Leading the Niches
Business Analytics Field Gets Crowded
One of the recent great CRM-feature gold rushes was to analytics, as companies found they wanted to know not just who was calling and buying, but why. Hence, the field is littered with point solutions, suite vendors, and repurposed reporting packages all claiming the analytical CRM label.
"The problem is that there are vendors that have great [analytical] technology but are relatively weak in their understanding of CRM, and vendors that have a very good understanding of CRM, but their technology itself is not cutting-edge, not that exceptional," says GartnerGroup Research Director Gareth Herschel.
Despite all the noise, SAS Institute Inc. remains the respected first name in customer analysis, with its annual revenue for analytics in the $80 million range. SAS is the most aggressive in trying to position itself as both analytical experts and CRM savvy, Herschel says. To help shed its outsider image, SAS acquired profitability analysis specialists ABC Technology, and this year is rolling out profitability scoring metrics for the financial, telecom, and insurance industries.
Meanwhile, traditional business intelligence vendors are sneakily recasting themselves as CRM providers. Information Builders, for instance, credits 30 percent of its revenues to CRM analysis. That would put the company's annual CRM-related revenue slightly above SAS. Independent analysts, however, could not confirm these figures. "That's not saying we make $100 million a year reporting off Siebel--it's off a lot of home-grown [CRM] systems as well," says Michael Corcoran, chief communications officer at Information Builders.
Next in line is E.piphany, which has endured multiple straight quarters of declining revenue, although the analysts do not seem to be delivering a eulogy just yet, only a warning. "The challenge is that they're not the obvious solution," Herschel says. Unlike most vendors that have turned to newer product lines like PRM and analytics to sell into their installed bases, E.piphany will instead need to sell more operational CRM into its existing analytical clients to thrive, he says. According to E.piphany president and CEO Roger Siboni, the company's recent launch of E.piphany E6 is leading its transition to being a full-footprint CRM company.
Then there is SPSS, which built its CustomerCentric division in large part around NetGenesis Web analytics, which in retrospect was a difficult decision. "[In the past companies like SPSS] had been doing such a good job of saying, 'We do all the Web analysis you could need, why go to NetGenesis?'" Herschel says. Because NetGenesis, and even SPSS's lower-end analytical tools are often viewed as tactical rather than strategic, the division has some identity issues. SPSS has declined to break out separate revenue for this division.
Consider it best to ask hard questions--who, what, how much, and for how long--before buying into a total CRM analytics solution from one of these, or contemporaries like Cognos or Hyperion. What looks like CRM number crunching may not be. "If you make SAP BW [business intelligence module] attribute to CRM usage, that probably makes them as big or bigger than anyone else," says Forrester Research's Principal Analyst Bob Chatham.
But not all of the interesting analytical offerings come from the biggest names. Herschel recommends keeping a careful eye on up-and-coming U.K. predictive modeling specialist Quadstone, which recently added former Portal Software executive Paul Kelly as its chief executive.
NCR division Teradata has also made moves to bolster its direct CRM analytical offerings as of late, but has refused to offer any quantifiable measure of its market presence. "I think they have a great solution, the thing that kills them in the market is Teradata [database software]. They claim Oracle support, but clients don't believe it," Herschel says.
Remember that major operational CRM firms have also worked to expand built-in analytical capabilities. "For meat-and-potatoes analytics, the suite vendors are going to win, just by virtue of volume," Forrester's Chatham says.
CRM Leadership Transfers to PRM Market
The basic tenets of sales force automation amplified, combined with a healthy dose of order handling and supply chain integration, make up the partner relationship management space, which some CRM adopters embrace in the hopes that channel affiliates can act in better concert with the flagship. So it is no wonder that the largest CRM vendor is also the largest developer of PRM applications.
"There's only one leader: Siebel," says GartnerGroup Vice President of CRM Research Rob DeSisto. "There's no question they're piggybacking the enterprise applications. It's not like Siebel went out and sold 400 PRM-only implementations," he says. Analysts estimate Siebel's quarterly revenue from PRM applications is in the $20 million range, or about $80 million annualized, making the vendor the clear heavyweight in the space.
However, Yankee Group Program Manager Sheryl Kingstone warns that some existing customers might overpay for Siebel PRM functionality compared to point solutions. "But that doesn't matter to a lot of companies, because they want a single platform," she says.
The current PRM market is pegged at about $200 million and is expected to grow modestly to $300 million over the next five years, according to industry analysts. Since analysts do not expect PRM to spread like wildfire, they do not expect everyone to last.
"The only companies that are really going to survive are numbers one, two, and three. Number one is, potentially, Siebel, and maybe two or three is ChannelWave," Kingstone says. That company built its partnership expertise through a series of acquisitions in 2000, and now offers a J2EE-based partnering platform in its ChannelWave 5 product.
Allegis is often mentioned in the same breath as ChannelWave, and it targets similar customer bases--namely, whatever it can get away from Siebel. "They offer best-of-breed functionality, and it's potentially easier to get up and running quicker," Kingstone says.
Allegis Chief Executive Dennis Ryan puts stock in his company's survivability by pointing out that enterprise customers are not acting as though they have been fooled into buying a white elephant. "Eighty percent come back to buy additional software or services from us" after the initial PRM network is enabled, he says.
Comergent, which would not share specific sales figures, boasts a customer roster that includes major names from the technology, retail, and manufacturing sector, including Sears, Seagate, and Goodyear. Its PRM approach is geared towards moving an order through complex partner-selling networks that may include customer intervention, such as a Web inquiry to a manufacturer site that would lead to a local distributor fulfilling the order.
However, next to Siebel, ClickCommerce claims the largest number of paying PRM customers. "ClickCommerce [has] some of the most loyal customers you'd ever want to talk to, which is different from being able to execute as a business," GartnerGroup's DeSisto says. He also notes that buyers in non--Microsoft environments, or those who are uncomfortable with the idea of a very low vendor share price, may wish to steer clear.
"I personally like [ClickCommerce's] technology and like the [management] team; why they're struggling has to do with complacency in the market," Yankee Group's Kingstone says.
The other major suite vendors, such as SAP, Oracle, and PeopleSoft, have yet to make an event-worthy splash in PRM, although among companies with publicly or privately reported revenue data PeopleSoft squeaks onto our radar screen with an estimated $2 million in quarterly revenue directly attributable to PRM. Oracle believes its homegrown PRM suite will begin attracting the attention of Oracle CRM users who want to serve and reward partner organizations according to merit and ability. Also, as Invensys rebuilds the Baan CRM product line in its manufacturing image, expect to see it grow in relevance and influence as well.
Call Center Market Has Room for Big and Small Players
The call center software space features steady players, a phoenix or two working to rebuild after a disastrous merger, and, of course, a familiar face at the top of ladder.
"If you want to get 25,000 agents deployed, you're not going to find many companies that can certify that they've done it, but Siebel is one of them," says Esteban Kolsky, a GartnerGroup senior research analyst. "The application is nothing out of the ordinary, but [clients] go with financial viability." Siebel's estimated call center revenue is about $324 million a year, according to Dataquest.
In this bread-and-butter space, however, not everything is perfect. Kolsky cites slower-than-expected adoption rates for Siebel 7 and what he considers a less-than-ideal transition to a new Web-based architecture as chinks in the CRM giant's armor.
A distant second is Amdocs, a company that specialized in customer care services. Amdocs went from dabbling in CRM software to owning a fully loaded call center suite when it bought Clarify from Nortel last November. This acquisition, worth approximately $2 billion, came shortly before Nortel unveiled some of the largest corporate losses in recorded history, and Clarify was lost in the shuffle. Amdocs' call center software revenue is estimated at about $52 million a year.
Amdocs is working to revamp the software platform and rebuild the Clarify brand. "Architecturally we're looking forward to a thin client, but the big thing for us there is coexistence, so customers can choose their own rate at which they migrate," says Peter Hurst, vice president of marketing for Amdocs Clarify.
Clarify had fallen virtually silent in the community as a mover and shaker under Nortel's stewardship, but expect that to change, at least within the markets Amdocs knows best. "They'll defend their turf in telecom," Forrester's Chatham predicts.
Another tough-luck story in call center CRM is still playing out. Embattled Peregrine Systems recently allowed its 2001 acquisition of Remedy to operate as an independent business. Peregrine did not return calls for this story. While the future is uncertain for Peregrine, Kolsky believes Remedy will survive by being spun off. "Remedy has a good product and will continue to have a good product. In two years Remedy will probably go back to being the leader in the help-desk market." Remedy will face a tough decision to partner, acquire, or merge if it hopes to go beyond being a help-desk leader, or risk racing with other niche help-desk vendors like FrontRange, he says.
For its part, PeopleSoft 8 CRM builds on Vantive's strong history, and the company is hoping the Internet-architecture product catches on in enterprise environments. PeopleSoft reports that more than half of its CRM deals include call center components, and is looking for a new approach with new leadership. Remedy and Clarify veteran Joe Davis recently replaced CRM General Manager Stan Swete in what PeopleSoft calls a planned move as Swete takes a "career sabbatical." Kolsky summarizes the change differently: "Swete promised that by the end of this year they would have close to 200 CRM deployments. Considering they had 30 at the middle of the year...."
Kolsky also notes that after a shaky start, Oracle has stabilized its call center offering. The company jumped into contact center software in 1998 by purchasing Versatility, but would not break out customer or pricing data.
Standing out among smaller but noteworthy players, Applix sold its legacy Unix productivity suite in 2001 to focus on its contact center--oriented CRM suite, a strategy that has gained it a modest niche among SMB clients. "The system does what it's supposed to for small or midsize implementations," Kolsky says. The company would not break out its $9 million in quarterly revenue between its operational, predictive, and analytics applications.
Larger rival Concerto offers inbound and outbound automation for midsize companies, but the modest players face challenges staying alive in an economy that requires marathon runners. "We're facing a market where trying hard doesn't do much," Kolsky says.
Freelance journalist Jason Compton is based in Evanston, IL.