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Strategies & Market Trends : Gorilla and King Portfolio Candidates

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To: Mike Buckley who wrote (7093)	9/26/1999 10:08:00 PM
From: Mike Buckley	Read Replies (1) of 54805

THIS WEEK IN THE FRONT OFFICE The News Ernst & Young published a study this week of financial services firms' spending on CRM that I'll post in entirety. Highlights: "...the financial services industry is increasing spending on initiatives aimed at managing customer relationships even though most firms lack a clear vision and business case for these relationships." "CRM spending increased by 31% this year even as overall technology spending slowed from recent highs of 14% to an annual increase of 7%. Spending for CRM efforts globally is expected to grow 34% next year." "63% of the respondents don't know whether their CRM strategies are increasing or decreasing profitability, 60% don't know if CRM expenditures are helpful in cross selling and only 25% segment their customers by profitability. Nonetheless, 77% of respondents reported having between one and 10 CRM initiatives and over half -- 54% -- think their initiatives are mission critical." "The most important CRM goals for survey respondents were: Retaining existing clients (27%); assessing current customer behavior (19%); only 5% said they use CRM to gain new clients and 9% said they use it to assess future behavior." "Regarding the Internet, the survey found: Internet transaction volume slated to grow faster than anticipated with respondents expecting Internet transactions to account for 10% of volume in the next four years from 1% at present. In 2002, 58% of survey respondents estimate Internet-related investments will be their most important technology expenditures." If you notice the decidedly negative impression by Ernst & Young of how and why companies are using their CRM initiatives, that is the second recent report of that nature. It might be decidedly accurate. It also might be the consulting firm's way of showing these firms why they need Ernst & Young. Change of subject. A few months ago, Lucent bought Mosaic, a front office company. A few weeks ago Lucent forged a relationship with Siebel to resell Siebel products. Now we learn that "Lucent Technologies is the U.S. call center market leader in revenue and agent positions, according to the latest independent report from The PELORUS Group. ... The study shows Lucent's share for new and add-on agent positions is a market-leading 35.8 percent, and finds Lucent's share for new and add-on agent revenue is 38.3 percent, more than ten points higher than the closest competitor." That is all the evidence I need in support of the authors' thinking that the help desk market has been subsumed by a larger market. (That's an update in the revised manual.) See the important ramification below about Remedy's role in our Front Office Software game. The Stocks Darn. Our Front Office Gorilla Game slipped more than the indexes this week. Worse yet, we can longer brag that it's a double since inception. About the help desk market being subsumed. You might remember that a week or so ago we also discussed that the manual reminds us that the second best company (next of course to a gorilla) is a chimp that dominates a niche. I assume Remedy still dominates their niche in the internal help desk market. Until I learn otherwise, or until I see that their growth is once again slowing, I'll keep Remedy in our game. Thoughts from anyone? Next weekend you'll get all the details in my month-end report. --Mike Buckley

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