InformationWeek

September 4, 2000

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CRM And Call Centers Get Together

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More on call centers:

sidebar: CRM And Call Centers Defined

IP Telephony: Cosmic Call Center (6/19/00)

Tele.com Center of Attraction (6/26/00)

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But stiff competition will come from overseas. Alcatel recently bought call-center vendor Orda-m and computer telephony integration software developer Genesys Telecommunications Laboratories Inc. Alcatel has several years' head start in the call-center market, which could make it more appealing to customers than Nortel and Lucent, which are relying more on acquired or borrowed expertise in this area.

Which vendor emerges as the leader depends on the products they produce. Gartner Group research director Colleen Amuso says her clients are most intrigued by alliances between companies with truly complementary products, such as Siebel and IBM. But alliances that may involve overlap, such as Cisco and Oracle, worry them because they're not sure whose vision will dominate.

"Companies are going to have to weigh whether it's just a press-release partnership or a real technology integration with dollars behind it," she says. "It actually creates a bit more confusion in the marketplace."

Adding to that confusion are several smaller vendors. E.piphany and Kana Communications Inc. were among last fall's hottest initial public offerings, but now they face heavy competition. E.piphany acquired CRM competitor Octane Systems Inc. earlier this year, and incorporated its technology into E.piphany E.5 CRM. Kana has followed the same strategy, acquiring Silknet Software Inc. in February and combining their complementary E-mail response and customer-service applications. Kana and E.piphany also have partnered with Cisco, which could lead to interesting telephony-based enhancements. For example, Cisco engineers are working to help E.piphany enable new communications links within its E.5 product.

IT managers shouldn't overlook smaller vendors, particularly those that forge partnerships with other vendors and target vertical markets. "For companies like ours, one criteria in choosing CRM software is whether it has a vertical market solution for your industry," says Mick Meckler, VP of IT at Capital Blue Cross in Harrisburg, Pa. Meckler is considering FirePond Applications Suite from FirePond Inc., in part because it offers a support unit focused on health care and insurance. Capital Blue Cross should be able to integrate its existing modules from E.piphany and Oracle--a combination that should work well because both have alliances with FirePond.

IT managers have another choice, too--business-intelligence vendors such as Informatica, MicroStrategy, and NCR. They collect and aggregate customer data from several sources, but unlike E.piphany E5 or Kana's eBusiness Platform, they don't automatically turn information into action. Still, CRM vendors are eyeing their expertise hungrily. Siebel, for example, recently said that it will be using Informatica's analytical software in its eBusiness suite.

Businesses that don't want to buy and manage a CRM�call-center package could consider using an application service provider. All of the major CRM�call-center vendors have ASP deals, but analysts warn that overreliance on an ASP strategy could be a mistake. "Although vendors like Onyx Software are spending a lot of time developing their ASP strategies, much of the ASP business is going to niche players like FaceTime, RightNow, and eGain that specialize in things like Web-based communication and E-mail response management," says Gartner Group's Amuso.

Onyx, which includes CRM capabilities in its Onyx Front Office 2000 product, is allied with Alcatel and Siebel, among others. As E-mail and Web communications support is fully integrated in next-generation CRM�call-center products, ASPs may have even less importance for major customers.

For example, Nortel is hedging its bets by creating a special unit to go after ASPs, but doesn't consider them a primary channel. "It's just away to keep our toes in the water," says Davis. "Our direct sales model is too expensive for going after the middle tier, but this ASP organization is a way to do that."

PeopleSoft Inc., on the other hand, is pursuing an ASP-centric strategy, which generally appeals to midsize businesses. Says Davis, "It looks like they're giving up, saying, 'Leave the enterprise level to Siebel and Clarify, and focus on a different market.'"

PeopleSoft would seem to have a natural advantage in its well-developed enterprise resource planning software, which was bringing together data from multiple departments long before CRM became a hot concept. However, with its CRM strategy heavily invested in ASP delivery, it may be out of the running for larger customers that prefer to keep these functions in-house, analysts say.

The ASP model raises the issues of trust and performance. Companies may have trouble handing over sensitive customer data to an outside service provider, especially when companies have concerns about data security. Additionally, call-center functions require solid reliability, which ASPs often can't guarantee. "You may think you've contracted with one ASP, but you may really be working with five. Maintenance may be by another group, and your data may end up on a server elsewhere," says Amuso, adding that the primary factor in favor of using ASPs for CRM�call-center functions is that companies can lower the high cost of building these systems in-house.

Deciding which type of vendor to use isn't easy. Some say telecommunications vendors may have an edge, and the niche vendors likely will be acquired. "The telephony players bring communications enablement to CRM," says Sheila McGee-Smith, director of call-center and operator services for the Pelorus Group, an analysis firm. "The argument Nortel makes is that in the world of E-business, the Internet infrastructure becomes paramount, because it gets the data and transactions to the business applications. But as for the niche players, I don't see them being left behind. I see them bring snapped up."

Many products offer the same features, so customers are focusing on ease of implementation. For now, all require significant customization--a drawback. "The integration and ability to customize matters to customers," Amuso says. "The vendors aren't exactly lying when they say everything is integrated, but it's not as simple as some ads may lead you to believe. After all, you can integrate anything if you put enough time and effort into it with middleware and EAI tools. But customers are saying, 'We want seamless integration,' but the modules aren't seamless, even from one vendor." Some customers have been frustrated to find that it takes much twiddling to get data flowing between the call center and sales apps, or to get Web reports in front of call-center personnel.

In the end, the competition will be less between CRM�call-center products, and more between competing ideas of how information should be handled within the enterprise.

"The biggest problem we face is getting buy-in from the sales force to provide the information. The trick is to provide data to salespeople to makes them more efficient and valuable to the company, not to make them superfluous," says Davis. "A famous example from the old days was Xerox, which required salespeople to share their data to get paid," he says. "That's the stick approach. We're trying to go for the carrot approach: 'This prospect has been looking at our product on the Web site, now's the time to give him a call.' But it's not always easy to convince people."