The 2011 CRM Market Leaders
Incentive management (IM) is on a roll. “The market has been growing as organizations look to rationalize and replace spreadsheets,” says Mark Smith, chief research officer and CEO of Ventana Research. The past year saw major consolidations—the marker of a maturing industry—including SumTotal Systems’ purchase of Softscape, CRM magazine’s One to Watch for 2010. With IM vendors announcing record-breaking revenues, analysts believe this industry will expand upward and outward in 2012.
Ray Wang, principal analyst and CEO at Constellation Research, predicts that IM will extend its reach into the larger market of human capital management. “There’s a realization that we haven’t been investing in people as much as we should,” he says. To maintain a core team of talented employees, companies will invest in solutions that tie together sales and human resources. To simplify that shift, Smith says, ease of integration will be critical, noting that vendors will respond “to the need to provide more flexibility into model and planning capabilities.”
French compensation solution provider Excentive first hopped across the pond in early 2009. Two years after its initial expansion in the North American market, the vendor is gaining ground, as evidenced by its first-ever appearance as a category leader. Smith praises Excentive’s “approach to integrate incentives and compensation across the organization,” a philosophy that’s consistent with current customer demand.
In 2011, Merced Systems again found a spot on our leaderboard, an honor it has earned every year after its 2008 purchase of sales specialist firm Practique Associates. In the past 12 months, Merced continued to integrate its solutions and build its performance management brand. Smith says, “After expanding into sales, [Merced] has advanced incentives to operate across both sales and services.” This spring, the California-based vendor introduced Sales Performance Management 4.0, which will be available for purchase this year. The release demonstrates Merced’s commitment to the mobility trend with smartphone and tablet access—functionality that analysts agree is becoming increasingly crucial.
With two decades of performance under its belt, Synygy maintains its reputation as a strong IM provider. The vendor remains true to its pure-play roots. Wang says, “Customers love the ability to stay best-of-breed based on Oracle and Salesforce.com integrations.” Much of Synygy’s business grows out of outsourced opportunities, but the vendor’s SaaS story has helped Synygy move down-market, too. “The company has been continuing its advancements with improvements for many years,” Smith says.
Varicent has won a spot on our leaderboard every year since the category’s inception. However, 2011 marked the first year in which the Canada-based vendor gave the winner a run for its money. Through new partnership agreements with SugarCRM and the TerrAlign Group, Varicent has delivered added value for its customers. And that’s reflected in its 3.8 rating for depth of functionality, the highest in that category. Jim Dickie, managing partner at CSO Insights, says that the vendor “provides the right blend of capabilities you can use as right out of the box, along with the ability to highly customize.” With solid scores and a strong vision, Varicent could well take the lead in 2012.
One of the first SaaS-only vendors in the market, Xactly is being rewarded for its innovation. Our IM winner for the third year in a row, the San Jose–based vendor announced revenue growth of nearly 50 percent in the first quarter from the year before and celebrated its 100th SMB customer in May. Wang says that Xactly’s success can be credited at least in part to “understand[ing] both the management team’s needs and the salespeople’s needs.” With the release of Xactly Incent 7.0, the vendor introduced the Sandbox, which lets users create, modify, and test personalized compensation plans. This development spearheads a trend toward self-service capabilities, which Wang believes will continue to gain momentum.
One to Watch
This has been a victorious year for Versata. In May, the vendor won its patent-infringement suit against software giant SAP, and now it has shot up on our IM radar, capturing this year’s One to Watch. Smith says that Versata “continues to acquire assets and companies to expand its footprint.” This development was showcased by its acquisition last March of visual process discovery software provider Ravenflow. However, analysts argue that the company must improve its branding before it can make the jump to our leaderboard. Versata has “not [done] a very good job communicating its overall strategy and direction,” Smith says.
The social component looms large in this category, as vendors continue to build out capabilities like loyalty programs. However, the field remains slow to integrate social, says Michael Fauscette, group vice president of software business solutions at IDC. According to Fauscette, a key question that needs to be asked is: “How do I manage from a corporate brand perspective what goes onto those social channels that the local brand is trying to manage and drive?” He continues, “That’s a really complicated thing. How do I get them content and manage, yet allow them the freedom to drive what works in their local market?” New “social marketing automation solutions” that are still establishing themselves will challenge the current leaders, Fauscette predicts. “They are redefining the space,” he says.
The veteran status of Aprimo again proves to be a major selling point for the company. Its strength in marketing resource management and on-demand solutions establishes Aprimo as a leader for another year. But, while Fauscette points out that the company’s age and longtime reputation have kept it prominent, it needs to update its approach, including a more dedicated social strategy, to remain prominent over the long haul.
Eloqua is a pioneer in the software-as-a-service space, though at a somewhat detrimental cost. Its reputation for having a complicated product once again kept it out of the top spot. “Eloqua continues to gain ground with power users, but the business users now demand better ease of use,” says Ray Wang, principal analyst and CEO at Constellation Research. Analysts generally agree that the solution needs to be simplified, but perhaps Eloqua’s commitment to customer service will ease the confusion among customers over time.
SAS Institute customers are “as loyal as ever,” Wang says. Once again receiving strong customer satisfaction and depth of functionality scores, the company is committed to providing a positive experience for its users. However, company direction remains a somewhat weak spot for the company that was the leader two years ago. According to last year's analysis, SAS was dinged for acting independently of customer requests by designing "for the worst-case scenario." In last year's Marketing Solutions category write-up, Ray Wang said, “Sometimes [the worst-case scenario] is not necessarily what the majority of their customers are facing today.” It appears that similar concerns this year kept the company out of the winner’s circle.
After winning the top spot last year, Unica has slipped in the rankings. Cost and usability held down the recently acquired IBM company. However, Rebecca Wettemann, vice president of Nucleus Research, is bullish on Unica’s long-term ability to play in the market as a result of its partnership with IBM. “It is likely to drive a lot of sales and investment in their already-strong feature set,” she says. With a score of 4.3 for company direction, it appears that Unica will stick around the leaderboard for a while.
According to Fauscette, Marketo took a “completely fresh-from-the-start, ground-up approach” to marketing automation. “They have a really good interface, really good user experience, and they built out a really deep set of functionality pretty quickly and have gotten good traction.” Although it’s a relatively new solution, Fauscette maintains that it is more “feature-rich than some of the major players in this market.” Usability also establishes Marketo as the leader. “Marketo’s the hot darling in the space, as we see users gravitate to its user experience and ease of design,” Wang says.
One to Watch
Again just shy of our leaderboard, Oracle is still a company to watch. “It’s the breadth of what they have—there are so many components to build out and do this in a modular way,” Fauscette explains. He believes that Oracle has the “most to offer in a choice setting” with its recent acquisitions. “I think there is a lot of robust capability around what they have.” In addition, Fauscette points out that Oracle has devoted some attention to social, which may contribute to more long-term success.
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