InformationWeek

CRM products traditionally offer one of two solutions: automated sales, marketing, customer-service, and contact-management capabilities, or automated problem management via business process workflow. Although vendors are starting to add Web-based solutions to their CRM or sales automation gear, Aberdeen's Smith says these are mostly piecemeal solutions, and that's a big problem for businesses. "Once you start peeling the onion skins of the CRM wares, you see that they are either focused on campaign management, sales automation, or sending mass E-mail promotions," says ChemConnect's Bhargava, "None consolidates customer and partner activities over multiple communications media."

CRM vendors tend to address niche areas. For example, Clarify Inc. offers call-center capabilities; Kana Communications Inc. focuses on managing inbound E-mail and Internet-based communications; and BroadVision Inc.'s forte is in Web-based sales functions. Siebel Systems Inc.'s strength is in sales, marketing, and channel support, plus call-center service. The recent spate of mergers and acquisitions--such as Epiphany Inc.'s purchase of Octane--may help. The combined company will merge Octane's inbound customer-service products with Epiphany's analytical and personalization software to provide a more integrated CRM product than either could offer alone. The companies say they plan to support video and wireless media at some point. Likewise, the merger of Kana and Silknet is expected to fuse Kana's E-mail capabilities with Silknet's automated sales, marketing, and customer-service functions (see sidebar story, "Vendors Broaden CRM Offerings With Products, Mergers").

Until the marketplace evolves, companies are managing with what they have. For Watlow Electric Manufacturing Co.'s 100 sales engineers, a CRM system from SalesLogix Corp. is a step in the right direction. The $250 million St. Louis company assembles heating products with internal components from its eight factories in North America. Before the SalesLogix system, Watlow sales engineers had to telephone each of the manufacturing facilities to track orders. The system now automatically queries the factories to assemble orders for heating products, saving four hours every week. That equates to nine extra sales engineers, at an annual payroll expense of more than $1 million. Watlow's customers also get order status online on a daily basis, compared with the several days they previously had to wait for information. The CRM system runs on a SQL Server database and is linked to Watlow's AS/400-based business system. "CRM is the heartbeat of our organization because we use the package as our strategic, global sales, and marketing instrument," says Mike Butts, global sales technology manager at Watlow Electric.

Despite these benefits, however, Watlow Electric spent more than $1 million and slightly more than a year installing a customized version of SalesLogix's sales automation, contact management, and CRM systems. The company is also considering SalesLogix's Interact.com portal, which has just launched subscription services for several CRM functions. This will let Watlow link to customers over a secure Web site and share order status and customer-service interactions.

Indeed, online businesses are racing to install and implement Web-based CRM solutions. But as early adopters, many are finding that costs often start at hundreds of thousands of dollars and run into the millions, with implementation cycles of a year or more and lots of in-house development work.

Aberdeen Group says Internet commerce and the need to connect businesses with resellers, partners, and customers has stretched the scope of CRM. Companies are hungry for front-end applications that unify back-end business processes for better customer and partner traction. Aberdeen Group expects the market to meet these demands. For example, Siebel is in the process of adding CRM capabilities that encompass both partners and customers. CRM software licenses, which also include help-desk products, generated $2.5 billion in 1998 and is expected to reach $5.6 billion by 2002, Aberdeen Group says.

Forrester Research says business commerce over the Internet far outstrips activity in the consumer area, justifying the need for better CRM functions. While overall E-commerce sales for the consumer sector will grow from $39 billion in 2000 to $184 billion in 2004, the business-to-business market will balloon from $406 billion in 2000 to $2.7 trillion in 2004, according to Forrester Research.

Speed to market coupled with the cost and effort of implementing CRM is driving many small and midsize companies to application service providers. Westburne Electric Alberta, a $150 million wholesale distributor of electrical products such as switching gears and programmable logic controllers, needed to let its sales team follow customers' orders from the first sales call to implementation and after-support, says industrial sales manager Jim Lyske.

For Westburne, the benefits of an automated, comprehensive CRM system were evident as it moved from an Excel-and Word-based database about customer leads and orders. But Lyske found that doing the implementation in-house would take at least two months and cost more than $350,000. So Westburne chose FutureLink Corp., an Irvine, Calif., ASP that deploys Onyx Software Corp.'s Front Office CRM suite, for automated sales, marketing, and customer service.