Marquee Vendors Partner for Deepening Inherent CRM and BI Links

Event Summary

The strong connection between business intelligence (BI) and customer relationship management (CRM) is being recognized by companies and vendors alike. In order to extend the customer life cycle and meet customer needs, enterprises are looking beyond mere call lists and focus group information. They are seeking to exploit the vast amounts of information they already have on their customers, in order to build more effective marketing strategies, retain profitable customers, and let go of customer liabilities. Leveraging predictive analysis and other analytics, will enable enterprises to drill deeply into customer and market segmentation and improve product lifecycle management (PLM) to possibly reduce operating costs, enhance customer loyalty and lifetime value, and increase profitability.

Perhaps the tightest connection between CRM and BI can be seen in marketing automation (MA). MA involves analyzing and automating the marketing process to better allocate resources into various activities, channels, and media to build and enhance profitable customer relationships. This moves beyond traditional metrics to incorporate data cleansing, analysis tools, and campaign management systems (see the article Why Are CRM and Analytics Intrinsically Connected?)

Despite the complementary nature of CRM and BI, the implementation of MA has been stunted by slow markets and pessimistic investors. MA point solutions are often seen as luxuries when compared to broader CRM or enterprise resource management (ERP) solutions. Thus, vendors in CRM and BI, respectively, are building alliances in order to gain market share and illustrate the value of MA.

For example, SAS Institute, the world's leader in BI, in particular has been busy forging partnerships. It announced a global strategic alliance with Amdocs, a global telecommunications leader, to help communications service providers (CSP) unlock valuable intelligence from underlying operational systems. The alliance promises to leverage Amdocs' telecommunications industry expertise and established operational applications and SAS' predictive analytics and profitability software to give CSPs a combination of strong analytical software, business consulting, and implementation services. Together, Amdocs and SAS have created a Customer Profitability and Segmentation solution, and Amdocs will encourage its campaign management customers to migrate to SAS' Marketing Automation 4 offering. Customers will also be offered the SAS Telecommunications Intelligence Solutions.

For a detailed discussion of Amdocs see Amdocs Overhauls Its Marketing. For a detailed discussion of SAS see SAS: Striving To Sustain Leadership.

In addition to its strategic alliance with Amdocs, SAS has also announced that it will incorporate Aprimo Marketing Suite into SAS Marketing Automation. Aprimo pioneered the concept of marketing resource management (MRM), which centers on tracking marketing resources, including budgets and marketing skills to generate effective marketing strategies—a crucial activity given an age of shrinking budgets in marketing departments. It combines workflow capabilities for assigning tasks and triggering alerts and knowledge management (KM) to comply with marketing best practices.

The "name game" is also coming into play as vendors try and differentiate themselves from the competition to show the depth and coverage of their point solutions. For example, Aprimo and Unica refer to their products as enterprise marketing management (EMM) solutions to illustrate that their solutions surpass the limits of MA to offer tighter control over projected budgets, planning, and execution. Aprimo, in particular has created a Web-based software product that is designed to interface with and enhance ERP and CRM systems. To date, the company seems to be successful, as it boasts the Bank of America, Alticor, and Ernst & Young as among its clients. Unica also claims an impressive list. Its clients include AmBank, Halifax Bank of Scotland, and Best Buy. For more information on Aprimo and Unica, see Can the Market Sustain a Stand-Alone EMM? and Should Uniqueness Vouch for Marketing Automation Niche Players?

Marketing Automation Consolidation

Given the difficult market climate, only a few MA providers remain. Unica, Aprimo, MarketSwitch, and MarketSoft, have footholds in the market, but its questionable how steady their footing is. Acquisitions are abound as the strongest solution providers look to broaden and enhance their current offerings. The acquisition of Annuncio by PeopleSoft (which itself was acquired by Oracle, proving that anything is fair game in the IT sector) (see PeopleSoft Annuncio-es Continuation Of Its Shopping Spree); MarketFirst by Pivotal; Protagona by DoubleClick; Point Information Systems by S1 Corporation; DataSage by Vignette Corporation; Prime Response by Chordiant, and the merger of Kana and Broadbase (see The Mid-Market Is Consolidating, Lo and Behold), indicates the diminished life expectancy of independent CRM point solutions providers.

Blue Martini Software has also fallen into consolidation. Blue Martini is a provider of sales optimization systems, and has recently boosted its analytical capabilities and bringing its new functionality to the forefront of its latest product suite. In May, 2005, Blue Martini announced that it will be acquired by Multi-Channel Holdings, which is a privately-held Golden Gate Capital portfolio company and the parent entity of multi-channel retail software vendor Ecometry, which is a predominantly retail-mail-order-oriented company. Multi-Channel Holdings was likely attracted to Blue Martini by the opportunity to round out its retail portfolio with a B2C e-commerce solution.

Blue Martini's strategy has changed many times. The company began as an e-commerce application vendor for business-to-business (B2B) and business to consumer (B2C) businesses with an on-line presence. However, it started to develop products as a multichannel CRM suite vendor, intruding even into the dubious partner relationship management (PRM) realm (see What Does the Future Hold for PRM?). In 2002, with the purchase of Cybrant, Blue Martini entered B2B, on the sell-side of e-commerce, because Cybrant provided the configuration for guided-selling functionality. From there, Blue Martini then narrowed its focus to only two industries—retail and manufacturing. In 2004, the company backpedaled its positioning as a CRM suite provider to focus on interactive selling optimization, mainly due to declining business in e-commerce and CRM markets. Before being acquired, the vendor shifted focus away from its traditional B2C e-commerce positioning into more generic support for all selling channels, such as mobile sales, and will now likely focus only on retail.

Other Prospective Industries for Alliance

MA solution providers are searching for different markets to peddle their wares. Financial services is a promising target as their need for strong customer service capabilities is clear. They have millions of customers generating significant transaction volume each month, and consequently, focuses even greater resources on customer support than the telecommunications industry. Testing this market opportunity is Amdocs. Amdocs' offers an integrated customer management strategy that should be well-suited for this industry. ABN AMRO, a Dutch bank, recently selected Amdocs to join its efforts to modernize and consolidate its transactional systems for its business and consumer retail banking customers in the Netherlands. The Amdocs solution will integrate information from disparate systems onto a single, unified platform, allowing the bank to launch new bundled services and cross-product price plans and discounts, reduce operating costs and time to market for new services, and increase efficiency, all while improving the overall customer experience.

Deregulated gas and electricity (and even waterworks to some degree) energy and utility companies, may also be a viable market for MA providers. Utilities companies are now operating in a competitive, dynamic environment that is quite different from what it faced previously as a near-monopoly. In particular, the introduction of a dynamic trading market for energy has meant price fluctuations that puts a strain on the internal resources of energy companies.

Additionally, the new open markets has resulted in merger and acquisition (M&A) activity, so now there is substantial foreign ownership of utilities in many developed countries. Furthermore, utility firms now need to optimize those expensive IT assets that they have acquired in the pre-Y2K rush, since they now want a single view of their customers and what they are buying. Ultimately, this comes down to merging IT systems, billing systems in particularly. Needless to say that multi-utility billing is technically more complex than single-item billing. At this stage, many companies providing multiple services have not achieved a single customer view to provide a single bill for different services. Consequently, there is a high degree of focus on CRM, whereas another major market driver has been the implementation of new trading arrangements within the energy sector. This has exposed traditionally slow moving energy companies to the need for real-time data, as they are finding that errors cost real money due to penalizing contracts.

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