The customer is king. The clichT may have been around since the beginning of the century, but information technology systems tailored specifically to support that ethos are still in their infancy. Before the start of this year, few companies were actively promoting front-office, customer-centric systems – now virtually every major computer systems supplier is running an ad campaign designed to promote its customer-centric qualities. The reason for the sudden interest is clear. According to marketeers and other business specialists, small increases in customer retention rates have profound effects on company profitability. For example, a book called The Loyalty Effect: The Hidden Force Behind Growth, Profits and Lasting Value by Frederick Reichheld and Thomas Teal, claims that the average US company will lose half of its customers over the next five years. But, it says, if companies can increase their customer retention rate by just 5%, they have the opportunity to more than double profits. In his book Waves of Power, David Moschella, former analyst with market researchers International Data Corp, claims that systems designed to improve interaction with customers, labeled front-office systems by the financial analysts on Wall Street; have the potential to impact the business bottom line more than any other form of computerization in history. With these kind of claims, it is little wonder that customer-centric companies are becoming such hot stocks. Today, however, the customer-oriented market is still a fledgling. The customer care, sales automation and customer asset management market is currently worth around $500m, says John Luongo, chief executive officer of Vantive, a customer asset management specialist.
Fierce competition
By the year 2000, he says, it will be worth $2bn. Those figures are in fact conservative. In most people’s minds, ‘customer-centric’ is becoming less of a specialized application and more of a general business approach – which means, over the next few years, virtually all forms of technology could acquire the ‘customer-centric’ label. Everything from data analysis, mining and warehousing tools to sales automation, self-service and computer technology integration systems, to enterprise applications software, implementation services and beyond. With all this opportunity inevitably comes fierce competition. Today there are 300 companies targeting the customer-centric space, while the broader, front-office market encompasses thousands of suppliers, both new and established. The top ten, according to a recent Customer Centric Computing supplement published by Computer Business Review, includes (in alphabetical order) Arbor Software Inc, Cognos Inc, Edify Corp, IBM Corp, NCR Corp, Oracle Corp, Red Brick Systems Inc, SAS Institute, Siebel Systems Inc and Vantive Corp. But the sheer breadth of the front office means there are, in fact, hundreds of suppliers that could claim a significant role in the development, delivery and deployment of customer-centric systems.
Three main camps
Today, suppliers of customer-centric systems tend to fall into three main camps – those that help companies to better understand customer needs, those that simplify and automate the buying process, and those that help companies to sell to customers more effectively. The first category, those suppliers that help analyze customer demand and spot buying patterns, is made up of the traditional data warehousing community, supplying tools to collect, sort and interrogate data. Although there are huge numbers of companies addressing this space, there are few clear leaders. Only a handful of suppliers – including Platinum Technology Inc, privately-held SAS Institute and database giant Oracle Corp – have succeeded in building a broad-based data warehousing suite. The rest are mainly niche specialists, concentrating in one sub-sector of the data collection and analysis. Specifically, in the area of data extraction, transfer and transformation, Prism Solutions Inc, Evolutionary Technology Inc and Carleton Corp (recently acquired by Apertus Technologies Inc) are all strong, while in the area of data querying/data visualization, Micro Strategy Inc, Information Advantage Inc, Business Objects SA and Brio Technology Inc have well established positions. The situation in the automated buying sector is even more confusing. To date, a number of companies have been successful in selling call centers, based on computer telephony integration (CTI) products to customers operating primarily in the financial services and utilities fields. Few, however, have worked out how to hook up these systems to the increasingly important electronic environment of the internet, company-wide intranets, and the externally extended extranets to build true self-service systems. The companies most likely to do so, however, are the current CTI leaders – Northern Telecom Ltd, systems giant IBM Corp, Lucent Technologies Inc and Dialogic Corp.
Immature sector
The final category, comprising the sales force automation, help desk and customer asset management suppliers, is the most immature sector of all. Most of the suppliers targeting this space have only surfaced over the last two to three years and many still have revenues of well short of $100m. The key vendors not listed in Computer Business Review’s ‘ten to watch’ being tipped by analysts are Clarify Corp, Scopus Technology Inc, Remedy Corp, Onyx, Calico Technology Inc, Triology and Inference Corp. Whether they survive as independent companies, however, remains to be seen. Outside of these sectors, there are others which look set to be very important in the rise of customer-centric computing. First, there are the enterprise resource planning vendors who are in the process of modifying their application suites to cater for increasingly customer-focused business operations. ERP market leader SAP AG, for example, is working on a new front office system, while rivals PeopleSoft Inc and Baan NV are partnering or acquiring companies active in the customer asset management field. The services of the large systems integrators – IBM Corp, EDS Corp, Andersen Consulting Group and Cap Gemini Sogeti SA – are also going to be fundamental to ensuring that the customer-centric movement is a success.
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This article first appeared in Computer Business Review.
