Scoping Out SFA for Consumer Goods

The consumer goods industry is typically the center of attention at the end of the year, and it's under increased scrutiny this time because of economic conditions. Research and analysis firm Gartner has obliged our curiosity with its latest report, "MarketScope for Sales Force Automation in the Consumer Goods Industry." It reveals that, while spending remains strong on sales force automation (SFA) in this vertical, the nature of offerings is changing.

Gartner research indicates that SFA in the consumer goods vertical is returning to a best-of-breed battleground and shifting away from suites. The reason is that customers are only finding a need for a few of the five core sales processes Gartner has identified. These are:

• Category management;
• Customer planning and trade promotion management (TPM);
• Volume planning;
• Retail execution and monitoring; and
• Settlement.

"Consumer goods companies as a whole continue to pursue automation of the five key selling processes as largely independent initiatives," writes Dale Hagemeyer, research vice president at Gartner and author of the report. "Many of the vendors have no interest in expanding functionality beyond their current area of expertise, and some suite vendors (Oracle and SAP) aren't actively working to close the gap in best-of-breed strongholds such as category management and retail execution and monitoring." The shift in purchasing habits has led Gartner to revise its approach to covering this field, with reduced consideration of a vendor's breadth of offering.

CRM and related technologies such as SFA remain important to retailers, who largely realize that one of the keys to surviving a recession is maintaining relationships with existing customers. "We have not seen a significant reduction in IT spending in the current economy in the areas covered in this analysis," Hagemeyer writes. "We believe that this is because these areas are perceived as essential in the short and long term." Investment in SFA is steady, according to the report, but mainly in the consumables subsector (including food and beverage); it has dropped noticeably among semidurable companies (such as apparel and entertainment), and even more where durable goods (such as housewares, appliances, and consumer electronics) are concerned. Durable and semidurable goods are the areas "where the economic downturn of recent months has been felt most," Hagemeyer writes. "For years, we have expected the durable sector to get more involved in automating these processes; however, we see no catalyst for doing so on the horizon."

The Gartner report rates 13 vendors on seven criteria, not including the entry requirement of having "at least $5 million in consumer goods SFA revenue from consumer goods customers, specific to one or more of the five key field sales processes." These vendors are sorted into five final strength ratings, ranging from Strong Positive to Strong Negative (though no vendor appeared in the latter).

Of the 13, only one rated Strong Positive: CAS. The company stood out for its continued growth and global reach, its ability to integrate with Microsoft and SAP NetWeaver platforms, and a number of other factors. Gartner recommends evaluating CAS when "you prefer Microsoft-centric solutions, don't require a SaaS option, seek competitive advantage through advanced analytics and predictive modeling, favor a superior user interface, and are looking for a vendor that constantly pushes the boundaries of innovation."

Of the remaining 12 vendors, half received a Positive rating, which is one below the best. These vendors include:

• Interactive Edge;
• O4;
• Oracle;
• RW3 Technologies;
• StayinFront; and
• Xtel.

Three vendors achieved Promising, the middle rating:

• Adesso Solutions;
• SAP; and
• Synectics Group.

The fourth-lowest rating, Caution, was home to three vendors:

• Kenosia;
• MEI; and
• Trimble Mobile Solutions.

Overall, Gartner rates the SFA-for-consumer-goods space as Positive, an increase from last year's Promising. "We still advise investment in SFA because it constitutes a means to a competitive advantage, particularly as consumer goods companies evolve their capabilities from transactional to analytical to optimization and finally to optimized with a focus on more real time," Hagemeyer writes. "What we don't advise is complacency because what is required for a competitive advantage in 2008 won't last."

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