CRM is a major part of Oracle's future
User needs are changing
On Demand is the fastest growing business
Social CRM is still for experimenters
Social CRM is for experimenters, claims Oracle's Anthony Lye, but it's just one aspect of the changing face of CRM. Stuart Lauchlan finds out what else is in store and how Lye expects Oracle to meet demand.
“It's a good time to invest,'” declares Anthony Lye, Oracle's senior vice president of CRM, echoing the increasingly familiar sentiment that a recession is a terrible opportunity to miss out on.
“This is my third slowdown. There was the 1990s, then the techology slow down, now this one. What's different this time is that people recognise that CRM can play a significant role in making you different,” he argues. “That's largely because products and services have become commoditised so companies need to differentiate around customer service. Downturns represent both opportunity and threat around customers, but those companies that do invest will do significantly better than those who do not."
Lye reckons he sees this in the increased contribution CRM is making to the overall Oracle performance. “CRM has become very important to us as Oracle,” he says. “The Siebel and CRM On-Demand products account for more than 90% of our CRM business at Oracle – this year CRM will be bigger than eBusiness Suite. It will be the third largest year in Siebel history, better only by the two dot.com bubble years.”
CRM has become cross-channel
But he does see the nature of CRM changing. “One big change is that CRM has become cross-channel. It's no longer good enough just to support one channel. Customers may start their engagement with you on one channel, switch midway and then end up on another. They may use the internet to do their research, but want to pick up the goods immediately in a store.
“Loyalty has become a major differentiator. If you go to Starbucks, they have had not idea who you are, who their customers are. You were a piece of cash that was handed over in a particular store. But they saw the competition coming from firms such as McDonalds. Now they've introduced loyality cards at the point of sale so you're going to see a lot more attention from Starbucks to you as an individual, providing you with incentives to keep you loyal to their products.”
Another key trend that Lye argues is coming through is the concept of Social CRM – combining social networking technologies and techniques with CRM – although it seems questionable how much mass adoption this can get in an economic downturn where spending is tightened.
“Social CRM is still very much an area for the early adopter. It's an area to be experimented with,” admits Lye. “But we are working with a lot of companies, such as Swedish Rail, who are getting beyond the proof of concept stage. As a company, you need to look at your overall technology budget and decide how much do you want to spend on the stuff that makes you the same as everyone else and how much on the stuff that will make you different."
But he adds: “Innovation doesn't have to be something wildly different. You can take a lot of Oracle software and use it to reduce your costs. You can look at the custom stuff that you have in-house and ask whether you should be building this stuff or whether you should buy it off the shelf. In some cases, a better short-term thing to do is to ensure that you are running things in the most efficient way you can. Remember, innovation on the boring stuff is still innovation.”
For Oracle, there also some expedient and, at first sight, curious leanings emerging. “We've been working very hard over the past 18 months to integrate our CRM into Microsoft Outlook so that you never have to leave Microsoft Outlook to carry out the functions of CRM. According to the Microsoft Outlook people we've spoken to, our Microsoft Outlook editions are about seven years ahead of the Microsoft Dynamics edition. It's a very significant step forward for us and for users,to be able to offer CRM processes inside tools like that, with which they are very familiar,” says Lye.
Doesn't that represent a double-edged sword? After all, Microsoft is among the companies that Oracle most definitely doesn't want to encourage customers to get too close to. By offering Oracle CRM through the likes of Outlook, isn't that effectively endorsing Outlook? “Well, Outlook is a very widely used piece of technology,” suggests Lye. “We definitely see having co-operation between our CRM and Microsoft Outlook as being important, although we continue to see ourselves as very different.”
It's also seen as very important for Microsoft, where the Dynamics CRM team pitch the Outlook look and feel as a major selling point. “Microsoft CRM is very weak in many different areas,” insists Lye. “If the Outlook user interface was ever a differentiator for Microsoft, it isn't now. What people value most is the back end; the single source of truth; the loyalty programmes – all the things that Microsoft can't do.”
SaaS as a burden
That would include multi-tenant software as a service (SaaS) presumably, which Lye says is bringing its own benefits to Oracle. “CRM On Demand is being seen throughout the enterprise,” he argues. “SaaS in its first incarnation was designed for smaller interactions. We assumed it was for smaller firms who didn't buy enterprise software. It's now being deployed at very large organisations, most commonly in sales but also in service.
However, he warns: “We are seeing cases where the SaaS deployment after 6-8 months is being seen as a burden. It came in through the line of business for various reasons but then, after six months, those lines of business went back to IT and needed to have it integrated with the other systems. That ends up costing more than the original SaaS. That's why we combine CRM On Demand with very strong integration, building connectors between CRM On Demand and Siebel.
So why are people buying into On Demand? Is it the 'cheaper upfront cost' that SaaS enthusiasts constantly pitch as a main driver for adoption? “People are buying it for a variety of reasons,” reckons Lye. “They buy it because they're happier having a simple solution that isn't considered core but will support what people consider core. Sometimes they buy it where there is an immediate need and don't necessarily see it as being more than a short term decision.
“No-one comes to me and says they do it because it's cheaper, because they realise that long-term it won't be. The only people who say that SaaS is cheaper is Salesforce.com. Cost is usually a function of IT, so you need to ask whether IT thinks it wants to and can be great at something or not. If you believe that CRM is something unique to your company, then you keep it on premises. Hewlett Packard, for example, is damn good at on-premise CRM. They can explain that their cost of running CRM on-premise versus on-demand crossed over at year two!”
Making new enemies?
It was notable in Oracle's recent financial results announcements that CEO Larry Ellison held back on some of his usual fire towards the likes of SAP and Microsoft, focusing instead on Salesforce.com. Is this to be the new world order of public enemies for Oracle? “I don't really think we have public enemies; we have market opportunities and we want to do the best we can,” insists Lye. “Clearly, we are number one in CRM, although our friends in Germany [SAP] claim to be number one based on the amount they sell. But implementing is different to shipping....
“Oracle provides solutions that are aligned to buyers and their needs. Larry's famous comment is that if you show him one buyer, he'll show you one seller. We want to make sure that we are aligned with the buyers who are buying into on-demand. By Larry's definition, Salesforce.com is the largest on-demand vendor and we want people to recognise that we are a big player in that space. As he said, we now win more than we lose when we bid for on-demand contracts. But we're not really going after the same business. We want to service people who see software as strategic. If you don't see software as strategic, then Oracle is not the best company to service you.”
Does that explain Ellison's antipathy to the term Cloud Computing? 'It's too broad a definition,” says Lye. “It means everything and nothing. We have a data centre so does that make us a Cloud Computing company? You can provision Fusion Middleware on Amazon.com - that's not our Cloud, but does that make us a Cloud Computing company? I don't know. We just want to meet the needs of our customers.”