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AMR: State of the CRM Union
To this end, AMR released a report entitled, 'It Was the Best of Quarters, It Was the Worst of Quarters,' detailing CRM vendors' rocky financial performance in Q1 this year. On the upside, CRM vendors did a noble job of pulling out decent numbers in what is arguably the slowest-selling quarter of the year, according to AMR.
Posted May 3, 2002
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In these uncertain times, CRM software buyers are looking at financial viability metrics of vendors harder than they ever did before. "The risk of losing support for systems when a vendor goes out of business can be high for CRM users because they can't afford to have systems fail in front of customers," says Lindsey Higgs, analyst at AMR Research. To this end, AMR released a report entitled, 'It Was the Best of Quarters, It Was the Worst of Quarters,' detailing CRM vendors' rocky financial performance in Q1 this year. On the upside, CRM vendors did a noble job of pulling out decent numbers in what is arguably the slowest-selling quarter of the year, according to AMR. Chordiant, for instance, had a stellar quarter, posting 70 percent year-over-year revenue growth. Concerto, Digital River, Kana and Pegasystems also grew. While SAP's overall license revenue was down 12 percent, CRM revenue grew by 10 percent. Bellwether Siebel Systems though, had mixed results: Revenue was down 20 percent year over year, but license revenues of $246 million was more than the combined revenues of the next five largest CRM vendors. And then there's the gloomy part of the story. Click Commerce missed estimates by 18 percent; eGain by 46 percent; and Onyx and E.piphany by 22 percent. PeopleSoft and Oracle also had a tough quarter. Why CRM's tale of two cities? It all comes down to sales execution, says Joanie Rufo, analyst at AMR and the author of the report. "CRM is not a new concept, buyers don't have to be educated," she says. "But they do have to be convinced that there's a return on investment on a purchase and know clearly what products each vendor brings to the table, which remains difficult given the similarity of vendor messaging." Since Q2 looks to be much the same as Q1, in terms of economic climate, potential CRM buyers should be prepared for aggressive sales tactics and discounting. Admittedly, the criteria CRM buyers use to choose financially viable vendors must go much deeper than simply looking at stock prices, says Higgs. Aside from sound financial positions, buyers want to see a software vendor with "strong management of the companies and products, good forward momentum, and market-leading visions," she says. "By using these criteria, the strongest vendors in the CRM market currently are Siebel Systems, Oracle Corporation, SAP AG, and PeopleSoft."
Tom Kaneshige also writes for Line56.com
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