Vendors of enterprise relationship planning (ERP) software are campaigning on a platform of integration as they attempt to displace Siebel Systems Inc. as the de facto leader in the market for customer relationship management (CRM) systems.
While the latest figures have San Mateo, Calif.-based Siebel owning 45 percent of the overall CRM market, experts agree that ERP application makers, including SAP, Oracle Corp. and PeopleSoft Inc., are winning deals based on their message of integrated front-and-back office architecture.
According to Mary Wardley, vice president of the CRM application group at the research firm International Data Corp., Framingham, Mass., the market is swiftly shifting into a two-horse race.
"You have the Siebel perspective of best-of-breed versus the power of a fully integrated environment, the position of the ERP vendors," Wardley said.
The analyst believes that both perspectives carry a good deal of validity, though she recognizes that Siebel resides in a unique position, being so far ahead in terms of market share. Wardley points out that Siebel grew much of its following during a time when best-of-breed was the norm.
There are a huge number of companies that now subscribe to the integrated environment, she said, with many businesses giving weight to their legacy ERP vendors when they first begin looking at CRM. Yet this trend is still in its budding stages, the expert concluded.
"The jury is still out on whether the integrated enterprise suite environment is going to prevail, and if any one of those companies can eclipse Siebel," Wardley said.
One organization that has bought into the integrated ERP-CRM concept completely is Canada Post Corp., Ottawa, Ontario. Having recently carted off a CRM success award from market research firm Gartner Inc., Stamford, Conn., the government-owned postal agency is sold on the benefits of a single vendor.
Cal Hart, vice president of product management and business transformation at Canada Post, said that the organization's efforts with enterprise software from SAP have been nothing short of impressive. The executive estimates that Canada Post has redesigned more than 700 business processes since it began its CRM project in 1999.
"What you understand in using an ERP vendor to achieve better CRM is that you're probably giving up some functionality in the name of integration," Hart said. "But if you buy best-of-breed, you're left trying to integrate. In effect, you're creating the next generation of legacy systems for your company."
Hart said what has most impressed him with Walldorf, Germany-based SAP is the company's ability to rapidly close the functionality gap with vendors such as Siebel by pouring money into research and development. One example the executive gives of this growth has been SAP's ability to build stronger supply chain event management tools. Because SAP has been able to catch up with elements of Siebel's offerings over the last two years, Hart said he doesn't feel Canada Post has missed out. He estimates that integrating a CRM system from Siebel might have eclipsed that timeframe.
As an example of how owning an integrated ERP-CRM system has proved advantageous, Hart pointed to his organization's ability to quickly shift critical business processes such as pricing from a single point. Before shutting down some 83 disparate systems using ERP and linking to its CRM front end, the same task would have taken months and eaten up a number of employees' time.
Regarding pricing, the ERP vendors have been trying to leverage lower pricing in their battle to steal market share away from Siebel, but experts agree that the strategy has not aided this effort to a large extent. While their packages are often priced well below the market leader, it is accepted that the expense of adding much-needed customization often makes the original, lower cost of the ERP crowd less important.
Scott Nelson, vice president and research director at Gartner, said he believes that the ERP vendors have improved their position against Siebel, but he added that there is still a long way for these vendors to go.
"The ERP companies are definitely in a better spot," the analyst said. "Their product has more functionality and they've been able to overcome previous shortcomings. But not all clients want to go with the 'one throat to choke' approach, as they feel vulnerable having all of their eggs in one basket."
Nelson does not expect Siebel to lose market share to the ERP crowd in the near future. The analyst believes, however, that these companies will continue to challenge the market leader as the integrated CRM war cry resounds with potential customers.
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