Enter the Enterprise
From the boiling pot of CRM vendors comes more best-of-breed choices and the idea of enterprise-wide integrated solutions.
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CRM magazine's Executive Editor Danna Voth spoke with consulting group AnswerThink's Managing Director of CRM Practice, Lee White, about trends in the CRM space. White addresses the dynamics of evolution in the CRM solutions arena, and what that means to the businesses that deploy the different types of solutions.

CRM: What is happening to the term "CRM?" What does it include and is that changing?
Lee White: CRM, by AnswerThink's definition, is pretty comprehensive. It cuts across all three functional areas: marketing, sales and service, and has key dependencies on many other areas of a business whether it be production planning, inventory availability, the finance function, billing or collections. So first we already know that it's pretty comprehensive, and other people have differing definitions of what CRM is, and maybe we need to level that. The second tenet is that it also is multichanneled. And that again speaks to the enterprise nature of it because it is not just direct [sales], or just partners, or telesales, or the Web. Because it is fairly comprehensive and complex, the number of companies that can provide a full suite of capabilities is probably fairly limited. I think that consolidation will continue to occur as companies continue to add to the breadth of their portfolio.

CRM: So you see vendors consolidating around enterprise suites?
LW: Yes. But I think it's going to be two steps forward and one step back. There will always be, just as there are in the ERP side or the supply chain side, people who can innovate around distribution and logistics faster than the enterprise players can add robust distribution logistic modules to their applications. With solutions getting bigger and more complex-whether it's Siebel with 147 modules or Oracle with 47 modules and seven families or the PeopleSoft suite-by definition the suites have more moving parts, and to develop a whole new version of them across all those different modules and keep a high degree of quality and code consistency means becoming somewhat bureaucratic. It will take longer to roll out new versions, which creates an opportunity for more nimble innovative competitors to get a leg up in one area or another. I think there's going to be a constant tension going forward between the enterprise class applications' ability to provide connections across multiple functions and other people's desire for speed and innovation, and I don't think just one is right. I think they're both right. Depending on a client's unique circumstances, one might be a better answer than the other.

CRM: Will the CRM field evolve to only a few big players, or will there continue to be smaller innovators?
LW: I think there's going to be continual innovation because of the very nature of the number of functions, the number of channels. People can take a niche and derive a tremendous amount of innovation in that niche and move the ball forward and, by definition, leapfrog or stay ahead of someone who is trying to do something in a comprehensive way. So the counterbalance between innovation and the need to be enterprise-wide will continue to proliferate new entrants or new niche players that will then be gobbled up. You will continually see consolidation, but you will also see new players and new innovation, and I think that's been going on for the last six or eight years, and it's probably going to go on for the foreseeable future.

CRM: What are the implications of choosing enterprise suites versus best-of-breed solutions?
LW: You're always going to have a yin and yang. I may be all set to be a suite purchaser because I don't need best-in-class capability in any one area. I need it across the board. So I am willing to accept a little bit of mediocrity in order to get a comprehensive solution. Other players may want best of breed in a specific area because it has extremely high value to them and they are willing to then take on integration issues and the support issues around having several best-of-breed tool sets in their environment.

CRM: Who will be the last ones standing, in terms of enterprise players?
LW: I think that Siebel Systems right now has such a presence and breadth of functionality, breadth of client base, breadth of industry coverage, that they are certainly one that most likely will prevail. I think you are going to have some of the platform players-and Oracle from a database and tools platform-now moving into the applications suite, certainly if they have an ERP backbone that's quite strong. They have some pretty significant potential.

CRM: What about PeopleSoft? I find it interesting that although they are offering an enterprise solution, they are emphasizing their solution's ability to work with multiple legacy systems.
LW: It's pretty interesting because I think that they've kind of hit on the crux of the whole enterprise story: At the end of the day would enterprise-class applications and the ability to connect to the enterprise across functional boundaries and organizational boundaries and skill sets, and so forth, be highly desirable? The answer is yes. But as we've learned through the ERP initiatives and the early CRM initiatives, frequently it's more difficult to do than anybody ever gave credit to. In many areas, and especially in the marketing and the sales area, due to the unstructured nature of the work, it's hard to get anybody to use the stuff consistently and routinely.

So for Peoplesoft to be more specialized and focused on the ease of integration and the ease of connection to other systems, I think that that makes a lot of sense. And conversely, they've got a huge customer base that would also be looking for easy accessibility to their existing applications, and so for those two reasons, I think that they've got some real potential. I mentioned earlier that I think that Siebel is definitely going to be a long-term player. I think it's healthy for the industry, and it will allow the industry to continue to move forward and innovate rapidly, to have competition, and right now you've got the best-of-breed players. But a lot of the larger players like Siebel are basically game, set and match, because if you don't have an enterprise class application, there's just no point. It's done.

I think having an Oracle and a PeopleSoft being viable enterprise-class application providers will continue to keep the pressure on Siebel to innovate. Long-term, having three viable players is better than having only one.

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