After a speech I delivered recently at a CRM Executive Forum in San Francisco, an attendee asked me what I thought about Tom Siebel's claim that 80 percent of the current CRM vendors will not exist in two years. Having been involved in the software industry for 24 years, I would not be at all surprised if that were the case. There have been many instances in the software marketplace where, as market segments mature, an implosion reduces many vendors to a few. CRM will be no different. That said, I think in two years we will actually have more CRM vendors than we have today.
The implosion theory applies to mature parts of a software marketplace. Clearly a number of CRM markets--contact and opportunity management, marketing encyclopedia, call center, product configuration, for example--are considered mature technologies. In these areas we will indeed see a contraction to a handful of players.
But these areas represent only the tip of the iceberg regarding the value that technology can bring to the customer-facing operations in a company. There are scores of improvements yet to be made in how we market to, sell to, and service customers, and there is a whole new generation of CRM vendors entering the market to fulfill those needs. These innovations will come in a number of forms, but two key trends driving the market in 2003 will be process optimization and insight analytics.
Process optimization is all about leveraging technology to allow users to perform critical parts of their job more effectively than before. Take the telecommunications industry as an example: Many telecom salespeople are good at selling data, and many more are good at selling voice, but precious few can do both. A huge, unmet need in this marketplace is helping salespeople conduct a needs analysis for their clients.
WhisperWire, of Austin, TX, is one of a new breed of CRM players tackling this challenge. In addition to CRM technology, WhisperWire also provides imbedded business processes. Using its solution a telecom sales rep is guided through a proven approach of qualifying a client, conducting a needs analysis, defining the right solution for the client's requirements, and correctly pricing those options. There are dozens of other firms starting to create similar types of process-driven solutions for other market segments, including financial services, medical products, healthcare, and industrial equipment sales.
Analytics has been around for several years, and has helped companies generate a wealth of data about their operations. The issue now is what to do with all this data. A new set of vendors is emerging to help turn analytics into actionable insights. For example, Veridiem Inc. is a firm that applies analytics to assess the effectiveness of a marketing mix for mass advertising. MarketPartners has similar expertise in helping sales managers mine insights into their operations from all the data in opportunity management systems.
So while the market may well be maturing for the old guard of CRM vendors, causing an implosion in that part of the market, a whole new set of opportunities is emerging. Over the next few years we will see a new breed of CRM vendors come to market. These will be hybrid vendors: part technology manufacturer, part consulting firm. Through leveraging their domain expertise regarding specific problems or industries, along with technology, they will be able to create a demand for new CRM innovations that we can only start to imagine now.
Jim Dickie is managing partner for Insight Technology Group, a Boulder, CO--based benchmarking firm that specializes in researching how companies are reinventing the way they market to, sell to, and service customers.