By Krishna Roy
There is a new quip in the enterprise software industry: ERP systems come from Mars, CRM suites come from Venus. Where once this expression was used to exemplify gender differences, the phrase is now being used to cast a spotlight on the relationships between back-end enterprise resource planning suites with their front-office counterparts.
Companies that successfully achieve this engineering feat are told a door will be opened to customer-centric computing where sales rapidly accelerate as a result of gaining an intimate knowledge of the purchaser preferences and buying habits. Furthermore, sales cycles can be reduced as the time between order and delivery narrow. The customer effectively becomes an integral part of the supply chain as the front-office becomes the point of contact between a company and its customer base fulfilling order requests, providing customer support and acting as a sophisticated marketing tool to generate repeat business. Or at least that’s the theory.
In practice it is never that straight forward. A business can only cultivate a relationship with a customer if it has total access to that particular customer’s history, present requirements and likely future needs. In order to provide any more than a rudimentary analysis of buying patterns and preferences a fairly sophisticated level of data analysis needs to be employed. The automation of the sales cycle linking order requests to fulfillment does not suffice. If you automate a sales force it doesn’t necessarily mean they are more effective, they need qualified prospects to chase, says David Carouso at AMR Research.
The market may be awash with customer relationship management suites but few vendors provide the business intelligence tools required to perform sophisticated analysis of customer data to make customer relationship management systems truly effective. Analytical customer relationship management tools are the next breed of applications users require. Customer relationship management goes far beyond providing front office applications. Neither the traditional ERP vendors nor the new generation of CRM suppliers can provide these tools at the moment, but it’s a essential part of the process, says Liz Shanham at the Meta Group.
The stakes are high and the rewards are great in CRM. Overall software and systems integration service expenditure on customer relationship management projects will grown from $1.5bn in 1998 to $4.7bn in 2001, according to the Meta Group. And if the provision of an integrated business intelligence suite proves to be a fundamental metric for success, the back-office and front- office players will need to purchase product rather than partner since few have the time or experience to build datamining or data analysis capabilities in house.
Business intelligence tools vendors will therefore supplant call center/customer service vendors as the new acquisition targets in this space. A Holos/Seagate demerger has been on the cards for a while, Hyperion is looking vulnerable and someone might buy Comshare to get at its analytic applications business. Other niche players with relatively low market capitalizations and proven undersold technology, such as Gentia and CorVu, could fall prey to CRM heavy hitters of Siebel, Vantive and Clarify. These vendors have the financial resources and the necessary integration experience from earlier acquisition sprees to take business intelligence suites, tailor them to the CRM market place and offer them as a core part of their software suites.
But that situation is still in the dim and distant future. Enterprises should not expect front-office suite vendors or back-office players to meet all front-office application needs including analytic, and transactional requirements until 2001, concludes a Gartner Group report.
There’s about a hundred CRM vendors in the market now, says Carouso, but no more than ten have built product around a business intelligence platform. Calico, Rubric and Harmony are held up as poster children in this field. But these vendors come from the marketing automation side of the house where click stream data analysis is employed to gain a profile of users’ behavior. They are nevertheless also objects of M&A takeover speculation, say analysts, due to their ability to provide the pre-requisite business intelligence functionality. Such moves would also help bolster the marketing automation aspect of CRM suites, which is still seen to be deficient.
The Siebels of this world provide very rudimentary first generation data analysis tools so we all end up getting junk e- mail and spam. There’s no intelligence being employed because the back-end ERP systems are holding all the customer information. And even if you can get at that data, how can you deal with it in an intelligent way without a data mart and business intelligence tools, says Pat McHugh, vice president of marketing at software house, Exchange Applications.
CRM vendors have been slow to grasp this concept. Even CRM market leader, Siebel Systems does not recognize the value that business intelligence tools could bring to its application suite. We offer some data mart and analysis capabilities to analyze customer data and buying habits but we don’t view additional functionality as vital to the success of Siebel 99, says John Bartlett, senior director, product marketing at the company.
For once Oracle, which is continually slated by Siebel for the lack of breadth of its CRM offering, may well be ahead of the pack. At least in its strategic thinking. The company is considering the possibility of selling some parts of the BIS business intelligence tools as a bundle with Oracle Applications Release 11, its back-end ERP suite. BIS is a small set of five web-based modules integrated with Financials, Purchasing, Operations, Human Resources and Process Manufacturing. But they must be licensed separately. The tools currently read data directly from the core applications, but the future plan is for BIS to operate against the Oracle Warehouse.
The logical next step for Oracle would be to take the integration process one stage further and tie Oracle Applications into CRM 3i, its forthcoming customer relationship management suite. New modules in sales, service, call center and e-commerce are due out in May and will already be integrated with the ERP back-end applications.
If Oracle can deliver on its ambition in this field then it has the potential to radically alter the competitive landscape to gain an early lead while rivals sort out integration challenges. The competition in its traditional ERP sector (Baan and SAP) are struggling with the prospect of delivering a FrontOffice/Back Office suite let alone any data analysis capability. Both companies’ experiences characterize the problems acquired technology can bring and will no doubt emerge as issues for any vendor that goes on to purchase business intelligence tools.
When we bought Aurum two years ago we thought we had the domain expertise and product to bring a fully integrated suite to market quickly. We found we had two different data models and integration was a nightmare. We’re still not there yet, a Baan spokesperson told us. SAP is facing a similar dilemma. It also bought in CRM expertise by purchasing Keifer & Veittinger last year and has since ditched the product because it would not integrate with R/3. We acquired CRM domain expertise but we still had to rebuild the product from the ground up to tie it in with R/3 and we only shipped the combined suite to our first customer last month, says Cary Fulbright, an SAP executive.
Oracle’s expertise in database and tools coupled with its ability to meet the back office/front office challenge could see it emerging as the new leading light in this market. Oracle has a pretty strong vision. It has tools, databases and integrated applications and it looks at the problem more comprehensively than many vendors, says Carouso. But will it deliver?
