people?

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What does this mean for

people whose jobs are likely

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to change the most perhaps

over the next few years?

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- I think when you look

at the use cases that AI

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and specifically agentic have,

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the functions they've

been introduced to

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like marketing, HR, IT are,

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there's significant implications

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that organizations have

not thought through, right?

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And I think that's also gone

into why costs have spiked.

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Gartner found agentic

models consume

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five to 30 times more

tokens per task

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than a standard

chatbot interaction,

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which means as, as humans

are engaging chats more,

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and even if the cost of

tokens is going down,

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the spend is

exponentially going up

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higher than it is today,

which is alarming.

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So how did we get there?

You've got customer service.

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You've got functions that

are required to move faster

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because the C-suite is saying,

"I need business results."

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And what we're seeing

is as IT is, is having

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to build up their competency,

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the 90,000 jobs not nearly enough,

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you're seeing business say,

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"Give it to me.

I will just do it."

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So I think that's a very big

discussion on who owns what

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when it comes to not only the agents,

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but defining the workflows,

defining the experience,

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defining the future-state process.

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But then the middle

ground, which is, right,

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so if I just go here and

then you've got IT coming in

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from this side to pick

things up and run it through,

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is I think you're going to

start to see a redefinition

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of who owns further down

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the software development life cycle,

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the product development

life cycle, meaning

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can it be a business person

who orchestrates the agent

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to do the basic config, configuration,

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to do the functional design

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that typically sits within

the technology teams?

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And if so, what happens

to the technology teams,

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and who does,

who does which part?

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So I think that is a huge

part of the discussion

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when it comes to who does

what in the future of,

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of this hybrid model of CRM plus agentic.

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- What happens if

you don't prioritize

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those conversations now?

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Why is it so important?

Shake it all out for me.

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What's going to happen

in five, 10 years' time

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if you haven't had

these conversations now?

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- Oh, just five to 10 years?

Can I, can I take it ...

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- Well, three, two, whatever.

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- Can I take it in six to 12

months because I think it.

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So I think three is fine.

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Three is, three is actually good.

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Anything beyond three years

and we're really scientific

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and sci-fi movies at that point.

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- Yeah.

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- So, well, I think

there's a few concepts

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that I think we'll run towards,

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though the final destination

is still relatively fuzzy.

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I think, one, CRMs and

platforms will continue

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to move towards headless.

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I think it's going to be

a table stakes for them

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as they change their

commercial models,

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that they harness the data

backbone as their secret sauce

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and help organizations

really take advantage

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of the agentic moment.

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I think, number two,

we're going to see agents

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really take the place of bolt-ons

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that have existed today to

where CRMs have been gapped.

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These agents are going

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to help organizations

innovate at scale

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for those, those use cases.

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I think it's also going to

be the experience layer,

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and it's going to

help connect data

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across different channels

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and different,

different customers.

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And I think that's very different

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from how we see it today,

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where CRMs are monolithic

applications

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that really drive,

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I call it distrust and lack of lovability

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to where agents get to

help actually massage it

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back to value to

back to the company.

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And that's the three-year

view for me is

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that at that point,

we can come back

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and say, "Bryan, are CRMs

going to exist again?"

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Let's have take two.

I don't know.

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- Yeah. Yes, indeed.

There you go.

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Bryan, we've covered the so what.

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What about the now what?

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If you're a CEO listening to this,

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what are your next immediate steps?

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- Don't start with the

build versus buy decision.

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Start by getting your chief

sales and revenue officer,

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your head of customer support,

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your head of digital

and legal and tech

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and finance in a room.

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And it's not about

let's agree

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on the first place

we're going to go build,

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but align on the principles

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in which you're going to

govern your investments.

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What should an agent do,

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or what, what should an

agent do that CRM can't?

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What is the implication

of who can deliver that

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in the cost profile for them,

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both the human cost as

well as the agentic cost?

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What does that do when it comes

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to longer-term scaled value

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since the moment you go through

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the let's let a thousand

flowers bloom,

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you're unable to

actually understand

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which flower, why did it bloom,

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and what's going to

really nurture it

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to grow in the way you need it?

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So you understand cost,

resource, and innovation.

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So if you go over your

spend, it's done.

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If you don't have enough

resources in the room,

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then who do you go to?

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If innovation isn't

fast enough based

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on what a functional leader

needs, then pause, right?

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That's going to help people

get to a proof point.

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- Bryan, what role will

consultants play in all this?

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- Oh, a self-serving answer

I could give, but I shall not.

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I do fundamentally believe

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that the expertise is not

going to be in the agents.

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I think they're going to be commoditized.

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And so if we think about

the role of consulting firms

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and who's in the room when

you start to innovate, is

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that the people that understand

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the business context,

the strategy can design

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the future-state processes going

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from 10 sales stages

down to six.

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Why do you need five sales

motions versus 14, right?

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What's the forecasting method

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for each of those,

and how do you go?

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That's a business discussion that's based

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on strategy and data

and best practices,

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not based on how you

configured a tool.

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And so I fundamentally think

consulting is going to go back

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to, dare I say it, actually

consulting organizations

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on what they should and

should not be doing,

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how they should be doing it,

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and the agents are going

to be doing the work.

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For services providers,

professional services firm,

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I think what we're going

to see is we're going

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to see a shrink and a

shift for those consultants

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who provide services for the

customers of salesforce.com,

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Dynamics, the other CRM providers.

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When we look at that shift,

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I think we talk about

it from a who is going

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to be the orchestrator

of the agents, right?

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Think about it

differently in this way.

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Today, the constraining factor

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of most transformations

are business decisions

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and the change of how you

do things today to tomorrow

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and the technology

and technology teams

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that are responsible

for delivering that

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in order to drive process

scale and automation.

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Today, that technology team is constrained

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by capacity and, and time.

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What agents do is it makes the development

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and the repeatability

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of quality development

a commodity,

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which means while you need

high-end tech capacity

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and skills, actual doing of

the build should be pushed

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more and more towards agents.

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Now, do I think it's going to be immediate

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where you're pushing the entirety

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of your software development

life cycle to agents?

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No. In fact, you're going

to have throttle limits

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on how much can go

into these platforms

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and drive, you know,

automated builds,

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and you're going to want to

have, you know, quality checks

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to make sure you're

doing it right.

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But the momentum and the swing

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and the shift is

already underway.

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So the real dialogue, the real discussion

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within both professional services

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and within the company's

organizations

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that run these are who

orchestrates the agents

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and what's the special

sauce that goes into

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what the agents should do?

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And so I actually believe

that the companies,

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and services firms specifically,

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they're going to win

are going to be the ones

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that can harness

their internal context

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and knowledge, kind

of that big brain,

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and then bring that into the

agents for a client specific

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and then deploy that to help

them actually accelerate.

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So I believe the, the change

fundamentally is going to be

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how do you upskill your

clients in agentic build,

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so they can take

it on themselves

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versus having long-tail run

support that's outsourced.

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I think it's how do you

accelerate transformation

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from the business side and

the decisions you're making,

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which I believe is

a sweet spot for BCG

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as a business integrator.

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And then, I believe, how

do you actually contract

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towards outcomes, which I

think will be a tectonic shift

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on how do you actually move into,

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I will sign up for an outcome

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that allows you to turn on

this new process, the entirety

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of the platform

within three to six months

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and do it at scale versus

12 to 18 to 24 months.

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It's going to be table

stakes to get it right.

Speaker: 00:19:24

- Bryan, thank you so much,

and thank you for listening.

Speaker: 00:19:26

If you'd like to find out

more about the subject,

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you can find links to

BCG's research in this area

Speaker: 00:19:31

in the show notes.