CRM: Analytics to the Rescue?CRM players tap analytics to recover momentum — and deliver higher return on investmentCustomer relationship management: We can only hope. That seems to be the essence of what many observers and analysts say these days about the once high-flying CRM software sector. If memory serves me well, the introduction of just about every form of software solution goes through a similarly steep, hype-driven, boom-and-bust cycle, eventually settling into a more realistic growth rate — if it's worthy. But the dark clouds seem to be lingering over CRM: Will the combination of a tough economy and world tensions starve it of the executive attention and resources necessary for steady expansion toward critical mass? Could the sum not be as great as the parts? That is, will the notion of an integrated CRM "suite" splinter as its components become subsumed into more vertically or functionally oriented software packages? Much as they might deny it, CRM software providers are nervously watching the twin threats of low-budget solutions from the likes of Salesforce.com and, of course, the increasing presence of Microsoft. "To the IT community," writes John Taschek in an eWeek product review (Feb. 18, 2003), "Microsoft CRM is perhaps the most important business solution released to date." Microsoft's aim for the small- to medium-sized business (SMB) market sector is forcing the rest of the CRM field to concentrate on increasing new sales and expanding their footprint with larger businesses — primarily those with more than $1 billion in revenues. Microsoft's 1.0 CRM release focuses on sales force automation. It's the first new product from the Business Solutions unit formed by acquisitions of Great Plains and Navision. Expected in ensuing releases will be fuller implementation of Microsoft's foundation of data resource management products, especially Exchange, SQL Server, and SQL Server's Analysis and Reporting Services. We could see some interesting synergy developing with Microsoft's newly formed Real Time Collaborative Group, now led by Anoop Gupta, who was a high-profile member of Microsoft Research. In January, Microsoft acquired PlaceWare Inc., a provider of Web conferencing services, which became part of this group. With the "Yukon" release now in beta, SQL Server is in the midst of a major upgrade cycle in 2003 that will expand its integrated business intelligence (BI) capabilities. Much as this expansion will challenge other DBMS and BI vendors — such as IBM, Oracle, Business Objects SA, Cognos Inc., and SAS — it will also challenge CRM and ERP application vendors trying to gain traction in the SMB sector. Microsoft will change how emerging businesses perceive what creates strategic value in enterprise business applications, such as CRM. And, lest we forget, at least a few of these SMBs will grab market share and grow into billion-dollar companies; the establishment will take note of what kind of software helped them to get there. Fungible ValueAnalytics, of course, can mean many things: The emphasis these days is on creating "actionable intelligence" so that knowledge workers can immediately make processes more efficient and otherwise improve their organization's planning and forecasting. As providers of BI suites strive to capture the lead in the emerging area of business performance management (BPM), they're clearly crossing into the domain of ERP providers that offer solutions for financial management. BPM analytics certainly can play a role in CRM suites for improving business process performance and aligning efforts with metrics associated with market share and profitability targets. PeopleSoft, SAP, J.D. Edwards & Co., and others are very much awakened to the competitive threat and have been moving quickly through both internal development and reseller partnerships to make sure customers see them as the one-stop shop for analytical enrichment across all key enterprise applications. PeopleSoft, with its Enterprise Performance Management (EPM) solutions, stresses the value of a solid enterprise data warehouse platform and common data model to ensure that analytics touch all relevant data sources in an integrated fashion. SAP's Business Information Warehouse also focuses on metadata. The ERP providers stress the value of CRM integration with their range of enterprise applications — and that ability, rather than incredible algorithms, underlies their messages for competitive advantage regarding analytics. E.piphany Inc. and other players that emerged with the dot-coms gave sophisticated data mining a high profile as part of their CRM and personalization solutions for capitalizing on the enormous challenge of marketing into the Internet channel. Siebel Systems Inc., the category leader, seemed slow to grasp the value of analytics until October 2001 when the company acquired nQuire Software, a promising new BI player led by Larry Barbetta, creating Siebel Analytics. The company now claims that Siebel Analytics 7 is its third largest product line, with more than 200 customers and generating $157.4 million in revenue in 2002. It notes that IDC regards SAS as the leader in customer analytic applications (at least according to 2001 data) with revenues of $83.4 million in that category. Siebel has taken its licks over the past year or so, including bad publicity over a Nucleus Research report that claimed many Siebel customers weren't happy with their return on investment. Could Siebel Analytics start the company's momentum in a more positive direction? Barbetta's focus is on facilitating "actionable intelligence" — focusing on what key knowledge workers need to know, rather than on blowing them away with huge quantities of static data via traditional reporting. Siebel's evolution is worth watching. Siebel Analytics could reignite mainstream interest in the strategic power of CRM. David Stodder [dstodder@cmp.com] is editorial director of Intelligent Enterprise.
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