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Oracle stresses CRM flexibility in evolving consumer goods market

Oracle is among the CRM software makers pushing its vertical approach. The executive in charge of its consumer packaged goods sector admits CPG is a shifting market rife with challenges.

One of the most diverse vertical industries addressed by CRM providers today is the consumer packaged goods (CPG) sector. With a range of potential customers that reaches from beverage bottlers to footwear manufacturers, vertical CRM software needs to meet varied requirements of a wide range of businesses.

With a long-running background in the CPG industry as an executive for food and tobacco conglomerate Philip Morris Companies Inc., Phil Friedman feels well suited for his role as vice president of the Redwood City, Calif.-based CRM vendor's Consumer Packaged Goods group. Placing his emphasis squarely on open communication and business process flexibility, Friedman recently shared his thoughts on the lucrative but challenging CPG vertical with

What are the unique CRM challenges of the CPG sector?

The challenge is that the industry is going through significant consolidation. In the last three years, you've seen the big getting bigger. The driving force behind this, behind driving market share, is to reduce costs through scalability, in addition to dealing with larger retailers, like a Wal-Mart. The challenge for the industry is to drive shareholder value out of the cost formula. Sitting on top of that is trade management (the administrative and legal issues associated with doing business globally). We've spoken with a number of CEOs about the business, and trade management is certainly a shared concern and opportunity. They know they can reduce costs this way and have an effect on the bottom line. They want to have more effective campaigns and leverage information. Using more effective trade management, a company could conceivably drive its share price up by a couple dollars, and in this economy that's nothing to sneeze at.

Does all the consolidation make it harder for Oracle to sell to these companies? Is there a hesitancy to spend on IT, or is there a greater demand for CRM created by bringing previously unconnected systems together?

I'm not going to say one way or the other, but I can say that it's more exciting. These companies are looking to partner. A few years back, people were looking to glue together best-of-breed to achieve all this. Being able to work off common data architecture has become more of an issue. It's more expensive to make best-of-breed work. It's very hard to work with multiple vendors, and IT executives are getting less money to work with.

With CRM, as you move into larger organizations, they're starting to understand the value chain. We believe that the shared data model and the advantage offered by suites and strategic business flows can expedite deployment and truly save costs. They know that they can get to market more quickly by working with us as well. The challenge is to build mind share from the top down.

What is the state of readiness for most CPG companies around CRM? Are they realistic and knowledgeable about what these kinds of enterprise applications can and can't do for their businesses?
I think people have gotten wiser over the past few years. The challenge is to identify where CRM begins and ends. If you look at areas that have immediate benefits and ROI capabilities, you can succeed. You have to look at the components of a business and try to figure out how business can be done more intelligently. The underlying technology doesn't interest most business people; they're looking for that end result. They do get it when it is wrapped around the real business issues. CPG is a more diverse area than a lot of other verticals, in terms of the kinds of businesses you serve. How does Oracle identify the touch points that reach across different business models?
It used to be more traditional. You had food and beverage, and you could take [CRM] from a manufacturer and translate it into a supermarket chain. You could do footwear and apparel and bring it from a manufacturer and push it through into a retailer. The dawn of the 'Wal-Mart' era has changed this completely. They're one of the largest grocers anywhere, but they're also a mass-market retailer. You have to look across the spectrum and identify the core areas that remain consistent throughout as many of these companies as possible. From there it filters down through addressing consistent customer demands, governmental reporting, etc. Within the industries you still even have a certain amount of individuality. How do you address the various partner networks that operate throughout different CPG industries? Is PRM a big part of what you do?

We are an active participant in a number of industry groups that help flesh out the common issues. This is a great way for us to help companies articulate the rules of engagement for their partners and enable more efficient operations. There's a lot of work to be done yet, but you really get a feel for what companies are scrambling for within these loose-knit or formalized partner organizations. Companies do understand to what extent their partners can affect their ability to succeed with CRM. Sitting down with everyone at the table to talk about it gives us a better idea of how to help facilitate a successful environment for everyone involved.


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So what does Oracle do to customize for each industry under the CPG umbrella?
If you take a look at customer-facing areas, many of the core functions reach across different industry sectors. And we get executives together to help figure this out. Much of the core functionality is very consistent from business to business. Nomenclature may change, but customer service as an art is very similar across the board. What changes is the workflow. About 90% of the technology is core in a lot of cases, but you need that ability to be flexible to address varying workflow patterns.

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