CRM Vendors Cash In On The Financial Services Industry
The 1933 Glass-Steagal Act that prohibited the alliance of banks, securities
firms, and insurance companies was repealed in November of 1999. Its repeal
is creating opportunities for CRM vendors as well as for financial services
firms. Competitive pressures over the past 11 months have forced financial
services firms to broaden and reorganize their product offerings around
the needs of the customer. The reorganization also brings the need for
these large organizations to collect and share customer data across divisions
and other organizations. This has created a demand for CRM applications
that can meet the specific business requirements of firms in the financial
services industry. Siebel Systems, Broadbase Software, and E.piphany have
supplied applications to the financial services industry for some time,
but the increased demand for CRM applications and rising competition has
led to new business developments for each of these vendors.
Siebel Systems, Inc. (Nasdaq: SEBL) recently agreed to acquire Janna Systems
to enhance its Siebel Financial Services e-business product. Janna has
developed CRM software for the financial services industry since its inception
in 1990. Janna's strengths are in contact management and web-based self-service.
Siebel's eFinance product currently provides strong call center and lead
management functionality and the addition of Janna's web-based self-service
in particular will broaden Siebel's operational CRM offerings for financial
organizations. In a recent press release Siebel indicated that Janna technology
would be a fully integrated part of Siebel Financial Services 2001, which
will be commercially available sometime next summer.
E.piphany, Inc. (Nasdaq: EPNY) recently partnered with Deloitte Consulting
to deliver industry specific applications for customer analytics and campaign
management. Deloitte will develop and implement E.piphany applications
customized for Fortune 500 financial services organizations. This partnership
will provide the financial services industry with a strong analytical
CRM product. More information about E.piphany's products can be found
in TEC's analysis When
You Realized the Need for a Unified View of Your Customers, that is E.piphany.
Broadbase Software, Inc. (Nasdaq: BBSW) recently partnered with HomeCom
Communications, Inc. (Nasdaq: HCOM) to deliver analytical CRM applications.
HomeCom is a small Internet consulting and systems integrator with vertical
expertise in the financial services. HomeCom will develop and implement
Broadbase applications for financial services organizations. Broadbase's
strengths are in customer analytics and personalization. They also recently
agreed to acquire Servicesoft to develop applications for customer service
Continues to Expand).
Siebel's offering is likely to be very successful, in part because of
its strong brand. Furthermore, Siebel undoubtedly has the resources to
integrate the software from both companies into one offering and to promote
the product. Janna has a 10-year track record of developing applications
for the financial services industry, and has been operating profitably
for the past 9 quarters. Siebel purchased Janna to integrate its commercially
tested web-based self-service applications with Siebel's operational CRM
components such as call center management, field force automation, and
contact management (also commercially tested). This is a stronger commitment
than either E.piphany or Broadbase have made to date under their partnership
agreements. Their agreements do not require significant dollar investment
by the vendor to develop a product.
partnerships with systems integrators may indicate less commitment than
an acquisition and a branded product offering (i.e., Siebel Financial
Services 2001), E.piphany is fast becoming a distinguished leader in the
analytical CRM market, and Deloitte Consulting operates a large, successful
systems integration practice. Thus E.piphany should continue to remain
strong in the financial services industry.
a close competitor to E.piphany, has not enjoyed the sales growth and
media fanfare that E.piphany has, and its agreement with HomeCom is not
going to generate much attention. HomeCom is a small organization that
generated less than $7M in sales in 1999. Furthermore, HomeCom is unprofitable
and has watched its stock steadily lose over 85% of its value from mid-October
1999 to mid-October 2000. Thus it is highly questionable as to what kinds
of resources HomeCom will have available over the next 12 months to develop
and implement Broadbase products.
E.piphany and Broadbase are not in direct competition with each other.
Many applications in their product lines have significant overlap, but
Siebel's strengths are primarily in operational CRM while E.piphany and
Broadbase remain strong in analytical CRM. Therefore it is likely that
Siebel and E.piphany will each have room to be very successful in the
financial services industry. Broadbase needs to consider other business
development options if they plan to compete with E.piphany.
Firms in the financial services industry looking to implement CRM applications
should maintain a positive outlook on vendor product development. The
financial services firms represent a large market for CRM products, and
form Siebel's largest vertical industry segment. Financial services organizations
must keep in mind that Customer Relationship Management is a philosophy
for managing interactions with customers. The technology selection is
only one part of a CRM initiative. Thus, in order to make the right selection,
the strategy and resulting business requirements must be defined first.
it is time for a technology selection consider the relevant business development
activity of the vendor. Siebel and E.piphany appear to be making wise
decisions, but it is important for the prospective buyer to understand
what amount of customization is required, who is going to do it, and what
resources the vendor and the implementer have to ensure successful project