The 2005 CRM Market Leaders, Part 1
Categories and Criteria: CRM magazine's fourth annual Market Leader awards feature some enhancements over previous years. One such enhancement, which reflects the unique needs of and available solutions for small businesses, is a new category, Small Business Suite CRM.
We name one winner and four leaders (listed alphabetically) in each category, using a proprietary selection formula. This year we've added another criterion to the formula--reputation for company direction, which addresses such considerations as new product releases and upgrades, organizational restructuring, and mergers and acquisitions.
The overall award rating is based on a composite score of CRM revenues; year-over-year revenue growth; and analyst ratings for customer satisfaction, depth of functionality, and company direction. We also cite companies in each category worth watching for their potential to appear on their respective market's leaderboard next year.
CLICK HERE to view complete Market Leaders chart.
Enterprise Suite CRM
The competitive landscape continues to evolve among the providers of enterprise suite CRM applications. Consolidation and corporate restructuring runs rampant--PeopleSoft now belongs to Oracle and Siebel has a new CEO. This year's market leaders are among those that have managed to take these changes in stride.
Data management continues to be Oracle's strong suit, along with sales and order management software. While its products have all the basic functionality of a CRM suite provider, Laura Preslan, a research director at AMR Research, maintains that its "analytics capabilities need to be built out." Besides acquiring PeopleSoft and J.D. Edwards (originally acquired by PeopleSoft), Oracle has strengthened its position in the retail software market this year, acquiring ProfitLogic in July and outbidding SAP for Retek in March. As a result, analysts were hesitant to reward Oracle strong scores in company direction, which averaged a 3.3. "They have so much technology inside the company, but they haven't articulated any clear road map for what they're going to do with all the stuff they bought," says Chris Selland, principal analyst for Covington Associates. However, Oracle announced plans for its Project Fusion Middleware strategy, which aims to merge components of the Oracle, PeopleSoft, and J.D. Edwards applications. Project Fusion is slated to begin shipping in 2007.
Now a part of Oracle's empire, PeopleSoft's applications have yet to be integrated into the Oracle product line. However, because Oracle CEO Larry Ellison has announced support for PeopleSoft solutions through 2013, PeopleSoft is still being rated as an independent company for this review. Analysts awarded PeopleSoft solid numbers in customer satisfaction and depth of functionality, giving the acquired company a 4.0 and 3.9, respectively. "PeopleSoft has always had a reputation for going above and beyond for their customers," Preslan says. PeopleSoft applications remain easy to integrate with HR and financial systems, analysts say. The issue with PeopleSoft, according to analysts, is how Oracle handles the integration of its product lines. "Oracle needs to prove to the world that it is safe to buy the PeopleSoft product," says Martin Schneider, enterprise software analyst at The 451 Group.
SAP continues to focus on improving functionality, which led to an improved 3.8 customer satisfaction score, up from last year's 3.1. Most analysts agreed SAP has caught up to competitors on CRM functionality, but its product road map impresses them most, which is reflected in its strong 4.3 score in company direction, the highest among all leaders. "If you need the entire ball of wax, CRM, ERP, supply chain, SAP is the company," Schneider says. SAP has filled out its product suite in recent releases to offer improved CRM functionality that continues to integrate easily with back-office solutions. "They have a lot of customers going live with their CRM implementations, so their customer satisfaction scores should continue to improve, though they still have some usability fixes to make," Preslan says, referring to the software's ease of use.
Siebel Systems continues to offer very strong functionality, with analysts' scores averaging an impressive 4.8. However, its customer satisfaction and company direction scores were not nearly as stellar, with a 3.5 and a 3.8, respectively. Additionally, its sales fell roughly 1 percent in 2004 to $1.3 billion. This, combined with competitive pressures, has bumped Siebel off the top spot after reigning supreme for the past three years on the leaderboard. "There is a lot of turmoil there right now," Selland says. The turmoil is already influencing technology buyers. As another analyst says, "We're getting a lot of calls by Siebel customers asking 'Should I go forward with an additional module or should I look to my ERP provider instead?'"
Of all the leading enterprise vendors, Amdocs is clearly the most vertically focused. When it comes to telecommunications, Amdocs is second to none. But Amdocs has been quietly gaining ground in other verticals, most notably financial services and high-tech, thanks to its ClarifyCRM division. With solid scores across all categories and a 2004 revenue of nearly $1.8 billion (a hefty 19 percent increase over the prior year) Amdocs is this year's CRM enterprise suite winner. The company posted the highest customer satisfaction score of all the leaders with 4.4 and solid scores in company direction and functionality. "Amdocs is a perfect example of a company that's focusing on what they do best," Preslan says. Schneider agrees: "They're not trying to be everything to everyone. That's a feather in their cap." --Colin Beasty
One to Watch
A recent AMR report indicated that 47 percent of large enterprises, or companies with more than $1 billion in revenue, were going to look at the hosted model as part of their "going forward CRM strategy." If there is a single one-to-watch on-demand provider, it's Salesforce.com.
It has been a busy year for the company. Salesforce.com continues to help make on-demand CRM palatable to the enterprise space and is forcing the leaders in this category to reinvent their own on-demand offerings. "The fact that nearly half of all larger enterprises are looking at hosted solutions as a viable option is huge," AMR Research's Preslan says. "That said, I think Salesforce.com is an obvious up and comer in this space."
Midmarket Suite CRM
With revenues between $100 million and $1 billion, there's a large array of companies for midmarket suite CRM vendors to serve. To do it well, smart CRM vendors have either built their own, or partnered to deliver, low-cost on-demand solutions, as the monthly pay-as-you-go model proved to be more digestible for this sector. The sudden interest in the on-demand model as well as increased competition has significantly rattled the midmarket suite CRM leaderboard this year, evidenced by the removal of Microsoft and SAP, and the addition of RightNow Technologies and Sage Software.
Although reconfigured as a wholly owned subsidiary of Oracle, PeopleSoft's midmarket knack, which got a boost with its own 2003 acquisition of J.D. Edwards, earned the second-highest functionality score, 4.2, three-tenths of a point higher than last year. Our satisfaction calculations awarded PeopleSoft a 3.7, down from last year's 3.9. What hurt it the most, though, was its company direction tally, 3.1, the lowest among the leaders. As part of its overall strategy, Oracle did, however, announce that it will provide support for the PeopleSoft Enterprise, J.D. Edwards EnterpriseOne, and J.D. Edwards World product lines through 2013. Plans for its Java-based Project Fusion, which will combine features and functionality from Oracle, PeopleSoft, and J.D. Edwards product lines to create an application set, were also announced, but Project Fusion's impact on the midmarket is uncertain. "The benefits for large enterprises are pretty clear," says Ian Jacobs, principal analyst of CRM at Current Analysis, but "how does Project Fusion, when it's done, play for smaller companies?"
With its origins in the e-service sect RightNow Technologies may seem like an unlikely CRM suite player. But with its October 2004 release of RightNow CRM 7.0, it took serious strides to carve out its mark as a viable suite play for midmarket organizations. Not all are so sure, though, of RightNow's suite capabilities, as its weakest showing was its functionality rating of 3.3, the lowest of the leaders. Its brightest spot, though, its customer satisfaction score of 3.7 (indicative of its 90 percent customer retention rate), helped RightNow make our midmarket list for the first time. But RightNow is "in a situation where it gets a little bit crowded out by Microsoft and Salesforce.com in particular, so its job in the midmarket is to make itself much more one of the main contenders," says Laurie McCabe, vice president of SMB insights and business solutions at AMI-Partners. However, its 30 consecutive quarters of revenue growth are unequivocal proof that RightNow is capturing more market share.
Returning to the use of the Sage moniker, Sage Software, formerly known as Best Software, is a familiar face in the small and medium business space, winning last year's SMB Suite category. This year, however, Sage also bolstered its midmarket footing, marking its first entry onto the midmarket leaderboard since its 2003 leader status as then Best's CRM division. Over the past year the company rebranded ACCPAC CRM 5.7 as Sage CRM, available via on-premise or on-demand, and released its expanded SalesLogix 6.2 CRM suite and SalesLogix for Pocket PC. "SalesLogix has a huge customer base," says Janet White, research analyst at Info-Tech Research Group. "They also have the advantage of being able to sell SalesLogix in the lower midmarket, as well as the small [business] market." According to Info-Tech's November 2004 Info-Tech Power Curve report, an evaluation of vendors in the midmarket space, Best had the highest percentage of very satisfied clients.
Thanks largely to its financial-performance woes and the lowest reputation for customer satisfaction score among the leaders, Siebel Systems slipped out of its midmarket throne. But even in a year for the company that will primarily be remembered for leadership changes and growth concerns, Siebel actually improved its customer satisfaction score from last year's 2.5 to this year's 2.9. And although some analysts deem Siebel's functionality too complex for midmarket organizations, most impressive was Siebel's near-perfect functionality rating, up from last year's midmarket-leading 4.7 to this year's pinnacle, 4.8. Still, "they have traditionally had really long sales cycles, which make it difficult to win the customers and get the revenue that you need year over year," White says. "Those are things they are working on this year, and their on-demand product should certainly shorten their sales cycle." As of July 2005 the company was up to Siebel CRM OnDemand Release 8.
Salesforce.com has relentlessly focused on its "no software" mantra--and it has worked, as the company outpaces all midmarket contenders in company direction and scores for customer satisfaction. Its success, though, is also rooted in its strengthened product offering, evolving from its early stages of virtually just an SFA tool into delivering more robust feature sets and deeper back-end integration and customization capabilities. Although analysts note Salesforce.com's eye on the enterprise, Jacobs points out its enhanced functionality with subsequent releases. Just this past July the company announced the general availability of Summer '05, including Salesforce Summer '05, Supportforce Summer '05, Multiforce 1.0, and Customforce 2.0. --Coreen Bailor
Ones to Watch
Analysts noted Micro-soft's strong company direction, but the absence of Microsoft CRM 2.0 during our evaluation process, coupled with a poor ranking for reputation for customer satisfaction, contributed to its fall from the midmarket leaders list. Microsoft skipped 2.0 of its CRM product and plans to release 3.0 in Q4 2005, but "we're still waiting for them to come to market with anything that's really usable," Yankee Group's Kingstone says. But, she continues, "3.0 is clearly addressing a lot of performance issues...[and Microsoft] will eventually be a force to be reckoned with in the midmarket."
SAP, pulling in the lowest marks for company direction and depth of functionality, and tying for the lowest tally for reputation for customer satisfaction, slips off the leaderboard. But with its double-digit revenue growth and increasing midmarket focus, its presence is still felt. A perennial player in the enterprise space, reports indicate that 30 percent of its revenue comes from the midmarket. That figure could get a boost, as SAP may well pick up much of the business that otherwise might have gone to PeopleSoft, analysts say, which may help SAP return to the top five next year.--C.B.
Small Business Suite CRM
Small-business CRM is a competitor-rich environment. According to Sanjeev Aggarwal, senior analyst at Yankee Group, anybody who wants to compete for the business of small business must remember that ease of use, fast implementation, and low cost are the keys. In addition, Aggarwal says, "Customers prefer integrated solutions whenever possible." Suites remain attractive to SMBs because, even as service-oriented architecture and integration become popular, integration can still become a headache. On-demand continues to grow as a powerful option; our winner and three leaders offer hosted CRM. "On-demand is very attractive, especially if the functionality isn't limited," Aggarwal says. A key development here is the emergence of the dual-delivery model, pioneered by Sage Software and copied by everybody from startups to Siebel.
FrontRange has been around with GoldMine since CRM meant contact management, and now serves more than 2 million seats worldwide. The company's most recent version of GoldMine provides a broad range of CRM and SCM functions, including marketing campaign management, analytics for sales trends and effectiveness, and even IP telephony applications. The HEAT component adds service and support components over and above those of GoldMine. "This is a solid choice for the smaller end of small business CRM," says Janet White, research analyst at Info-Tech Research Group. Jim Dickie, research partner for CSO Insights, says that GoldMine and HEAT users constitute "a very loyal customer base."
Quiet Canadian vendor Maximizer might not be going out of its way to make itself visible, but it's serving the complete needs of small-business CRM. One reason the casual observer might miss Maximizer is that the company is more concerned with organic growth than big acquisitions; another is that the flagship product is named Maximizer Enterprise, even though the focus is on SMBs. White suggests Maximizer needs "a lot more branding, and more resellers" to claim a stronger position. "They understand the needs of small businesses very well," Dickie says. Liz Herbert, an analyst for Forrester Research, adds, "They have a very full CRM suite offering."
NetSuite made its mark this year with the introduction of NetSuite CRM+, adding a truckload of functionality to the company's hosted CRM suite. Additions like partner management, order management, Web analytics, and sales compensation modules blend the company's strengths of ERP and CRM. Many of the add-ons are available for per-module pricing instead of the usual per-user per-month structure. NetSuite's offerings rival Salesforce.com's in terms of functionality; Dickie says "NetSuite has a full range of tools, including commission management. It's got considerable broadness." White notes that NetSuite has "really good functionality and comparatively good integration" when examined next to its rivals. They're clearly doing something right--NetSuite's revenue is more than double what it was last year.
Sage Software is not a newcomer to these awards, but its name is: The company, formerly Best Software, changed its name early this year to align itself more closely with parent company Sage Group and its global Sage brand. This was most apparent with the introduction of Sage CRM, replacing the ACCPAC system and filling gaps in the company's coverage at the seams of the three major segments of the business: small, midmarket, and enterprise business solutions. Sage CRM, offered both as on-demand and on-premise, was the first CRM product to be available this way, and the model was quickly copied. The vendor provides the same functions in its hosted application as its installed software, making it easier and cheaper for customers to switch as needed. White says Sage's SMB products are "robust and customizable," and integrate well with Microsoft.
Salesforce.com jumped to the forefront of the small business space this year by continuing to deliver on its promises of simple pricing, breadth of functionality, and low IT overhead for users. This helped to deliver the company's strongest rating, 4.1 for company direction.
But a winner isn't made on one criterion alone. Salesforce.com's scores were all consistent, with its direction garnering a 4.0 in satisfaction and 3.9 in functionality, showing the company to be a solid choice overall. Salesforce.com also served up a basketful of new functionality with Sforce Partner Toolkit, an open-source Java application that allows customers to open up parts of their CRM system to partners without exposing all their data. A number of other additions were introduced as open-source or soon to be so. "They're a relatively young vendor, consistently and continually adding enhancements, modules, and features," says Laurie McCabe, an SMB analyst at AMI-Partners.
One thing remains to be seen, though. Its most important partnerships and marketing pushes have been toward the top end of the midmarket and into the enterprise realm. Will this big-game chase cause Salesforce.com to slip against its competitors in small business suites? Only time will tell. --Marshall Lager
One to Watch
Among the most trusted names in software, and certainly the most ubiquitous, Microsoft's continued work with Microsoft CRM entices and frustrates. Functionality has been slightly disappointing compared to competitors with more current builds; AMI-Partners' McCabe says CRM 1.0 "suffered a little in ease of use and depth," while Forrester's Herbert laments the old system's "lack of marketing automation." Despite the repeated delays of a long-promised upgrade, analysts believe Microsoft CRM 3.0 will deliver the goods. --M.L.
Sales Force Automation
Two contradictory trends ruled the sales force automation (SFA) arena this year: integration and specialization. On the one hand, many suite vendors added or expanded SFA capabilities to their CRM suites, either through in-house development or acquisition; on the other, the industry saw a number of small, focused SFA vendor entries, coupled with changes in how customers implement solutions. "Many companies downgraded from CRM to SFA because the big, intergalactic suites were too expensive and presented too many features," says Jim Dickie, research partner for CSO Insights. "Sales reps need their information with a minimum of fluff." That's why the SFA leaderboard only focuses on those companies that remain primarily pure-play SFA providers.
Entellium makes our list of leaders despite its limited penetration into the North American market so far. This limit is likely to change, as the company has seen tremendous growth in the past year and is generally well regarded by analysts. Janet White, research analyst at Info-Tech Research Group, says Entellium's on-demand product has "good filtered reporting, and is very customizable," and also gives it good marks for the low customer price. According to White, improvements to speed and support for Mozilla and other browsers will go a long way toward making Entellium an even stronger contender.
Innovation is important in any software business, but sometimes so is history. With GoldMine, FrontRange has a little bit of both. GoldMine, a reputable forerunner in SFA, has also kept up with the expanding demands of salespeople. Like some other vendors in the sales automation niche, FrontRange wants to grow beyond that niche and step up to serve larger customers, White says. "They're trying to shed the pure SFA persona, and also to move up into the midmarket". GoldMine's best feature, according to Dickie, can be summed up in one word: integration. The software plays nicely with others, and has a reputation for depth of functionality beyond its SMB roots. "It's not as well regarded as Siebel, for example, but [GoldMine] is still pretty functional," White says.
Maximizer is the little SFA engine that could. Dickie gives its product a good review, noting the company "has a good understanding of sales," a worthy distinction when dealing with sales force automation. Maximizer's only real weak points, according to White, are in its public facing areas--Maximizer is a small company compared to the other market leaders, and might benefit from a stronger marketing push than the current strategy of organic growth. "They have to do more branding, and more work with resellers" to get the product in front of the right people, White says. She also says that, in cases where demand for the product is outstripping the supply of customer support, the relationship can bog down. "They need to do some work on post-implementation support. I've been hearing about long wait times for service."
Salesnet will cap five successful years with the company's 25th release later this year. "Salesnet is nicely differentiated in terms of SFA, and its focus is great," White says. While Dickie notes that Salesnet has had "lots of executive turnover" this year, and the company is caught between larger entities like Salesforce.com and Siebel OnDemand when the hosted-SFA wars heat up, analysts agree that this vendor and its hosted/installed no-contract delivery is appealing. Its functionality rates among the top performers in our awards this year; achievements include a greatly expanded second version of its OEM product, with record-to-record relationships, automated email customization, secure single sign-on, and a laundry list of other additions.
Sage's ACT! is one of the first sales force automation applications ever to see daylight, slightly older than GoldMine, and traditionally has nudged the FrontRange product out in terms of reputation as well. ACT! has grown from simple contact management to become a much more full-featured SFA utility. It's still very much a small business solution, designed to serve 50 users or fewer, but that's part of why it's such a success. White says, "ACT! is enough for a lot of small businesses, without being too much program for them. You don't change a good thing."
Dickie notes that the Sage division's superior direction is partly due to ACT!'s independent roots. "The group's focus still shows remnants of the culture created by founder Pat Sullivan, who also founded SalesLogix--he's a sales guy's sales guy." Herbert calls the application "easy and intuitive," which leads to higher customer satisfaction.
There are definitely things for the development team to work on, though. Dickie sees support for teams and groups as a key area for improvement. And, as hosted solutions gain in popularity, the new ACT! for Web will be tested and tweaked in a new delivery model. --Marshall Lager
One to Watch
What do you do with a strong SFA performer that doesn't compete in the traditional SFA outlets? In the case of Interface Software's InterAction, you make it a One to Watch. The company and its solution were recently acquired by Lexis-Nexis, a good fit since both companies serve up strong offerings in professional and financial services, and government. While these and other related verticals aren't usually where one finds sales departments, InterAction provides "very strong client support," says Info-Tech Research Group's White. Yankee Group's Kingstone likes the product's social networking capabilities, and White and Forrester Research's Herbert agree that it's the best solution for professional services. --M.L.
End of Part 1. Click here to read Part 2.