The 2004 Market Leaders (Part 2)
Sales Force Automation
Sales force automation, say the seasoned veterans of CRM, is where it all began. When contact management was largely limited to index cards and pipelines were figments of delirious imaginations, SFA came to bring order. Even as CRM increasingly becomes a company-wide strategy, the numbers clearly indicate that there remains an important place for sales-focused initiatives in modern enterprise.
SFA products from such vendors as Siebel, Salesforce.com, and Onyx continue to be sought-after when sales efficiency and sales effectiveness solutions are needed, particularly at larger firms. However, because of the maturity and evolution of the SFA market, we chose to focus on those companies that remain primarily pure-play SFA vendors.
"The news is that GoldMine and Maximizer both survived the past year," says Jim Dickie, a partner with CSO Insights. Microsoft's entry into CRM drew the attention of many traditional SFA integrators, cutting into the reseller base available to both CRM and SFA vendors. Even so, GoldMine is faring quite well in the SFA market. As a result, parent company
FrontRange Solutions has enjoyed strong quarter-to-quarter growth in recent months, and brought in a new channel director to bolster confidence among GoldMine VARs. Although FrontRange considers its GoldMine/HEAT pairing a complete CRM suite, analysts say they are waiting for improvements in GoldMine later this year that will give the software true CRM functionality for SMBs.
Maximizer Software, a name once uttered in the same breath as ACT! and GoldMine, had fallen on hard times, but that hasn't stopped the company from continuing to improve its product. The release of Maximizer 8 this past May resulted in a strong spike in sales for the company, hinting that the wait-and-see period for Maximizer is over. And although the company has a smaller market share than its traditional rivals, some industry watchers attribute that variance to Maximizer's focus on profitability instead of new revenue growth. CRM magazine's Leaders formula does not account for profitability, but living to fight another year is its own reward.
Doubtless below the radar for many SFA customers compared with the over-the-counter high flyers ACT! and GoldMine, Interface Software is a segment leader by virtue of strong performance in its vertical (professional services companies like law firms) and extremely high marks from analysts. The strong market ownership by SFA mainstays, combined with pressure from on-demand services, has all but forced new entrants to find a niche and serve it well. "In [Interface's] field...I consider them tops," says Rich Bohn, executive editor of SellMoreNow.com.
On-demand leadership in the SFA-only space comes from Salesnet. While accumulating customers more slowly than on-demand cohort Salesforce.com, Salesnet took a more focused approach than attempting to be all things to all people. And contrary to popular wisdom that says on-demand solutions tend to be less flexible to individual corporate needs than packaged software, Dickie gives high marks to Salesnet for its ability to mold to a company's specific sales process. "Salesnet is clearly the strongest player in the marketplace for companies that have a structured [sales] methodology," he says. The company has already launched three vertical solution packages, with more on the way.
After all these years ACT!--what some consider to be the original SFA tool--remains locked in a fight with archrival GoldMine. Arguably the most available CRM tool in the world, sold through integrators as well as retailers, ACT! claims to have 2 million active users and claims that the number is climbing.
Now part of the Best Software family, the company had pledged to work to build more links between ACT! and its wide range of SMB accounting software. If Best is true to its announced strategy, ACT! users will soon have a smooth upgrade path to ACCPAC CRM, the company's hybrid packaged/on-demand solution.
New functionality for ACT! has not been quick in coming--as of this writing, it has been more than one year since ACT! saw an upgrade. For an established workhorse, that's not necessarily a bad thing. "Here's something that wasn't broke when they [Best] bought it, and the great thing is that they left it alone," Dickie says. For a while, anyway. ACT! 2005 was released August 24. --Jason Compton
SALES FORCE AUTOMATION ONE TO WATCH
An up-and-coming on-demand provider with the promise to make a significant splash, Entellium already offers strong sales tools and some support and marketing functionality to a growing customer base. The system emphasizes process and workflow, and currently sells at a significant discount to larger on-demand rivals. Entellium already promises Outlook integration, sought after by customers who rely on Outlook for email and basic contact management tasks.
The highly modular solution, designed to let companies turn on support and marketing functionality as needed, is already aggressively targeting companies with complex ERP integration needs. Because most companies find it easier to experiment with on-demand sales, we expect Entellium's earliest leadership and success will come in the SFA space. --J.C.
Marketing Performance Management
Marketing performance management (MPM) is a catch-all that takes pieces of both marketing resource management and marketing operations management and blends them with the campaign management and lead management functionality that many vendors include in their marketing automation suites. Not surprisingly, all that blending makes it difficult to definitively locate the boundaries of the market, and so the blurring of its constituents is inevitable. Generally speaking, though, the MPM space is the top-level approach to marketing efforts, designed to reach out to both prospective and existing customers.
As if all those blurred lines didn't make selling in this market challenging enough, the rules kept changing this past year, with the creation of the national Do-Not-Call registry, the implementation of the federal CAN-SPAM law, and the burgeoning threats of phishing and identity theft. Despite all the obstacles there's been "an uptick in the number of deals this year," says Elana Anderson, senior analyst of enterprise applications at Forrester Research. Anderson estimates that licensed software sales in the marketing automation segment grew by about 6 percent in 2003, to roughly $350 million.
By most estimates privately held Aprimo's revenues are roughly divided between campaign management and MRM offerings, which are powerful enough to attract big-name clients like Bank of America and Merrill Lynch. Analysts say Aprimo's strength is serving the B2B market. This year the company outpaced all but one of its peers, as it landed several new tier-one clients, retained nearly 100 percent of its existing users, and introduced Aprimo Marketing 6.0, adding new workflow capabilities, among other features, to the flagship product. All that effort paid off, with the company scoring near the top in functionality and customer satisfaction.
Despite E.piphany's avid fan base among customers of its marketing offerings--the company "provides the best customer references, bar none," Anderson says--it still yearns to be considered a vendor of full-suite enterprise CRM. The company made compelling progress last year, trimming losses and refocusing its efforts, going to an indirect sales model outside of North America and Western Europe and targeting five main vertical markets: financial services, insurance, telecommunications and media, travel and leisure, and retail. The E.6 product line, including what Anderson calls "best-of-breed functionality for real-time decisioning," won over a number of analysts and customers, helping the company score high among the leaders in customer satisfaction and functionality.
SAS Institute remains the most recognizable name in the marketing arena, having parlayed its strength in innovation, data mining, and analytics to become, as Aberdeen's Vice President of Sell-Side Research Chris Selland says, "the gold standard, and the dominant force." Analysts agree that the company's Marketing Automation 4.0 is a powerful release, one that's rumored to make the usability issues that have dogged SAS a thing of the past.
According to analysts, SAS's offerings--which scored a close second to Unica in breadth of functionality--could even pose a threat to Unica's leadership in the space.
Until this year's release of Siebel 7.7, Siebel Systems had put little emphasis on its marketing tools. But that has never stopped the company from trying to trample over its better-entrenched peers. Siebel executives say the marketing module is one of the company's fastest-growing offerings, and several analysts said its enhancements this year in loyalty management are a major step forward. Even though the company's marketing line is less mature than its others, "they've been able to get mindshare in this market with what is a rudimentary product," Selland says. According to Anderson, this edition is the first marketing automation solution "that will be able to get [Siebel] to the table to compete against vendors like Unica and E.piphany in high-end consumer marketing companies."
Unica scored off the charts in CRM magazine's survey of functionality and customer satisfaction--one of the few Market Leaders to top both lists in its category. "Unica knows more about database marketing than any vendor in the space," Anderson says. The company released Affinium 6 this past year, and the entire Affinium product line scored excellent reviews, especially for its Optimize and Interact modules. Anderson says the company also has "a good footprint across a marketing automation suite that is continuing to expand." Campaign management is still the focal point of the suite, Anderson says, but this year Unica "has significantly ramped up its resources to sell the Affinium Plan module, and is starting to gain some traction with Affinium Optimize."
The company leveraged its strength in database marketing and marketing automation to keep ahead of its competition, landing more new clients than most of its peers--achieving record revenue growth, totaling $31.4 million in 2003. And Unica's latest product launch, Affinium eDelivery Services, promises to extend the company's functionality lead.
Marketing Performance Management
Why build expertise when it's out there to be snapped up at bargain-basement prices? DoubleClick spent the year gobbling up various bits of marketing functionality, most notably in the form of SmartPath, which had been seen as Aprimo and Unica's closest competition. The result is a vendor offering all the fixin's when it comes to marketing performance management. Now all the company has to do is convince prospects that it has the wherewithal to integrate all that newfound functionality--and remove the banner-advertising stigma that still wafts around it. Since DoubleClick is more of a service provider than a software provider, according to Selland, "in many ways [it's] the Salesforce.com of this market." Luckily for DoubleClick, he says, "this is a market that's more likely to go for a Salesforce.com model." --J.W.
More top business executives are demanding data analytics as part of their CRM software purchases. "There's been a real growing focus on CRM applications in analytics in the past year," says Gareth Herschel, a research director at Gartner. "Companies are getting on the CRM bandwagon for analytics as they see that a raised [CRM] profile can do a lot to drive an organization's revenue."
With this increased awareness and demand comes opportunity for growth. And the analytics vendors--especially the market leaders--are seizing that opportunity. "The big guys continue to dominate the market," says Chris Selland, vice president of sell-side research for Aberdeen Group. One reason for this, according to AMR Research analyst Paul Kirby, is that many potential customers implement technologies from the larger companies to have a single analytics provider.
Teradata, the data warehousing and analytics division of NCR, is one of the big guns in the analytics market, according to Selland. Teradata "handles a tremendous amount of data in its data warehouse business," Kirby says. "As the volume grows, the analytics increases accordingly."
However, according to Herschel, Teradata is so driven by the warehouse business that it will allow competitors to take the analytics portion of a contract as long as Teradata gets the warehousing end of the business. Nevertheless, Teradata's analytics business continues to grow as many of Teradata's clients see increased need for more comprehensive analytics.
Business Objects offers a solid, broadly focused application, according to analysts. The company added to the depth of its offering when it acquired Crystal Decisions in December 2003. With the acquisition Business Objects now has partnerships with more than 1,500 firms, including systems integrators, original equipment manufacturers, and value-added resellers--and an estimated 24,000 customers worldwide.
BusinessObjects 6.5, which started shipping at the end of June, integrates with Crystal Version 10 products. The combination offers Web query and analysis, as well as reporting and analytic capabilities. This breadth of functionality is getting attention from customers and analysts. Business Objects also entered a partnership agreement with Firstlogic, one of CRM magazine's data quality leaders. Under the agreement Business Objects embedded tools from Firstlogic into Data Integrator 6.5 for specialized data cleansing activities. Cleaner data means better analytics, so Business Objects could parlay the partnership into increased sales.
Cognos, which Herschel ranks just behind Business Objects for a vendor with a broadly focused data analytics operation, is seeing significant interest in its Web-based enterprise query and reporting application, Cognos ReportNet, released in September 2003.
The application is integrated within Cognos' business intelligence offering. Cognos ReportNet builds on the business intelligence application's query and reporting functions. It offers multiple-language support for companies with business in multiple countries, helping the company strengthen its relationships with current customers, while catching the attention of new prospects. The multilanguage capability is increasingly important as companies seek one solution for multinational operations, giving Cognos a stronger worldwide offering.
E.piphany unveiled a new version of its application, while returning to some of its roots, according to Selland. In 2003 the company rolled out E.piphany 6.5, which the company credits for its 30 percent revenue growth over fiscal year 2002. The release offers better analytics of marketing campaigns, as well as deeper analysis of marketing campaign parameters. E.piphany also announced several major new customers during the year that chose E.piphany in large part for its improved analytics offering. According to Gartner's Herschel, E.piphany has the best operations system among the CRM analytics vendors.
The behemoth of the analytics market continues to be SAS Institute, which dominated the market with $1.34 billion in total revenues. In 2003 the company launched the SAS 9 business intelligence platform, which includes predictive modeling. The company also released a customer intelligence application, SAS Marketing Automation 4, which is based on SAS 9. "SAS is the Rolls Royce of data analytics," Aberdeen's Selland says.
The new predictive analytics capabilities should help the company maintain its market dominance. "SAS sells more than anyone else and has the staff support to keep the growth on target," says Herschel, who also considers SAS the best vendor in terms of predictive analytics.
Although other companies are attracting attention as the analytics arena continues to gain in importance, SAS's large customer base remains among the most loyal in the category. And while the company continues to add new clients, its leadership can only stay strong. --Phillip Britt
CRM ANALYTICS ONE TO WATCH
License revenues for Siebel Systems grew more than 80 percent in fiscal year 2003, according to the company. In one of the most recent "wins" for the analytics division, Siebel is providing analytics support for Minneapolis-based Jostens, a maker of class rings, yearbooks, and graduation products. Though analytics is only a small portion of Siebel's total business, Selland says, the company's sheer size makes potential analytics customers take notice.
Editor's note: SPSS was the 2003 Market Leaders CRM Analytics One to Watch, but during the 2004 judging process the firm was restating its financial numbers, thus could not be included. The company is conducting a review of its audit committee. With the potential uncertainty, SPSS wasn't considered among the leaders, though a few analysts did mention the company as an important player in its market niches: education, healthcare, and financial services. --P.B.
Data quality continues to grow in importance. In fact, analysts agree that there's a direct correlation between the quality of a company's data and the financial performance of the company itself.
The outlook for the market is promising due to the increased interest from large enterprises, according to Gartner analyst Ted Friedman. Meta Group expects data quality adoption rates to continue to expand 20 to 30 percent annually over the next few years.
Group 1 continues to enjoy the benefit of a bigger market footprint than its competitors, though Firstlogic, Trillium, and Ascential have been more innovative lately, according to Friedman. He estimates that about a third of Group 1's $100 million in total revenues comes from data quality work.
Growth has been a strong suit this past year. "Outside of acquisitions, much of their revenue has come from the strength they already had in the marketplace," Friedman says. "They built up a large installed database over the years."
Group 1 also added to its business through its acquisition of Sagent Technology in October 2003. (Sagent is now part of Group 1's enterprise solutions division.) The combined offering enables client companies to access data from multiple sources to populate CRM and other enterprise systems. Group 1 also has market strength from its partnership agreements with Siebel and other CRM vendors to offer data quality support within those vendors' applications.
In the past year Firstlogic released its new technology platform, IQ8, which company officials say took 2.5 years and 103,000 man-hours of engineering work to develop. This was a welcome release to its already satisfied customer base. "Firstlogic benefits from strong customer service and support," Friedman says. Firstlogic is continually cited as a leader in the market. A 2003 Meta Group report cites Firstlogic as the leading pure-play data quality company. For CRM-specific applications, Firstlogic goes to market with such partners as traditional CRM vendors Siebel and PeopleSoft.
Trillium acquired Avellino Technologies at the end of February, a deal that should add to the profitability of this division of Harte-Hanks, Friedman says. The Harte-Hanks relationship is an important one, analysts say, because it gives Trillium the financial backing that private data quality vendors don't have. Trillium's acquisition buoyed the company's presence, which already benefits from partnerships with such industry leaders as Accenture, IBM, and Siebel. Trillium also unveiled several major, successful installations with large telecom companies and financial services firms.
Ascential Software has completed the successful integration of recent acquisitions into its own product offerings, strengthening the attractiveness of its overall suite. "Ascential Software has gained market mind-share by leveraging its size and market presence," Friedman says. "It acquired data quality technology from Vality Technology and Metagenix in 2002. Positioning around the importance of data quality in integration initiatives, Ascential has been integrating the products and has repackaged them as the QualityStage and ProfileStage components of its enterprise integration suite." Analysts also cite Ascential's handling of customer data issues and the flexibility to address data domains as key strengths that help bolster the company's market presence.
The top data quality vendor from a CRM standpoint is Acxiom, which receives an estimated $700 million of its $1 billion in revenue from CRM-related data quality analytics, according to Gartner analyst John Radcliffe's estimates. Though an estimated growth rate of just over 5 percent may not look spectacular, it continues a trend of steady increases from the 35-year-old data quality company.
"You can't do CRM without data quality," says Radcliffe, who sees Acxiom as offering the most complete package in this area. "Having [data quality] is vital just to pass go."
AMR Research analyst Paul Kirby also calls Acxiom a strong data quality player due to its focus on CRM. Acxiom is expected to continue its solid growth on a worldwide scale as it realizes some of the benefits of last year's acquisitions of Caritas Europe and Consodata. The business deals expanded Acxiom's European operations to five additional countries. --Phillip Britt
DATA QUALITY ONE TO WATCH
Market research firm Winter Corp. recognized Experian Information Solutions in 2004 for having the world's most-used client database, one that handles 887 simultaneous queries at its peak workload. Though CRM-related data quality represents only about a quarter of Experian's total revenue, according to Radcliffe, the Atlanta-based company ramped up its data quality business in the past year. Experian also developed the Express version of its analytical marketing database, for smaller clients that have smaller budgets. Though it still has a strong focus in the credit-reporting arena, Experian is continuing to grow its CRM-related data quality presence. Based on the company's sheer size, its growth in data quality could push it into a leadership role in 2005. --P.B.
Everyone loves the idea of out-of-the-box simplicity, but no one honestly expects to remove third-party consultants from the CRM equation anytime soon. Much like the enterprise CRM market, consultancies are staking out positions on either side of the best-of-breed divide: Some claim to be one-stop shops for strategy, integration, and maintenance, while others are content to specialize in one niche or another. In the end the continuing need for both strategic and tactical assistance kept this year's winners very much on the move.
The market itself is decidedly top-heavy, with five firms combining for about half of what analyst firm IDC estimates was an $8.6 billion market for CRM-related consulting in the United States last year. Not surprisingly, those five were the Market Leaders this past year, but for highly varied reasons.
Considering BearingPoint's flat revenues, the fact that it has maintained a leadership position is testament to its perseverance. The firm focused on fewer industries than some of its competitors, but it excelled in them, particularly the more technical verticals. BearingPoint also benefited from vendor-specific specialization, with deployments of some of the smaller CRM vendors. "BearingPoint, for its size, probably has more KANA or E.piphany resources [than IBM BCS or Accenture]," says one analyst. That targeted approach may explain the firm's sterling customer satisfaction rating-- outscoring its competitors.
Capgemini's strengths in Europe and in certain verticals (e.g., communications, life sciences) bring it back to the table again and again. The company's CRM practice benefited this past year from a series of phased projects that required business-process work before an implementation, playing to Capgemini's strengths and helping to win over clients that may have been skittish about long-term contracts. The North American division began to address its attrition problems this year, and has made a firm commitment to provide CRM clients with balanced scorecards and metrics to help assess the value of CRM projects.
Deloitte Consulting is best known for giving clients the star treatment. The firm has what one analyst calls "a collegiate atmosphere to it, [and] its clients tend to have an affinity with it." Another analyst characterizes Deloitte as "a better-focused, better-run company" than its peers, one that doesn't try to be everything to everyone. It does especially well in its areas of expertise, such as real estate and consumer packaged goods. Though a distant third in terms of revenue, based on client satisfaction alone Deloitte would get top marks--and that's the main reason several analysts said Deloitte would be one of only a handful of consultancies to see growth in the coming year.
IBM Business Consulting Services has spent the year finalizing the absorption of what used to be PwC Consulting, and doing a fine job of it. One measure of that successful assimilation has been continued growth that most other consultancies would envy, in part thanks to the new partnership with Siebel Systems for its OnDemand offering, which is just one of many partnerships that helped drive business to IBM's consulting practice last year. "IBM has the most momentum in the marketplace around CRM, because of PwC," says Laura Preslan, CRM research director at AMR Research. According to some analysts, however, customer satisfaction slipped a bit, as some poor staffing choices may have impacted results. "They're missing the basic blocking and tackling," says one analyst, who says existing PwC clients had come to expect a higher level of attention. That wasn't enough, apparently, to scare away the long-standing accounts that helped generate what one analyst firm estimated to be more than $2 billion in CRM-related revenue last year.
One thing Accenture's clients don't have to worry about is that the consultancy is going away anytime soon--not with $3.51 billion in cash on hand. Accenture's big draw is the breadth and depth of its expertise, but at least one analyst says the firm's single best differentiator is its clear strategic vision, not its record for execution. Accenture's traditional dominance in Siebel Systems implementations doesn't cast the long shadow it once did, as Siebel's fortunes have dimmed somewhat, but Accenture still managed to notch a 6 percent increase in CRM-related revenue. The firm's renewed focus on analytics and marketing sciences helped it branch out into CRM's more fertile fields, as well--and explains in part why Accenture got the category's highest score in terms of breadth of offerings. --Joshua Weinberger
CRM CONSULTANCIES ONES TO WATCH
Inforte stood out for its sterling reputation and laserlike concentration on CRM. Its March acquisition of SAP business intelligence specialist Compendit only added to its strengths. The resulting combination leverages Inforte's existing focus on SAP implementations, but even before the merger the firm had already more than doubled operating income.
Another consultancy with an eye on cracking the list is Unisys, which played a strong hand in the financial services and transportation industries, and in the public sector. If the firm can spread its wings a little by crossing over to other verticals, there may be a new member of the top five next year. --J.W.
Click here for Part 1 of the Market Leaders article.