Home
 > Research and Reports > TEC Blog > CRM Vendors Cash In On The Financial Services Industry

CRM Vendors Cash In On The Financial Services Industry

Written By: L. Talarico
Published On: November 2 2000

CRM Vendors Cash In On The Financial Services Industry
L. Talarico - November 2, 2000

Event Summary

The 1933 Glass-Steagal Act that prohibited the alliance of banks, securities firms, and insurance companies was repealed in November of 1999.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
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
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
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 (see: Broadbase Continues to Expand).

Market Impact

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.

Although 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.

Broadbase, 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.

Siebel, 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.

User Recommendations

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.

When 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 completion.

 
comments powered by Disqus

Recent Searches
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z Others

©2014 Technology Evaluation Centers Inc. All rights reserved.