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To: Oeconomicus who wrote (7883)	2/6/2003 8:57:16 PM
From: TEDennis	Read Replies (1) \| Respond to of 9677

CRM - Vendors and Their Applications in for a Rough Ride Thursday, 6 February 2003 In 2002, the worldwide customer relationship management (CRM) applications market actually shrunk 25% from 2001, and major vendors like Siebel and Oracle suffered precipitous declines in license revenues. A new report, Operational CRM: Identifying Niche Opportunities in a Maturing Market, just published by independent market analysts Datamonitor (DTM.L), predicts that by the end of 2005, the market will have barely recovered to 2001 levels. Datamonitor expects many vendors will go to the wall, as the market is too crowded, especially at the high-end and in the most developed countries of North America and Western Europe. At the top-end of the market, vendors whose solutions extend beyond CRM to incorporate whole business processes, which sometimes involve supply chain or financials functionality, are likely to have the upper hand. Intelligence critical: CRM applications with intelligence, delivered through analytics, will grow at a faster rate than those that are process-oriented Traditional sales force automation (SFA) applications, typically > adopted early in the CRM lifecycle, focus on management and control of the sales process, rather than on the analysis and intelligent use of customer data. Meanwhile, the first 'bridges' between the worlds of analytical and operational CRM have been built in the realm of marketing automation (MA), where campaign analysis and targeting can result in demonstrable revenue-generation. According to Datamonitor, process-oriented CRM applications will stagnate. The emergence of enterprise-class analytics specifically focused on customer data and the front-office marketing function will continue to drive MA growth, at the expense of SFA. For example in North America, SFA applications will only grow at an average annual rate of 1% between 2002-2005, whereas MA applications will grow at an average 6% per year over the same period. Similar trends exist in Europe, the Middle East and Africa (EMEA). "The effects of analytics on the operational CRM (oCRM) competitive landscape will also be dramatic. Expect enterprise vendors with weak marketing functionality to aggressively partner with analytics vendors to add depth to their solutions. The alternative for the large oCRM vendors is to watch the MA space become dominated by traditional analytics vendors from data warehousing backgrounds," says Elsa Lion, Datamonitor technology analyst. The key is small and medium-sized enterprises (SMEs) One of the mantras chanted over and over by vendors has been that they believe in the power of the SME market. Indeed, Datamonitor can confirm this. Penetration of core CRM applications among SMEs in almost all verticals and national markets is low, and there is much room for growth. In North America, the low-end of the market will grow at almost three times the rate of the high-end, and in EMEA, Datamonitor expects the low-end to grow twice as fast as the high-end. But this does not mean that large enterprise applications vendors are well-positioned to take advantage of this growth. "The key to selling into smaller businesses is the establishment of a pre-packaged, very low-priced product with 80-90% of the functionality of the high-end version. Direct sales into the low-end are therefore prohibitively expensive. However, finding good resellers who possess 'solution selling' rather than 'product selling' skills is a challenge. It is therefore likely that smaller CRM vendors who focus exclusively on the > SME market, and have a lighter sales structure, will be in a better position to generate profits from the low-end." Another unknown factor in the low-end of the market is the entry of Microsoft. "Microsoft is currently in the process of identifying and qualifying a reseller network for their upcoming CRM release. This will undoubtedly shake-up the competitive landscape in the SME sector," says Ms Lion. Shrinking license revenues, yet growth in some geographies. Despite the gloomy outlook, Datamonitor's research has uncovered some areas that are ripe for vendors to exploit. For example, growth opportunities for operational CRM (oCRM) exist in Asia-Pacific, the Caribbean and Latin America (CALA). Datamonitor predicts they will have average growth rates of 20% and 14% respectively compared to just 4% in North America. Therefore whilst large enterprise software houses are strapped for resources, the best move will actually be for them to start building up both reseller networks - for example in Eastern Europe, and new satellite sales and support offices, for example in parts of Asia, where direct presence is a prerequisite to gaining end-user trust and confidence. crm2day.com