The 2005 CRM Market Leaders, Part 2
Companies are empowering employees to individualize their marketing efforts, giving customers what they say they want as opposed to what the businesses tell them they need. Marketing automation takes into account direct campaign management, as well as marketing resource management, and overall marketing effectiveness. "After a few years of stagnant market growth that resulted in the demise of a number of vendors, the drive to improve effectiveness of customer communications has breathed new life into the market," says Elana Anderson, principal analyst at Forrester Research. The trend is toward embedding analytics with marketing automation, adds Sheryl Kingstone, CRM program manager and industry analyst at Yankee Group.
Aprimo in June acquired the enterprise marketing business unit of DoubleClick, including the SmartPath and Ensemble products, effectively eliminating a competitor. In February 2005 the company released the Aprimo Marketing 7.0 suite of Web-based software. Because Aprimo is private, it does not provide specific revenue numbers, but reported achieving its fifth consecutive year of double-digit revenue growth aided by a 66 percent increase in new customer wins and a 100 percent increase in the number of orders with new and existing customers. Its customer satisfaction rating climbed from a 3.4 last year to a 4.2. "They've always been Unica's younger brother. If Unica's IPO goes well, Aprimo will have no end of venture capitalists banging on their door," says Gareth Herschel, a research director at Gartner.
SAP is a newcomer to the marketing automation leaderboard, bumping off Epiphany (which scored poorly among analysts polled, suffered a 17.5 percent revenue loss last year, and was acquired by SSA Global in August). With about $10.2 billion in revenue last year, SAP jumped 15 percent in revenue from the year prior, and its strong NetWeaver business process platform makes SAP hard to ignore, especially for those that already use other SAP products. It still needs buy-in from someone in the marketing department, however, according to Adam Sarner, principal research analyst at Gartner: "Marketers aren't saying they want it. They're being told 'We're going with SAP and you're going to have to use it,'" he says. Current SAP customers will want more, while newcomers may seek a stronger leader, according to Chris Selland, principal analyst at Covington Associates. "They're strong in their install base. They have no urgent need to go [beyond] the install base anytime soon," he says. "SAP definitely has focused on closed-loop systems. As long as everything runs on SAP, they run really well."
SAS boosted its customer satisfaction ranking from a 3.6 to a 4.3 this year. The company grew its revenue by 14.2 percent in 2004 to record $1.53 billion. Analysts applaud SAS's reputation for customer satisfaction and strong leadership under Jim Goodnight, who earned a 2004 CRM Hall of Fame award. However, the company is too focused on the high-end power user and needs to make things less complex if it wants to continue to gain ground, analysts say. "Unica builds models for business users, at SAS you build the model [yourself]," Sarner says. SAS is Unica's number one competitor from a campaign management standpoint, but Unica uses marketing resource management (MRM) as an advantage, according to Herschel.
Despite revenue uncertainty, Siebel continues to make strides in this category, going from a 2.2 to a 2.8 in reputation for customer satisfaction from last year to this year, and from a 2.9 to a 3.0 in depth of functionality. In April 2005, Siebel introduced Version 7.8 of its Siebel Enterprise Marketing suite, part of the Siebel enterprise CRM suite. "Siebel has done a much better job producing the easy-to-use line of business tools [than SAS]," Kingstone says, "but their architecture has been cumbersome and when [customers] think of Siebel they don't think of easy-to-use tools."
Unica, which topped the leaderboard last year, is resting comfortably at the top spot again this year. The company saw a substantial increase in customer satisfaction--from 3.8 last year to 4.6 this year, according to analysts polled. This likely explains how the company can boast of a 95 percent customer retention rate and a sharp revenue jump of 48.2 percent from $38.6 million last year to $57.2 million this year. The company isn't sitting on its laurels either, as it released Affinium 6 in January 2005, hired a vice president of corporate development, and has continued to grow operations in Europe and Asia Pacific. The company grew its Customer Success organization and launched a global customer-only Web site to help leverage Unica products. Additionally, Unica is positioning itself for further growth, as it completed its IPO in August. Analysts say the company is well-managed with a clear vision as to what it wants to achieve. "This is what they do, this is all they do. This is the best-marketed company in the space," Selland says. "They're a class act. They've got the leadership in this market established." --Alexandra DeFelice
One to Watch
Teradata is essentially an analytics vendor, but customers that are committed to its data warehouse are likely to make the investment in Teradata's marketing automation tool, according to Forrester Research's Anderson. It digs into customer value and segmentation, and it scored a "positive" ranking in the Gartner Market Scope for Campaign Management, 1Q 05 report, citing renewed momentum among large enterprises. "Teradata competes head to head against Unica in [many] deals," Anderson says. "They acquired a best-of-breed solution in Ceres [a marketing automation technology company] several years ago and they've focused on keeping it on the cutting edge. It's a stable multibillion-dollar company and they have good records from a services perspective." --A.D.
The CRM analytics market is no longer targeted solely at power users. There is an emerging trend to get that same power in the hands of the average business user and the companies that recognize that trend are leading the way. The market for business intelligence (BI) reporting and analysis solutions exceeded $5.5 billion in 2004, and most enterprises have between five and 15 separate tools in place, according to a Forrester Research report. Now companies are looking to adopt a standard BI platform. "BI vendors need to smarten up. They have to hide the complicated tools [from] the business user," says Keith Gile, principal analyst at Forrester.
Larger suite vendors are putting analytics into their CRM solutions and focusing on providing actionable insight to everyone in the organization. "The [future] threat may not be a traditional [analytics] vendor, but the database or enterprise application vendors that are putting analytics in there," says Mike Schiff, vice president of data warehousing and business intelligence at Current Analysis.
There are two fundamental pillars to analytics, according to Gile: analytic reporting and enterprise reporting tools. While all the vendors have the former, Business Objects became the sole possessor of the latter tool when it acquired Crystal Reports in 2004. The company announced the availability of Crystal Reports XI in January 2005. "Business Objects is one of the best at both and no one else is," Gile says. Last year, the company scored a 3.0 for depth of functionality, which shot up to a 4.1 this year. Although Business Objects is not as strong as SAS or Teradata in the customer satisfaction category, says Guy Creese, managing principal for Ballardvale Research, "they pay attention to their customers, and they're good at listening." While the company earned less revenue than its competitors at $925.6 million in 2004, this amounts to 15 percent revenue growth.
From a competitive perspective, Cognos and Business Objects go head to head in many deals. Both companies focus on operational reporting, and a recent IDC report shows Cognos gaining market share and showing growth in the BI space in 2004. Total revenue was $1.47 billion, 20.8 percent revenue growth over the previous year, and its depth of functionality score jumped from a 3.0 to a 4.0. Gile notes the company spent much of last year successfully selling ReportNet and Cognos Series 7. Although it is supporting two separate platforms, as Series 7 PowerPlay is on the traditional client/server architecture, this is expected to change in late 2005, when the Cognos 8 product will provide an analytics tool on a service-oriented architecture platform so they can complement each other.
"[Cognos] knows where they need to be and are doing it," Gile says.
SPSS doesn't play in the same field as Business Objects and Cognos. It is more focused on data mining and predictive analytics and therefore is pinned up against SAS, which is difficult to do with total revenue of only $225 million. Gareth Herschel, research director at Gartner, says that the company is doing well by coming out with products that target specific groups within an organization and is innovative in providing text-mining tools in which companies can sort through customer emails and call center transcripts, combining structured and unstructured data to predict customer needs. Still, analysts say, SPSS is extremely tech-focused and the company has a way to go before reaching the everyday business user.
Teradata's biggest strength is its reputation for customer satisfaction, earning a score of 4.3 in the category, second only to SAS. The company reports a 95 percent customer retention rate and achieved about 100 customer wins in 2004. "They do a good job of learning from their customers," Herschel says. Gile agrees: "It's hard to imagine a Teradata customer walking away saying 'I can't stand this anymore.' It's going to cost you a lot, but you're going to get top-shelf service. They treat their customers brilliantly."
Analysts also agree that Teradata focuses more on selling its data warehouse products than the analytics applications, which is partially why it received the lowest functionality score, a 3.2--the functionality doesn't all lie in its analytic tools.
SAS Institute has once again emerged victorious with the primary differentiator being its outstanding 4.6 for customer satisfaction. SAS's customer retention rate is 98 percent, of which 95 percent are satisfied and 60 percent highly satisfied according to a sampling of attendees at SAS's customer conference. The biggest difficulty for the vendor will be proving it can simplify. "SAS needs to overcome its image as a high-end sophisticated tool so it could [further] penetrate the larger organization and not just concentrate on particular users," Herschel says.
CRM has continued to be a primary focus for the company during the past year, as SAS significantly increased the resources dedicated in the area, including R&D, product management and marketing, sales, and implementation. "They are solid in the vertical application market...and they can make any acquisition they want to solve gaping holes," Gile says. --Alexandra DeFelice
One to Watch
"Information Builders Inc. continues to add to what is arguably a hybrid reporting solution in WebFOCUS. This gives IBI a consolidated analytic, enterprise, and business-reporting solution, on top of best-of-breed data integration component in iWay," Forrester Research's Gile says.
IBI is traditionally thought of as providing an integration technology tool, but it has the potential to get a stronger foothold in the analytics space. "IBI seems to have some new energy," Ballardvale Research's Creese says. "They've always had great technology. They just kept it under a bushel basket.." --A.D.
A CRM system is only as good as the data in it. That's why the industry pundits encourage businesses to keep their data clean and accurate. "It's a constant effort to ensure that your data is correct and that you really know what your business is doing," says Lester Callif, manager at BearingPoint. More businesses are cottoning on. Ted Friedman, vice president of research at Gartner, estimates the data quality tools market is within the range of $250 million to $300 million annually, a small market, but one that's experiencing 12 percent to 15 percent year-over-year growth. Members of this year's data quality leaders were limited to those that focus heavily on data quality software.
Introduced in May 2004, independent vendor Firstlogic's IQ8 Integration Studio bolstered its standing, along with the April 2005 launch of IQ Assurance, an initiative of programs, methodologies, and consulting services. In fact, the company experienced a full-point increase in its reputation for customer satisfaction score to 4.4, and a near full-point increase in reputation for depth of functionality from last year's 3.0 to this year's 3.8. "They're really a visionary company," says Jill Dyche, a partner at Baseline Consulting. Robert Lerner, senior analyst at Current Analysis, notes that rivals that have the backing of sizable parent organizations have a significant advantage over Firstlogic. But that's about to change--shortly before presstime Pitney Bowes advanced its plans to acquire Firstlogic, giving the company more muscle against the heavy weights. Because of the too-close-to-press time announcement, the acquisition plans were not reflected in analysts' scores.
Group 1 Software once again secured its place as a leader within the data quality market, but received the lowest scores for company direction, reputation for customer satisfaction, and reputation for depth of functionality. Similar to IBM Information Integration Solutions, Group 1's acquisition by partner Pitney Bowes, and the cloudiness surrounding its course as a Pitney Bowes subsidiary, is in large part responsible for its poor point performance, stemming from its company direction calculation of 2.8. Its 2004 reputation for customer satisfaction of 3.6 slipped this year to 3.1, but its reputation for depth of functionality increased mildly from 3.0 last year to 3.3 this year. Still "they don't have the international features that some of the other companies have," Dyche says, but "it's a good company."
IBM Information Integration Solutions (formerly Ascential Software) earned a 3.1 for company direction, according to analysts polled, which marks the second lowest score in that criterion among the category's leaders. "Nobody knows what they're doing," says Joyce Norris-Montanari, data management practice leader at Baseline Consulting. "Everybody is just waiting." With the acquisition, Ascential can, however, draw on IBM's reach. "They're going to have an extremely strong story to tell," says William Donlan, officer and cofounder of Adjoined Consulting. "I don't know if it's there yet...[but] they're going to have a very compelling position in the marketplace." Already, Gartner gave IBM a "positive" rating, citing the company's plans to integrate Ascential's data quality products with IBM's WebSphere solutions.
With sound marks in all categories, particularly its enhanced functionality count by a full point from last year's score of 3.0 to this year's 4.0, Trillium Software, a division of Harte-Hanks, again solidifies its position as a data quality leader. The company announced a new concept, Total Data Quality framework, which is designed to maximize corporate data assets. TS Enrichment, a service offering that allows companies to combine data enrichment services with data quality technology, was also announced, and the company released Trillium Software Discovery Version 4.1. Trillium is also benefiting from the addition of Avilleno Technologies' data profiling functionality, acquired by Harte-Hanks in February 2004. Trillium "has perhaps the broadest range of international data quality capabilities in the market, as well as the broadest geographical presence of any data quality vendor," Lerner says.
DataFlux is a new entry to our category, but with the strongest numbers amongst its market peers for company direction, reputation for customer satisfaction, and reputation for depth of functionality, its first splash onto our leaderboard proves to be a definitive one. "They're really the dark horse that's surprising everybody lately," Dyche says. Upping its functionality appeal with the release of Version 7.0 of the DataFlux Data Quality Integration Solution, a platform that enables its customers to further the reach of data quality from departmental implementation to more enterprisewide deployment through a service oriented architecture framework, the company also boasts a customer retention rate of 94 percent. "I went to their user group...and their clients there loved that company," Norris-Montanari says. "They did everything to get information out of them on how to move the product and in what direction." The kicker? Its parent company's might. "They have the power of SAS," she says. --Coreen Bailor
One to Watch
Though not the most recognizable vendor within the data quality landscape, Innovative Systems' portfolio is impressive enough to have the financial services sect take note. Its client roster includes the 10 largest banks stateside. Its i/Lytics Data Quality functionality provides quality-profiling analyses on name structure/content, addresses, customer identification, customer/product synchronization, and redundant data synchronization.
"It was the first important data quality company with a data profiling solution (albeit through a partnership), and it had a regulatory compliance offering prior to 9/11," says Current Analysis' Lerner. "The company currently has a broad range of technology, including a CDI solution and a number of regulatory offerings." Look for Innovative's burgeoning interest in regulatory compliance to help deepen the nearly 40-year-old company's chances of gaining more traction. --C.B.
End of Part 2. Click here to read Part 3.