According to many recent reports in the press, it appears that Xchange, Inc., once one of the leading marketing automation and analytics providers, has very recently closed down its operations. Part One of this note discussed the specifics of the Xchange demise and related it to the changing nature of the ERP market. It also noted that almost all traditional ERP vendors (small and big alike) had to experience a �wake up call' and have long been trying to expand their product offering in tune with the ever-changing trends and requirements of the new collaborative economy.
To that end, over the last few years, all significant enterprise applications players have been actively partnering or finding other ways to provide solutions that allow businesses to collaborate more effectively. Consequently, the boundaries between ERP, CRM, e-commerce and SCM have meanwhile blurred so much that any attempt to functionally separate them becomes ever more pointless. If the ultimate objective is to win and retain customers, one must consider the entire chain, which includes traditional ERP and SCM functions as well as the once considered more remarkable and supposedly more relevant CRM and e-commerce activity
The cycle begins with the attraction of the customer through sales and marketing. This hopefully results in an order management and fulfillment process and ends with a customer service, which can involve anything from field installations through to enquiry and complaint management. All of these steps have to be executed well without exception. Otherwise, the customer will end up on a competitor's list of customers. Therefore, the relative importance of CRM vs. ERP, ERP vs. SCM or of any other match-up is irrelevant. All of these functional areas are critical, except for some esoteric or autistic businesses that can go by with implementing islands of information. The 64,000-dollar question is how all business processes work together. In the electronic world, the degree of flexibility and efficiency of collaborative processes relating to the customer lifecycle, product lifecycle, and so on, to name but a few, will be a big determinant of losers and winners.
Incidentally, Applix, with its recent exit from the CRM market (see Will A Big Fish's Splash Cause Minnows' Flush Out Of The CRM Pond?), may exemplify the other side of the CRM medal nowadays, as droves of smaller pure CRM vendors have been hard pressed to survive owing to the combined effect of CRM users' disenchantment with the products' hardly ever materialized benefits, after a hasty infatuation with its touted �silver bullet' mantra (which once also happened to its older sibling ERP's users), compounded with the tight IT budgets due to the worldwide economic recovery delay and with Microsoft's entry into already crowded place. Although many mid-market pure-CRM solutions have been maturing and improving, they must continue to facilitate integration with back-end systems, given the increasing awareness of this need for full-fledged benefits of CRM. Further, they must also provide the differentiation through verifiable return on investment (ROI) metrics, and indispensable features and functions germane to selected industry verticals.
Despite these niche CRM vendors' attempts to overcome these challenges, many will continue to struggle to avoid insolvency, while the luckier ones that have some attractive point solutions (e.g., partner relationship management (PRM) or portal solutions) that large enterprise vendors would still gladly incorporate will become acquisition targets. Although Xchange might have held out longer than most of its peers after the dot-com bust, it is a crumb of comfort to its stranded customer base now. Its predicament has been only aggravated and expedited by the company's public nature, given that some of its privately-held competitors have not had to come out with an array of dismal results and thereby further feed investors' bad sentiment and pessimism.
Larger CRM vendors have, on their hand, been weathering the storm by relying on cross-selling broader CRM application suites to their existing and potential customers, involving also components such as Sales Force Automation (SFA), employee relationship management (ERM) or call centers. Marketing automation point solution providers have particularly fallen prey to pessimistic investors and diminishing global corporations' appetites for technology. They have taken the impact of the slowdown because of a more budding market yet to create the market awareness of its true value proposition, and because of the slower adoption of information technology in marketing departments. These applications will have also often been perceived either as luxury (a �nice to have' but not show-stopping) applications in these days of anyone hardly having any customers at all, or, in cases of customers valuing the proposition, they might be much more inclined to obtain it as a part of a broader CRM suite (if not even from an ERP provider) rather than as a point solution. Thus, the need for providing a full, comprehensive CRM suite rather than an individual solution or a bundle of point solutions for each distinct CRM area remains firm, and will urge further CRM (and overall enterprise applications for that matter) market consolidation.
Why has it been so difficult for CRM point solution providers to even find a white knight, which has not generally been the case with even ancient ERP products? With several generations of some ERP products being available over a long period of time, the product development costs have been spread among a large population of users. These annual service & maintenance fees thus represent a substantial portion of revenue for most ERP vendors, and even if the product has not been actively marketed any longer, that revenue stream is going to be attractive to someone, if not to the original developer. This large installed base also allows for a greater aggregated vendors' experience, resulting thereby in higher-quality tried-and-true products.
The untapped ERP market segments will have also benefited by vicariously learning from mistakes and failed ERP implementations in many commercial companies in the past. Additionally, many ERP systems are now componentized, which provides phased implementations in more manageable chunks (instead of a traditional 'big bang' approach) in addition to vendors' developed implementation methodologies that are based on bypassing the usual traps of past failures. Many ERP systems have meanwhile also been Internet-enabled, which also allows for a quicker and simpler implementation, because client machines do not have to be configured time and again. Consequently, a prospective customer also has a choice of either installing software on its own intranet or renting it via an application service provider (ASP). Further, the leading ERP vendors have incorporated CRM, SCM, e-procurement and business intelligence (analytic) modules by developing them in-house, by acquisition or through strategic partnerships with the best-of-breed vendors.
To that end, over the last few years, all significant enterprise applications players have been actively partnering or finding other ways to provide solutions that allow businesses to collaborate more effectively. Consequently, the boundaries between ERP, CRM, e-commerce and SCM have meanwhile blurred so much that any attempt to functionally separate them becomes ever more pointless. If the ultimate objective is to win and retain customers, one must consider the entire chain, which includes traditional ERP and SCM functions as well as the once considered more remarkable and supposedly more relevant CRM and e-commerce activity
The cycle begins with the attraction of the customer through sales and marketing. This hopefully results in an order management and fulfillment process and ends with a customer service, which can involve anything from field installations through to enquiry and complaint management. All of these steps have to be executed well without exception. Otherwise, the customer will end up on a competitor's list of customers. Therefore, the relative importance of CRM vs. ERP, ERP vs. SCM or of any other match-up is irrelevant. All of these functional areas are critical, except for some esoteric or autistic businesses that can go by with implementing islands of information. The 64,000-dollar question is how all business processes work together. In the electronic world, the degree of flexibility and efficiency of collaborative processes relating to the customer lifecycle, product lifecycle, and so on, to name but a few, will be a big determinant of losers and winners.
Incidentally, Applix, with its recent exit from the CRM market (see Will A Big Fish's Splash Cause Minnows' Flush Out Of The CRM Pond?), may exemplify the other side of the CRM medal nowadays, as droves of smaller pure CRM vendors have been hard pressed to survive owing to the combined effect of CRM users' disenchantment with the products' hardly ever materialized benefits, after a hasty infatuation with its touted �silver bullet' mantra (which once also happened to its older sibling ERP's users), compounded with the tight IT budgets due to the worldwide economic recovery delay and with Microsoft's entry into already crowded place. Although many mid-market pure-CRM solutions have been maturing and improving, they must continue to facilitate integration with back-end systems, given the increasing awareness of this need for full-fledged benefits of CRM. Further, they must also provide the differentiation through verifiable return on investment (ROI) metrics, and indispensable features and functions germane to selected industry verticals.
Despite these niche CRM vendors' attempts to overcome these challenges, many will continue to struggle to avoid insolvency, while the luckier ones that have some attractive point solutions (e.g., partner relationship management (PRM) or portal solutions) that large enterprise vendors would still gladly incorporate will become acquisition targets. Although Xchange might have held out longer than most of its peers after the dot-com bust, it is a crumb of comfort to its stranded customer base now. Its predicament has been only aggravated and expedited by the company's public nature, given that some of its privately-held competitors have not had to come out with an array of dismal results and thereby further feed investors' bad sentiment and pessimism.
Larger CRM vendors have, on their hand, been weathering the storm by relying on cross-selling broader CRM application suites to their existing and potential customers, involving also components such as Sales Force Automation (SFA), employee relationship management (ERM) or call centers. Marketing automation point solution providers have particularly fallen prey to pessimistic investors and diminishing global corporations' appetites for technology. They have taken the impact of the slowdown because of a more budding market yet to create the market awareness of its true value proposition, and because of the slower adoption of information technology in marketing departments. These applications will have also often been perceived either as luxury (a �nice to have' but not show-stopping) applications in these days of anyone hardly having any customers at all, or, in cases of customers valuing the proposition, they might be much more inclined to obtain it as a part of a broader CRM suite (if not even from an ERP provider) rather than as a point solution. Thus, the need for providing a full, comprehensive CRM suite rather than an individual solution or a bundle of point solutions for each distinct CRM area remains firm, and will urge further CRM (and overall enterprise applications for that matter) market consolidation.
Why has it been so difficult for CRM point solution providers to even find a white knight, which has not generally been the case with even ancient ERP products? With several generations of some ERP products being available over a long period of time, the product development costs have been spread among a large population of users. These annual service & maintenance fees thus represent a substantial portion of revenue for most ERP vendors, and even if the product has not been actively marketed any longer, that revenue stream is going to be attractive to someone, if not to the original developer. This large installed base also allows for a greater aggregated vendors' experience, resulting thereby in higher-quality tried-and-true products.
The untapped ERP market segments will have also benefited by vicariously learning from mistakes and failed ERP implementations in many commercial companies in the past. Additionally, many ERP systems are now componentized, which provides phased implementations in more manageable chunks (instead of a traditional 'big bang' approach) in addition to vendors' developed implementation methodologies that are based on bypassing the usual traps of past failures. Many ERP systems have meanwhile also been Internet-enabled, which also allows for a quicker and simpler implementation, because client machines do not have to be configured time and again. Consequently, a prospective customer also has a choice of either installing software on its own intranet or renting it via an application service provider (ASP). Further, the leading ERP vendors have incorporated CRM, SCM, e-procurement and business intelligence (analytic) modules by developing them in-house, by acquisition or through strategic partnerships with the best-of-breed vendors.
No comments:
Post a Comment