If 2003 was CRM's year of consolidation, what will 2004 hold? That's the question we posed to several industry insiders. Each said that the merger and acquisition activity isn't over, and some even speculated that the juiciest CRM fruit has yet to be picked.
Oracle moves on -- to Siebel
By Chris Selland
- The "can spam" law is ineffective (but that's a good thing). The just-signed bill won't do much at all to stop the flow of spam. But let's count our blessings -- the 36 (and counting) state laws that preceded it would have been no more effective and only would have fostered the creation of a new industry - Spambulance chasers (our favorite term of 2003!). In this case, one ineffective but consistent federal law trumps 36+ ineffective, inconsistent, confusing and potentially dangerous state laws.
- Regulation increases. "Can spam," "do not call," Sarbanes-Oxley, Graham-Leach-Bliley, HIPAA (and the list goes on...) Ready or not, 2004 will be the year that companies finally need to get serious about how they manage and use customer data. Consumers (voters!) have had enough, and those who desire their votes (politicians!) will continue to respond -- particularly in an election year! CRM project goals will shift away from the traditional but ephemeral "cross-sell," "up-sell," "360-degree view" goals toward more tactical objectives, such as avoiding financial penalties and keeping senior management out of handcuffs.
- Oracle throws in the towel. This will have more to do with the rising stock market taking PeopleSoft's stock price beyond Oracle's willingness to pay than any other action. Larry's attention will turn to the numerous other targets in the market -- top of the list being Onyx and (you heard it here first) Siebel.
- Microsoft splits. This doesn't mean it won't succeed in CRM, but it makes little sense for Microsoft to continue selling enterprise solutions alongside desktop products and operating systems. A breakup is, at this point, the best way for Microsoft to unleash shareholder value. Competitors should not be encouraged because Microsoft's CRM business will be, if anything, an even more fierce competitor after this occurs.
- Hosted solutions continue to ascend. Yes, there are drawbacks, but ultimately the rise of hosted CRM is not a passing fad. Salesforce.com will have a blockbuster IPO, perhaps RightNow will too, as adoption continues to rise. Which will mean that...
- Traditional "enterprise software" fades. Much of the appeal of hosted solutions is, of course, based on the much different economics behind them. These economics are a huge threat to the incumbent enterprise software leaders, who will never again see the types of pricing and margin power they had in the 1990s. Some (i.e. Siebel) are at least responding to this threat, but many others are dinosaurs in denial. Ultimately, those that fail to adapt will be run over.
- CRM becomes a growth market (and fun) once again. It's been easy, given all the talk about "failure" surrounding CRM, to lose sight of the fact that CRM is ultimately about making customers happy and growing a business. 2004 will be a year of tremendous change, but also a year when the success stories once again become prevalent. I hope your organization is among them!
Selland is the founder of Cambridge, Mass.-based consultancy Reservoir Partners. Previously he worked as vice president of marketing at eSupportNow and vice president of e-business strategies at analyst firm Yankee Group.
The beginning of the end of CRM?
By Paul Greenberg
CRM went through a resurgence of interest in 2003 -- though there didn't seem to be a commensurate increase in revenues associated with that interest. I guess resurgences take time…
That said, I see the following for CRM in 2004:
- The "net native" hosted CRM solution will continue to be red hot with market leader Salesforce.com doing well and other key players like Salesnet and NetSuite will grow. The more traditional hosted solution -- such as those offered by application service providers Surebridge and Corio -- will grow too, but much more slowly. Surebridge will benefit from the Microsoft hosted solution (MS CRM) that it currently carries.
- Microsoft's MS CRM offering will continue to gain ground big time. With 6% of the SMB market at the end of 2003 and the multi-language version 1.2 out, it can only gain greater market share. Microsoft will also announce its entry into the greater-than-100-user market in CRM, too.
- Market consolidation will continue with Siebel becoming an acquisition target -- a hostile one. The Oracle attempt to acquire PeopleSoft will ultimately peter out as executive vice president Charles Phillips and CEO Larry Ellison try not to lose face.
- I see the beginning of the end of CRM as a separate strategy in 2004, though not reaching full fruition until 2008 or 2009. As the demand and supply chains become an enterprise-wide customer-focused value chain, the need for CRM as such begins to fade. CRM becomes simply how business strategy is formulated.
- Keep your eye on two federal government CRM initiatives, one run by the General Services Administration's Office of Citizen Services, the other by the Defense Logistics Agency. They are the public sector's CRM future. Their success means explosion; their failure means implosion. But the smart people running them know that, so I predict dramatic success for each of them.
- Finally, could this be the year CRM in sports becomes important? Go Yankees!!
Greenberg is the author of the best-selling book "CRM at the Speed of Light: Capturing and Keeping Customers in Internet Real Time" and is president of The 56 Group, an enterprise applications consulting services firm.
Moving beyond M&A
By William McKnight
There are numerous signs that 2004 will be a guardedly optimistic year for IT spending. Business intelligence should see continued growth coming out of a strengthening 2003. The BI industry has finally found ways to show quick payback, which is absolutely required for success in these days of non-speculation. This is actually a very positive development for BI and should allow it to prosper in these days of disciplined spending.
CRM is a laggard in this sense and continues to experience many of the same results that BI did in its early days –- underscoped and long implementation cycles, unsponsored projects and a technology in search of a business problem. The business problem that CRM satisfies continues to exist, but there remains the somewhat rare organization that can find the proper marriage between a successful CRM implementation and its customer-oriented business problems.
But, just as with BI, companies will continue to try. The merger and acquisitions activity is slowing down the progress made to date. Until targeted and digestibly-scoped project methodology sinks in, CRM is likely to continue with its poor image. 2004 should see some gains, however, as end-user companies take advantage of the offers that the early market share grab in the form of mergers and acquisitions bring to them.
As for vendors, Business Objects has been an undeniable force in business intelligence for many years and the purchase of Crystal Decisions will only ensure its continued impact. There is likely now a software component from Business Objects in most business intelligence implementations. From a sheer revenue perspective, the additive effect of adding Crystal makes Business Objects the largest business intelligence company in the world. It will now be closing in on the billion dollar mark in revenue.
However, there are questions about the ability to get beyond the additive effects of this merger. Any merger needs to show cost efficiencies and/or revenue enhancement beyond the additive effects. Business Objects has the leading OLAP tool in the market. Crystal Decisions has the leading reporting tool. However, each company has made huge strides, both real and from a marketing perspective, in the past few years into the other's primary domain. So great have these strides been that the companies have virtually identical marketing messages and a high redundancy of products. Sales increases from the merger will likely come from increased comfort with the stability and girth of the company, rather than from an increased ability to upsell the customer base.
Expect the company to weed through the product set, sales forces and sales messages over the next few years. It will be a very difficult transition given the entrenched internal (and now conflicting) opinions about which product is best for which customer situation. This could lead to customer backlash and some short-term reluctance to make new purchases from the company. I have not seen a clear statement of direction, which customers are looking for.
I'm more buoyed by the upsell possibilities of the Brio purchase by Hyperion. Hyperion now has more of a legitimate end-to-end message. The pre-merger Hyperion had a more heavy-duty multidimensional cube approach to BI. Brio had a solid user interface for its reporting, query, analysis and dashboards but lacked scalability. The Brio products will be re-branded to Hyperion, which is probably a good move since the Brio image has suffered.
Clearly, both mergers were partially influenced by the recent reemergence of MicroStrategy and the recently demonstrated capabilities of Cognos across the business intelligence spectrum.
We're not yet at the complete commoditization of business intelligence product suites, but we're close. With commoditization comes consolidation, which we are experiencing now. It is not innovative in a free market for 10 companies to be working on the same set of enhancements to their products. Two or three will do, and the "me-toos" are redundant. We still have yet to see whom the two or three will be, but it makes complete sense to view any new business intelligence purchase in context of a framework.
Only a handful of frameworks remain that make sense for brand new business intelligence initiatives. The lead vendors in the frameworks, and candidates for the ultimate survivors, in alphabetical order, are Business Objects, Cognos, Hyperion, Informatica, Microsoft, MicroStrategy, Oracle, SAS and Teradata.
Only Oracle and Teradata, on this list, provide the DBMS. Only Teradata also provides the hardware. IBM has a relationship with ETi (ETL) and Business Objects (data access) and frequently recommends them in ots consulting proposals. It will be interesting to see what becomes of ETi. IBM could also pursue MicroStrategy or Cognos and become an immediate top BI software player. In the meantime, Big Blue is a major BI player by virtue of its consulting services, hardware and DBMS.
As for other consolidations, Microsoft may be quietly interested in NCR Teradata. Microsoft has not found a way to break into high-end BI/CRM and could be getting restless. While SQL Server is grabbing the lion's share of the low-end DBMS market including BI, Microsoft remains baffled by many high-end corporate cultures. I suggest the issue may be cultural as much as anything –- selling to the masses versus selling high-dollar deals. In 2004, we will see Microsoft make a major move, either through acquisition or in a culture-change sense to improve its value proposition for corporate America's BI and CRM dollars.
McKnight is president of McKnight Associates, Inc., a business intelligence consultancy specializing in providing bottom-line-focused data warehouse/business intelligence services, solutions and specialized resources.
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