Unveiling its latest product offerings at a major conference in Las Vegas earlier this summer, enterprise software supplier PeopleSoft seemed to have a convincing customer management story. The operational functionality it inherited from its acquisition of Vantive has been fleshed out, strengthening its hand in its long-running battle with the likes of Siebel, Oracle and SAP. Its enterprise analytics software puts it in a powerful position as more and more functionality is embedded in its core software. And its pure Internet architecture, the subject of heated ongoing marketing battles with Oracle, gives it a solid platform for the e-business environment.
One element however, is still missing--a convincing partner relationship management (PRM) offering.
John Grozier, vice president of CRM product strategy at PeopleSoft, admitted at the time that while the company has a fair amount of PRM functionality in its suite, allowing companies to share leads and promotional information with their partners and distribute opportunities by segment, it needs more. In line with its traditional expansion strategy, it's now going through a "build or buy" exercise to determine the best route forward. "PRM is getting a lot of traction this year," he said. "We have a sense of urgency about it."
PeopleSoft is not the only vendor that's eyeing the PRM space. Once largely the domain of specialist application developers, major opportunities are emerging in a number of vertical markets--particularly high-tech and telcos--and the list of blue chip PRM users is lengthening. Interest in the space from larger vendors is growing fast and a series of acquisitions seems forthcoming.
Just as interesting as the imminent round of consolidation, however, is a new perspective that's emerging about the whole PRM market. Traditionally, partner management has been viewed as an extension of CRM, treating partners as an integral element of an organization's sales and marketing activities; the core elements of PRM suites have been geared to this perspective. Alongside basic partner administration, software vendors have tended to focus on the benefits of effective lead distribution, automated co-op fund management, dissemination of marketing collateral and so forth.
Linking With the Supply Chain
As in the CRM space, a range of analytical applications and tools are also being released, giving organizations a far better insight into the performance of their partners from both a company-wide and individual salesperson's perspective. And not surprisingly, many of the major CRM vendors have developed or incorporated PRM functionality into their own product sets, including the likes of Onyx, Pivotal, Siebel and SAP. Increasingly, however, the focus on the PRM market is becoming broader, and it's being viewed as one potentially key element of an enterprise-wide business strategy.
Just as the CRM market is extending its focus from front-office activities to integration with back-office applications such as finance and supply chain management, many PRM vendors are looking to extend their reach. Internally, that means linking up with supply chain systems: externally, the spotlight is falling on marketplace platform providers and the whole concept of intra-enterprise collaborative commerce. While the PRM specialists are coy about ongoing discussions over partnerships or even acquisitions, familiar names are beginning to emerge--from supply chain specialists like i2, through marketplace vendors such as CommerceOne to the enterprise resource planning (ERP) vendors.
At a functional level, this broader perspective is beginning to be reflected in product releases. Many of the PRM specialists, including Allegis, have been focusing their efforts on increasing visibility along the supply chain to improve the whole order management process. In May, meanwhile, OnDemand released Demand Center, an application that links demand forecasting from partners to suppliers' inventory management systems, but also ties in channel incentives. The idea, according to Pradeep Amladi, director of eservice and marketing at OnDemand, is to improve the demand/supply measurement process. "Manufacturers would like to understand what they'll be selling for the next three months--but their fundamental issue is, there's no incentive to forecast right. The goals are not aligned: [partners] can over forecast and not get hurt." By giving forecasts an accuracy rating, manufacturers can provide price discounts, marketing funds and preferential product allocations to those partners that actually help them streamline their own product delivery processes.
From a supply perspective, this kind of application extends the concept of the chain, adding resellers onto an end-to-end process that ultimately connects to the originating manufacturing plant. Other developments, however, are geared less toward a chain and more towards building collaborative communities between the third parties themselves, with or without the involvement of the manufacturer. In the high-tech sector, for example, this kind of development has huge potential. According to Drew Williams, vice president of marketing at ChannelWave, in 60 percent of cases high-tech partners need a second partner to help them complete a customer order. At a basic level, that requires giving partners access to a database that helps them find other outlets with suitable skills and experience. But it goes much further. Once the collaborative team is in place, the PRM architecture has to allow for sharing of data, triggering of alerts, security and permission structures for viewing files and so forth.
As Williams points out, providing that kind of functionality requires a many-to-many software architecture, rather than the one-to-many design that characterizes a number of PRM applications today. Over the last two years, ChannelWave has rebuilt its product set along those lines, and vendors like Onyx are looking at designing the necessary tools to enable these kinds of interactions.
The Sour Side of e-Markets
Clearly, marketplace technology underpins this kind of collaboration. Over the last year, the collapse of several high-profile public marketplaces has soured the industry's enthusiasm for the B2B exchange environment. Some sites, however, have demonstrated good returns. Ford Motor Company, for example, recently announced that it achieved savings of $70 million in its procurement processes through Covisint, the vehicle manufacturer exchange, and was on track for savings of $350 million this year. More significantly, Covisint is now looking at ways to move beyond transactional efficiencies to collaboration in areas such as product design--precisely the kind of application that would underpin a private reseller community.
Most analysts agree that while the return in public marketplaces may be long coming, private exchanges offer a wealth of possibilities. Why, for example, couldn't different manufacturers club together to manage their third parties through one portal over an exchange, removing the need for partners to interact with several different sites and developing richer collaborative communities? As that kind of vision slowly begins to turn into reality, it makes a lot of sense for PRM relationship specialists to join forces with platform providers skilled in automating exchange-based transactions. What that means in practice is that PeopleSoft won't be the only vendor looking to build or buy: strategic consolidation in the PRM space is very much on the cards.