The fight over CRM: on-demand services are providing a renaissance for a once-struggling technology.Software giant Oracle has never been one to shy away from Verb 1. shy away from - avoid having to deal with some unpleasant task; "I shy away from this task" avoid - stay clear from; keep away from; keep out of the way of someone or something; "Her former friends now avoid her" acquisition. In 2005 alone, the Redwood Shores, Calif.-based company gobbled no less than nine competitors. When Oracle President Charles Phillips Charles Phillips refers to:
[ILLUSTRATION OMITTED] If such rhetoric seems harsh, it's because Phillips is embroiled em·broil tr.v. em·broiled, em·broil·ing, em·broils 1. To involve in argument, contention, or hostile actions: "Avoid . . . in one of Silicon Valley's hottest battles. From powerhouses such as Oracle and SAP to up-and-comers like Salesforce.com and RightNow Technologies RightNow Technologies NASDAQ: RNOW is a U.S. software company that develops customer relationship management (CRM) software for small and mid-market businesses. It is incorporated in Delaware and headquartered in Bozeman, Montana. , vendors are scrambling to corner the market on customer relationship management (CRM (Customer Relationship Management) An integrated information system that is used to plan, schedule and control the presales and postsales activities in an organization. ). It's easy to understand why. The global CRM applications market will reach $16 billion in revenue by 2009, up from around $11 billion in 2004, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. AMR (1) (Adaptive Multi-Rate) A variable rate speech codec selected by the 3GPP for the 3G evolution of the GSM cellphone system (WCDMA). Using the Algebraic CELP (ACELP) compression technology, AMR provides toll quality sound at transmission rates from 4.75 to 12. Research. Not bad for a technology that for a while looked as if it were about to fade into dot-bomb obscurity along with wearable computers and online pet food shopping. CRM software helps companies manage customer relationships in a variety of ways, from tracking customer preferences and buying habits, to automating service requests and customer complaints, to granting a company's marketing department access to information on competitors and industry trends. But early incarnations of CRM software were often difficult to implement and demanded a sizable IT investment. With only 16 percent of CRM initiatives demonstrating value, as estimated by AMR Research back in 2003, CRM quickly lost its acronym-du-jour appeal. Making a Comeback Today, CRM is not only making a comeback but is a battleground for some of the most successful software executives. Oracle, SAP, Salesforce.com, RightNow Technologies and NetSuite are only a few of the vendors clamoring for top billing as companies loosen their purse strings purse strings or purse·strings pl.n. Financial support or resources, or control over them: the politicians who control federal purse strings; tightened the corporate purse strings. to establish stronger relations with their customers. Moreover, there's no limit to the measures vendors are taking to establish a foothold in this market. From Oracle's acquisition of San Mateo San Mateo (săn mətā`ō), city (1990 pop. 85,486), San Mateo co., W Calif., on San Francisco Bay; inc. 1894. It is a commercial and retail center with some high-technology manufacturing. San Mateo, Spanish for St. , Calif.-based Siebel Systems Siebel is a brand name of Oracle Corporation. Siebel Systems, Inc., founded by Thomas Siebel in 1993, was principally engaged in the design, development, marketing and support of CRM applications. to Salesforce.com's unveiling of a new software platform, CRM is in the midst Adv. 1. in the midst - the middle or central part or point; "in the midst of the forest"; "could he walk out in the midst of his piece?" midmost of a rebirth that is pitting software executives--many of whom are Oracle alumni--against one another as they struggle to redefine the old acronym. Driving CRM's resurrection is the concept of on-demand services. On-demand is the delivery of application software over the Internet on a paid-subscription basis. A company simply signs up for a subscription. The vendor then enables access without the need to install software. It's a hassle-free alternative to the old licensed CRM software model that required companies to invest heavily in IT infrastructure and professional expertise. "People have been burned by the idea of making an up-front, five-year commitment of tens of millions of dollars on software," says Phill Robinson, vice president of marketing at Salesforce.com in San Francisco San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden . By providing a low-cost, user-friendly solution that can be up and running in three months, on-demand CRM can improve customer satisfaction and increase profitability, Robinson says. The market does seem headed that way. According to AMR Research, sales of hosted CRM grew a whopping 105 percent in 2004. And while the CRM kingdom is still ruled by installed-application vendors such as Oracle and SAP, on-demand CRM market leaders RightNow Technologies and Salesforce.com enjoyed 97 percent and 83 percent growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. , respectively. In fact, 47 percent of large enterprises, or companies with more than $1 billion in revenue, are going to look at hosting, reports AMR. "I get a lot of calls from venture capitalists looking to put money into anybody that puts 'on-demand' next to their name, and that's because of Salesforce," adds Rob Desisto, a vice president at Gartner Research. Ironically, it was Larry Ellison Lawrence Joseph Ellison (born August 17, 1944) is the co-founder and CEO of Oracle Corporation, a major database software company. Early life Ellison was born in New York City to Florence Spellman, a 19-year-old unwed Jewish mother. , CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Oracle, who opted to put his dollars--$2 million, to be exact--into Salesforce.com. In 1999, Marc Benioff Marc Benioff (b. 1964) is Chairman & CEO of Salesforce.com, a leading CRM company he founded in March 1999. Born Marc Russell Benioff on September 25, 1964 in San Francisco, California USA. left his position at Oracle to launch the start-up. Colleagues and investors scoffed at the notion of charging companies a monthly fee to access software over the Internet rather than pay for on-site installation. But Benioff's persistence paid off. Today, less than two years after going public, Sales-force.com boasts more than 300,000 subscribers and a profit of $4.4 million for the first quarter of fiscal year 2006. Salesforce.com may have put on-demand on the map, but companies such as Bozeman, Mont.-based RightNow Technologies are paving their own paths to CRM success. Although RightNow also offers its applications on premise, more than 90 percent of its customers are now on-demand. And more than half of the company's revenue comes from large government institutions and businesses with $1 billion in revenue. Germany's SAP also is exploring the on-demand model, despite making gains with the old system. A 2005 AMR Research report states that SAP's CRM revenue grew 30 percent, unseating Siebel as the revenue market share leader. "We are working on bringing a new offering to the market that's going to address the needs of a fast deployment, but we haven't released any specific information," says Ralf Von Sosen, SAP's vice president of CRM marketing. Time is ticking, says Rob Bois, AMR Research's director for customer management. "The longer SAP waits to get in on this game, the more ground they're going to lose," he says. Oracle is reaching for a slice of the on-demand pie through its acquisition of Siebel. The purchase is not only a slightly awkward reunion of Larry Ellison and Tom Siebel--a former Oracle executive--it also marks Oracle's entree into the hosted CRM market. "One of the purported reasons for buying Siebel was to take advantage of the knowledge Siebel acquired in the on-demand space," says William Band, an analyst at Forrester Research Forrester Research is an independent technology and market research company that provides its clients with advice about technology's impact on business and consumers. Corporate facts
Oracle may have ponied up the dollars, but smaller outfits such as Salesforce.com and RightNow Technologies could be the greatest beneficiaries of the acquisition, at least in the short term. In addition to Siebel's CRM applications, Oracle continues to peddle J.D. Edwards (J.D. Edwards & Company, Denver, CO, www.jdedwards.com) A developer of multinational, integrated enterprise software for distribution, finance, human resources, manufacturing and supply chain management. CRM, PeopleSoft CRM and its own Oracle CRM product lines. It's a hodgepodge hodge·podge n. A mixture of dissimilar ingredients; a jumble. [Alteration of Middle English hochepot, from Old French, stew; see hotchpot. of solutions that Band warns could create "a lot of uncertainty" for customers of Siebel, Oracle and J.D. Edwards. And it's precisely this customer confusion that Salesforce.com is hoping to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. . "There's no certainty about the technology that the customer really invested in, and there's probably not a viable route forward for the products Siebel has," says Robinson of Salesforce.com, who worked at Siebel for seven years. RightNow Technologies also is banking on the acquisition of Siebel to bolster its profile. With 3,000 products around the world, Greg Gianforte, RightNow's CEO, says: "We're in the best position of any vendor really to capitalize on this leadership vacuum." There is, however, an upside to Oracle's acquisition rampage. Its most recent purchase puts an end to months of rumors surrounding Siebel's fate, especially as its sales dipped roughly 1 percent in 2004 to $1.3 billion, robbing the company of its top dog status after dominating the industry. Following this, Siebel posted a $50 million loss for the second quarter of 2005. With software behemoth behemoth (bē`hĭmŏth, bĭhē`–) [Heb.,=plural of beast], large, fanciful primeval monster, like Leviathan, evoking the hippopotamus mentioned in the Book of Job. Oracle at the helm, however, analysts suggest Siebel customers are likely to breathe at least a temporary sigh of relief. Although the biggest CRM market share gainers have been on-demand players such as Salesforce.com and RightNow, these smaller outfits still have a lot of catching up to do. According to Gartner, companies will spend more than $500 million on on-demand functions in 2005. However, despite market hype, these services are likely to account for less than 10 percent of business applications through 2010. "[On demand] certainly has a lot of mind share, but there's a real question about whether it will live up to its hype," says Forrester's Band. Being called into question is on-demand's promise of low-cost, low-risk service. Some analysts suggest that hidden fees stemming from product customization, set-up, subscription termination and custom training can easily drive up costs for unsuspecting users. And then there are the security concerns that arise from placing sensitive data such as customer account information in the hands of a third party. Without a clear CRM winner in sight, it's no wonder the battle for industry dominance has taken on a decidedly personal tone. These days, CRM's industry list of who's who Who’s Who biographical dictionary of notable living people. [Am. Hist.: Hart, 922] See : Fame reads just like a dog-eared Oracle yearbook featuring Benioff of Salesforce.com, Tom Siebel of Siebel Systems and Evan Goldberg of NetSuite, a San Mateo, Calif.-based CRM software provider in which Larry Ellison is a majority owner. All the Silicon Valley bravado and the pairing of industry titans Oracle and Siebel hasn't unnerved Salesforce.com. In response to Phillips' promise to "crush" its smaller competitor, Robinson responds: "It's a huge compliment that the president of the world's second-largest software company feels the need to go on record saying he's going to crush us. It says to me that we represent some sort of threat." Salesforce.com even sought to poach poach damage caused to sodden pasture by the hooves of cattle and sheep. In clay soils and when the ground is sufficiently wet the damage caused by a heavy stocking rate of sheep may be very high. Said also of the take-off in front of a jump in an equitation course or a race. Siebel's talent by offering a $5,000 signing bonus A signing bonus or sign-on bonus is a sum of money paid to a new employee by a company as an incentive to join that company. These are often given as a way of making a compensation package more attractive to the employee e.g. if the annual salary is lower than they desire. for any current Siebel employee hired before year end. As for Gianforte of RightNow, he counts himself fortunate to be among Oracle's outsiders. "I'm happy to not be a member of that dysfunctional family dysfunctional family Psychology A family with multiple 'internal'–eg sibling rivalries, parent-child– conflicts, domestic violence, mental illness, single parenthood, or 'external'–eg alcohol or drug abuse, extramarital affairs, gambling, ," he says. "There's been so much chest-beating and arrogance. At the end of the day, customers are sick and tired of it." While rhetoric may grab headlines, product innovation is most likely to attract new customers. It's for this reason that Salesforce.com recently unveiled the details of AppExchange, a new platform for the third-party development of applications around its software platform. Serving as an online community, AppExchange allows users to shop for, test and install on-demand applications using only a browser and Internet connection. "In its simplest form, AppExchange is an eBay or a Downloads.com for hosted software," says Bois of AMR Research. In the meantime Adv. 1. in the meantime - during the intervening time; "meanwhile I will not think about the problem"; "meantime he was attentive to his other interests"; "in the meantime the police were notified" meantime, meanwhile , Oracle is hard at work on Project Fusion This article or section contains information about scheduled or expected . The content may change as the software release approaches and more information becomes available. , a roadmap for integrating the technology the company has inherited by acquiring Siebel, Oracle and PeopleSoft. By designing a fully integrated product suite culled from a variety of vendors, Oracle hopes to entice users to eventually migrate over to Oracle technology. All of which is good news to today's companies. Enticed by technology that promises to strengthen customer relationships yet skeptical of the hype that has long surrounded the industry, they're poised to benefit from the dawning of a new CRM era. RELATED ARTICLE: Where is the CRM Market Headed and Who is Ahead? Projected Revenues (in billions) 2004 10.9 2005 11.5 2006 12.3 2007 13.2 2008 14.4 2009 15.7 Source: AMR Research, 2005 Note: Table made from bar graph. Companies by Rank 2004 Revenue Revenue* Revenue* Rank Company 2004 ($M) 2005 ($M) Share 2005 1 SAP 1,664 1,727 15% 2 Siebel 1,339 1,340 12% 3 PeopleSoft** 472 0 0% 4 Amdocs 369 424 4% 5 Dendrite 311 337 3% 6 Oracle 286 387 3% Total (incl. other CRM vendors) 10,902 11,443 100% *Forecast **Acquired by Oracle on December 28, 2004 |
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