Smart cookies: De-coding the customer

Smart cookies: De-coding the customer - If the next big software war is over customers, who is battling to be the Microsoft of the front office, CRM and service database?

by ANDREW WILEMAN
Last Updated: 31 Aug 2010

If the next big software war is over customers, who is battling to be the Microsoft of the front office, CRM and service database?

Can you do a quick recap on developments?

Front office means customer interaction and transactions - including, in the new e-conomy, web browsing, online transactions, e-mail and chat. CRM is 'customer relationship management' - software that automates the front office. To do CRM, you need a database of customer details and history.

CRM is very hot. The customer base and relationships are a company's most valuable assets - but most businesses do a poor job of tracking and exploiting them. And the internet and e-commerce are transforming the front office.

So who are the players in this new software war?

The winners of two previous software wars over the past 10 years, for the desktop and for the back office; and new players targeting the front office and CRM, particularly in combination with e-commerce.

The clear winner in desktop was Microsoft, with a dollars 400 billion market cap, and 90%+ market shares.

In the back office, the winner was Oracle, with a dollars 200 billion market cap, and a 60%+ share of large-enterprise databases. Coming up fast till recently was SAP, the leading vendor in ERP (enterprise resource planning) with a market cap peak of over dollars 60 billion and an 80% share of Fortune 500 ERP systems.

Who are the new front office and CRM players?

There are two camps. The first camp comes from the old pre-internet economy. They got started by automating field sales or telephone call centres.

The leader here is Siebel - set up in the early 1990s by Tom Siebel. Tom used to be Oracle's leading salesman, and has his eye on Larry Ellison's collection of private jets. Siebel now has a market cap greater than SAP (dollars 36 billion, compared with dollars 30 billion), on less than 20% of SAP's revenue.

Siebel has lots of competitors, such as Pivotal and Onyx in field sales automation, and Vantive, Clarify and Remedy in call centre solutions (actually, all these systems now handle field sales and telesales). But right now these competitors are eating Siebel's dust.

How about the second camp?

It's more interesting, and poses a greater challenge to Siebel and to the front office ambitions of both Microsoft and Oracle. It comes from the new worlds of e-commerce based and e-CRM.

E-commerce is innately very rich in customer interaction and customer data. It's easier to capture and store data (like transactions and customer details) digitally, and it's possible to get whole new fields of data, like where and how customers browse before they purchase. If human interaction is via e-mail or chat there's a full, self-generated digital record of the contact - unlike a phone call or a field sales visit. And, of course, you can use all this data to auto-generate e-sales and e-marketing campaigns.

Who are the leading players in the e-commerce front office or e-CRM?

First, vendors of content-and-transaction e-commerce systems: Broadvision and Vignette in B2C, Ariba and CommerceOne in B2B, and InterShop in both. Broadvision may be the best-known of this bunch, as the popular writer of 'one-to-one personalisation'.

Second, vendors of e-contact management systems (where there is usually some human interaction) like Kana, Talisma and Brightware. They started off in e-mail customer service but are now extending into chat, auto-response, self-help and voice-over-internet, and into sales and marketing.

Third, vendors of data mining and analytics software that helps businesses exploit their new e-commerce customer data - such as Epiphany. Are these players really contenders for the next dollars 100 billion software market cap?

The e-commerce market leaders listed above all have market caps in the dollars 5 billion-dollars 15 billion range. Add them up and you're at dollars 70 billion - and that's on a small revenue base today.

As another indicator, established giants like Microsoft and Oracle are spending mega media dollars branding themselves as CRM and e-CRM players. If you believe the ads, it can seem like the entire infotech industry has turned into CRM - even Cisco, the dollars 400 billion internet hardware plumber, has purchased a small e-CRM vendor, WebLine, and is claiming CRM space.

How is this war going to be won and who will win it?

Ah-ha. You need some tech stock winners after losing your shirt in the last few months.

Andrew Wileman is a strategy and organisation consultant; e-mail: wilemanae@aol.com.

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