NEW YORK -- On Tuesday, a top executive at Siebel Systems Inc., laid out the company's vision for CRM's "second chapter."
In a keynote address at CeBIT America, executive vice president David Schmaier said the industry is about to turn a corner.
"We're [currently] in chapter one of a 20-chapter book on CRM," Schmaier said, spotlighting four concerns that will dominate the market's next phase: hosted software, total cost of ownership, application integration and business insight.
Not surprisingly, Siebel has software to address each of the imperatives that Schmaier outlined.
Schmaier said that hosted software lets smaller companies benefit from CRM without a big upfront investment or a long, complex rollout. He added that hosting also allows larger businesses to extend CRM to satellite offices.
"Our vision is what we call 'CRM for everyone,'" Schmaier said.
Last fall Siebel introduced Siebel CRM OnDemand, low-cost software that IBM hosts. To bolster its strategy, Siebel acquired application service provider UpShot Corp., integrated OnDemand with its existing on-premise applications and created a path for customers to move from hosted to on-premise deployments. Two weeks ago, Siebel introduced versions of its hosted software designed for specific vertical markets.
That vertical push is part of the second trend that Schmaier cited: lowering the total cost of ownership. Companies will obviously get bigger returns on their CRM investment if the software is easier to install and configure and costs less to maintain.
To that end, Siebel has introduced nearly two dozen versions of its software designed for specific markets. Because these applications support common business practices in individual industries, companies don't need to customize as much.
"I would argue that there's no such thing as a vanilla CRM market," Schmaier said.
Ironically, one Siebel customer listening to Schmaier's address may abandon the San Mateo, Calif.-based vendor in an effort to move more vertically. Siebel inherited the Texas Credit Union League, a trade association for credit unions in Texas, in its UpShot acquisition.
Now, the Farmers Branch, Texas-based firm is wondering if it would be better served enhancing its association management system with applications designed specifically for its market and dropping the hosted UpShot software that its remote employees use.
"Would Siebel enter [ the trade association ] market?" said Bill Braun, Texas Credit Union League vice president of information systems. "It would be great if they would, but it may be too small for them."
Today's challenges, tomorrow's answers?
Other users are struggling with integration, another key challenge that Schmaier said would define the industry in the future.
Walter Dyer III, deputy director of CRM for the U.S. Department of the Navy's Navy Marine Corps Intranet, doesn't buy into any one vendor's strategy but said integration is a big concern. Functional leaders within the Navy are charged with consolidating applications and tying existing systems together.
"Every time they turn over a rock, they find two more [applications]," Dyer said.
In fact, Schmaier said some Siebel customers run as many as 5,000 different systems and struggle to gain a single view of their customers. Without a common definition of each customer, businesses can't effectively cross-sell and up-sell, he said.
Schmaier endorsed a standards-based architecture for business integration and offered Siebel's customer data integration technology, Universal Application Network, as evidence that "this is now a solvable problem."
On the analytics front, Schmaier said the market has mushroomed from its roots delivering simple reporting tools. Going forward, companies will demand software that arms workers with predictive information as they prepare to interact with customers.
Analytics is now Siebel's second largest business unit. Like other providers, it is creating software that aims to be simple enough for everyday users.
"I've yet to find a head of sales who understands something called SQL," Schmaier said.
Changes at Siebel
In his address, Schmaier did not make mention of the recent leadership change at Siebel. Earlier this month, company founder Tom Siebel stepped down as CEO and handed the reins to former IBM sales chief J. Michael Lawrie.
Some have speculated that though he will now serve as chairman of the board, Siebel's departure from day-to-day operations will lead to an executive exodus. Tom Siebel was scheduled to deliver today's keynote but bowed out, citing a last-minute scheduling conflict.
Few were surprised by the CEO change, which comes at a time when Siebel is facing increasing competition. On the on-premise software front, ERP providers like SAP AG are stepping up their CRM efforts. In the hosted arena, competitor Salesforce.com got off to a big head start, has more than 9,500 customers and is set to go public.
People, process and technology
Still, Schmaier said much of the market remains up for grabs. He said fewer than 5% of all companies currently run packaged CRM software and said internally built systems account for the majority of the industry's estimated $23 billion worth.
Schmaier also addressed the notion that CRM simply doesn't work. Some analyst reports have suggested that as many as 70% of all projects don't deliver.
Schmaier touted a February study from International Data Corp. in Framingham, Mass., that found 82% of companies generated a 50% or greater return on their CRM investment.
"We think that CRM does work," he said.
Schmaier emphasized that CRM thrives when companies set measurable business goals, get executive support and install software in a phased approach.
"If you do anything 4,000 times, you really get a lot of wisdom on how to do it," said Schmaier, referring to the number of Siebel CRM deployments. "Some of this is fundamental IT project management."