Special Report: It's who you know, says Gartnerby
It's not what you know in the CRM market that counts, it's who you know, according to research firm Gartner, which argues that the viabilty of CRM vendors can be judged by the number of consultants and systems integrators specialising in them.
"Selecting the right external service provider (ESP) to assist with your CRM implementation can often be more of a challenge than selecting the application software," warns the research firm. "We advise [customers] to evaluate ESPs and applications in parallel."
Citing new research, Gartner notes: "A key criterion when selecting a customer relationship management (CRM) application vendor is the degree of support and availability of external consulting and systems integration skills. Some software vendors will tend to do much of the implementation work themselves, especially when establishing their credentials, whereas others will rely more on partners.
"Nonetheless, one way to establish whether there are available skills in the marketplace is to look at the number and size of projects done by consultants and systems integrators with specific CRM applications."
Gartner looked at a series of CRM projects that used external consultants and systems integrators such as Accenture, Capgemini, Deloitte and IBM Business Consulting Services (BCS) in the US, Europe and Asia Pacific. The results present an interesting view of the market that is not always at one with the perceptions left by vendor hype.
Siebel may be in the financial doldrums with its licence revenues in decline, but it continues to dominate the projects run by the largest consultancies - although even here the 2004 figure of 38 per cent was down year on year on 2003 and 2002. The largest consultants have built practices around Siebel since 1997, and the largest six consultants do more than 60 per cent of all Siebel projects.
Gartner research of Siebel reference projects in 2004 showed that 83 perent were implemented by consultants and systems integrators. To put that in context, Siebel is being rolled out four times as often as either SAP or Oracle.
But there’s a warning for Siebel as well. "We expect the percentage of Siebel-based projects to drop to mirror the volume of licenses sold since 2002, and because there is less Siebel "shelfware" now than in 2000 through 2003," predicts Gartner.
Perhaps the most surprising figure was that surrounding SAP which built much of its early success in the ERP field through its relationship with Accenture, then called Andersen Consulting. But despite claiming a revenue lead over Siebel, SAP CRM external consultant references came in a 9 per cent of projects surveyed.
This may be becuase SAP is doing more implementation work through its own consultants or indeed that SAP users are doing the work themselves. It's also possible of course that this is a manifestation of the long-held perception that much of SAP’s CRM revenue derives from bundled functionality that becomes shelfware.
But Gartner is more optimistic about SAP's prospects for 2006 and beyond. "Looking forward we can already see that the larger ESPs have most, if not all, of their SAP CRM resources tagged or billed out for projects. So it appears that, finally, some of the many long-awaited SAP CRM projects are getting under way, and the percentage of projects based on these technologies will rise slowly through 2008."
Oracle's external consultant projects are on a par with SAP at 9 per cent of the total, but again a lot of Oracle consultancy work is carried out by the vendor’s own specialists. Garter has good and bad news for Oracle. "During 2005, we expect Oracle to cause confusion with prospects as it grapples with the PeopleSoft acquisition, resulting in low, or no, growth in CRM project numbers," it argues. "We expect recovery in 2006 as Oracle's strategy becomes clearer and it benefits from one fewer competitor. We expect Oracle CRM skills to be in higher demand in 2006 and 2007, resulting in a slow ramp-up in ESP resources."
The surprise entrant in the ranking was Epiphany, soon to be acquired by SSA Global, whose compartively small licence fees still attracted a lot of big name consultancy attention. This is probably because Epiphany has not focused on building its own consultancy arm, but instead has focused on developing third party relationships.
Gartner had previously noted a 20 per cent increase in Epiphany resources in ESPs compared to 2004. If you want Epiphany skills, it adds, look to the systems integrators. "There are more skills available than there were 12 months ago," it notes, but adds the proviso: "Keep an eye on Epiphany; now that it has been acquired by SSA GT, there are implications for its future."
Bringing up the rear in the rankings was Amdocs, which was mentioned in less than two per cent of projects. More than 95 percent of Amdocs' revenue comes from services. Most trained Amdocs CRM resources appear to be with BearingPoint, Accenture and IBM BCS. "We expect the percentage of large ESPs mentioning Amdocs for CRM to decline," concludes Gartner.
As for the rest of the CRM 'names', four of the better-known vendors — Salesforce.com, RightNow Technologies, Onyx Software and Pivotal — were not mentioned by the references at all, implying that ESPs were not typically sought after for these applications or that skilled resources would have to be found within the vendors themselves.
Significantly two of these vendors play in the on demand space. "The on-demand business model is predicated on having fewer ESP resources than for traditional software deployments," noted Gartner. "So, it is unsurprising to see no references to Salesforce.com and RightNow. Both have started to succeed in selling to large enterprises in the past 12 months, but the time frame for the reference projects precedes these successes."