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Vendors' next big challenge is integrating software to link to all parts of a company

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Mitsubishi Motors Corp., with its Montero SUV, Galant sedan, and Eclipse coupe, attracts the youngest buyers of any car company in the United States--an average age of 39. Eight of every 10 customers also finance their vehicles through the company, adding even more revenue to the automaker's coffers. Mitsubishi's challenge is to build on its close ties with younger drivers so they don't move on to other brands as they get older--and, presumably, richer.

Part of the solution lies in making it as easy as possible for Mitsubishi owners to communicate with the company. Young buyers expect multiple points of contact--a self-service Web site, customer-service staff, financing representatives, dealers--all offering a consistent message, and all knowledgeable about the customer. Sounds simple. But it's not.Within the next month, Mitsubishi will launch a self-service Web site to give customers online access to their account information, such as how many payments are left on a lease and what it would cost to pay off a loan. The company also wants to send sales leads generated from the Web site to local dealers, blurring the line between customer service and sales. By letting buyers get basic information on their own, Mitsubishi will give call-center reps more time to sell--for example, asking customers whose leases are ending if they plan to buy the car or will consider a new Mitsubishi, then forwarding that information to nearby dealerships.To do all that, the company must integrate its customer-relationship management system--Siebel Systems Inc.'s eService applications--with its customized general-ledger apps. It also needs to connect its Web site to a lead-generation tool called AutoVision that routes sales leads to dealers and tracks the results.Dealers can access the leads now through a legacy system, which Mitsubishi hopes to eliminate in the next year by giving dealers direct access to the Siebel system. "When you're in business for 18 or 20 years, it's tough [to integrate] because you've got a lot of connections," says Rich Donnelson, director of customer relations at Mitsubishi.It's a rough road, but Mitsubishi isn't traveling it alone. Vendors that created CRM as a software category now face the question of "What's next?" for the market. The No. 1 answer, judging by the CRM suites vendors plan to release during the next 18 months, is much better integration.CRM customers want many improvements, including better data-analysis, personalization, and collaboration. But easier integration of CRM and third-party applications has emerged as the top priority when companies decide whether to buy CRM software and which applications to choose. How well this next generation of products responds to that demand will help determine CRM's success as the economy inches toward recovery.If the vendors get it right, they can chip away at the integration costs that have become a major source of dissatisfaction among managers of CRM implementations; companies spend $2 to $7 in services for every $1 they spend on software. That's why Siebel, for example, promises to build more integration points between its software and third-party applications, so CRM systems can take advantage of data stored in other systems.Alan Grometstein

Quick & Reilly uses Siebel's integration tools to merge its CRM systems with two other Fleet units to improve customer management, Grometstein says."Our experience is that the average interface takes a team of two to three developers and 2-1/2 to three calendar months to build," says Alan Grometstein, VP of IT at brokerage firm Quick & Reilly, a Siebel customer. "If Siebel is going to build those interfaces for me, that's one less thing that I have to build."Improved integration also could diminish the sense that CRM software isn't delivering the kind of companywide changes businesses want. When the tools emerged, vendors saw a chance to automate the front office, much as enterprise resource planning vendors had automated the back office. So, they focused on building specific functions such as sales-force management, says Steve Noone, VP of New England operations at Akibia Consulting, a consulting and integration-services firm that focuses on CRM implementations.But companies often bought software department by department, creating information silos along lines of business. That's exactly the opposite of what business executives looking for greater collaboration want today: to combine all customer data, regardless of where the information comes from, and share it throughout the company and with outside business partners.Vendors also face the reality that CRM as a distinct software category could start to fade away. Some companies are using database and data-mining tools, billing systems, and yield-management software to perform customer-management functions. Adding to the pressure on CRM sales is the slow economy, which hovers like a nosy neighbor around business budgets, raising doubts about major CRM deployments that can cost tens of millions of dollars at a large company. CRM vendors know that integration is key to delivering the holistic customer view that companies such as Mitsubishi expect--and to keeping this software sector thriving.
Rich Donnelson
Mitsubishi uses Siebel software to give service and sales staff the same information about customers, says Donnelson, but it will take a major integration effort with legacy systems.One problem is that each software vendor has a proprietary way of describing a customer and the related data. Web services may bridge that gap by helping to link applications. But data remains in a proprietary form. So if deeper integration with software partners is to become a reality, the CRM industry needs to provide data mappings that translate the data for use by other applications.Siebel's recently disclosed Universal Application Network tries to do that by using Web-services standards such as Simple Object Access Protocol, Web Services Description Language, XML, and Universal Description, Discovery, and Integration for design and development. The result, according to Siebel and its partners, will be a vendor-independent architecture that minimizes the complexity and cost of integration.Siebel also plans to deliver integration adapters and business-process libraries to companies that are integrating Siebel with legacy and other systems. Other vendors involved in developing the adapters and libraries include Accenture, IBM Global Services, KPMG Consulting, PricewaterhouseCoopers Consulting, SeeBeyond, Tibco, Vitria, and webMethods.Siebel needs to make this work to fend off vendors such as Oracle and SAP that promise easier integration by offering ERP and CRM functions in one suite. Siebel contends that such combined packages don't make a dent in large companies' integration problems, because most companies need to connect anywhere from 20 to as many as 5,000 applications, of which ERP encompasses only a few. "The industry has done a poor job of solving what we call the real integration problem," says David Schmaier, executive VP of products at Siebel.If Siebel's integration tools work as promised, they'll be a great help to Quick & Reilly, a subsidiary of FleetBoston Financial Corp. that's a test customer for Siebel's Universal Application Network. Earlier this year, Fleet decided to merge the CRM systems of Quick & Reilly with those of two other business units: Columbia Asset Management, which handles business banking and select high-net-worth clients, and Fleet's private client group, which also works with high-net-worth individuals. Edward Garry, VP of CRM solutions at Quick & Reilly, says that combining the three groups' systems will let the company better manage customers throughout their lives--such as a Quick & Reilly brokerage customer who reaches the net-worth threshold of the private client group.In fact, Fleet is working to integrate the databases and applications in all its systems, from mutual funds to 401(k) plans, private investments to personal banking. The company says better communication across Fleet divisions will lead to better service and cross-selling opportunities. "When the walls come down, everything will be linked, and we'll be able to have a seamless view of our customer base," Garry says.But it's a big challenge. None of the three investment groups is on the same version of Siebel CRM yet. Once Fleet standardizes on one version, the company will consolidate back-office systems, then integrate them with the CRM software, says VP of IT Grometstein. The new Siebel system will help, in part because the new libraries and tools will let Quick & Reilly build a subject-matter repository in Siebel, which will then integrate with legacy systems such as accounting and human resources, he says.Many companies also want to blur the line between employees who provide customer service and those who sell products and services, as Mitsubishi is doing. The automaker plans to integrate its Siebel sales and service applications to accomplish this. In some ways it's a natural outgrowth from giving companies a single view of the customer. Once sales and service agents have a full understanding of a customer's needs and problems, it's easier for them to do both parts of the job.E.piphany Inc. considers the hybrid between sales and service support an emerging software category of its own. The company wants to include an enhanced call-center application called E.piphany Service 6.0 in its next suite release, expected by August, that will be more closely tied to its Dialogs product for customer-service representatives. The enhanced product will let a call-center rep enter details of a conversation while the customer is on the line, and a list of suggested products with a sales script will pop up on screen for the rep.But not everyone is preaching the gospel of integration with third-party applications. Oracle continues to pitch its Oracle-only model as the best option for companies that want to link all their back-and front-end systems. The vendor maintains that its 11i E-business suite links not just customer data but all the information needed to complete a business process, such as taking a product from its initial marketing campaign through to a customer placing an order. During the next 12 months, Oracle plans to introduce more prebuilt business-process integration between its existing products, such as an Order To Cash module that will use Web services to integrate all the needed applications related to sales, order inventory, financials, and order management.Oracle says global companies have an average of 10 to 50 customer-data systems, each solving a unique problem. As they consolidate those legacy systems, they need to settle on software that will support each business process. "They're looking at things like, 'How do I take a marketing campaign and turn that into an order, and what are the processes involved in doing that?' " says Lisa Arthur, Oracle's VP of CRM product marketing.Oracle is improving its ability to integrate with other applications, but the results will never be as tight or go as deep as working within Oracle's own suite, Arthur says. For example, an Oracle sales-force automation application linked with Oracle order-management, service, and billing applications will let a sales rep see what a customer ordered, whether the order has been delivered, and the billing status of the shipment. But if an Oracle sales-force automation application is tied to another vendor's back-office software, a sales rep can see what the customer paid but would likely need to open a separate record to view more detailed information. To integrate third-party applications, Oracle supports Web services and bases its code on Java and PL/SQL, so developers don't have to learn a proprietary language, as they would with competing products from SAP, for example.Robert Moon is a believer in the Oracle approach. The VP of information services at ViewSonic Corp. is in the process of consolidating three versions of Oracle's back-office software. The Walnut, Calif., company, a manufacturer of high-definition televisions, flat-panel displays, and projectors with $1 billion in annual sales, has been running different versions of Oracle's software suite in its American, Asian-Pacific, and European offices. Once all three regions are on the same version of Oracle 11i in September, Moon plans to implement supply-chain and CRM software from Oracle. ViewSonic already uses GoldMine contact-management software from FrontRange Solutions Inc. and Amdoc's Clarify call-center applications. But Moon, who has completed two other Oracle implementations during his career, says the integration benefits of going all-Oracle far outweigh the savings from building links to GoldMine and Clarify data. "We want to create a unified view of all customer information so we can provide better service and marketing," he says. He'll use a centralized Oracle database and take advantage of the business-process integration built into Oracle's front-and back-office applications.PeopleSoft Inc. is taking a more middle-of-the-road approach to integration. The vendor is adding functions such as order maintenance to version 4 of its CRM suite, due out in December, which will let a sales or service staffer change an order based on information retrieved from other apps. If a customer calls to cancel or change an order, the sales rep can use the order-maintenance tool to see whether the original order has shipped and whether the new product is in stock. The ability to manage orders "is one factor that contributes to customer satisfaction and has been a missing piece from CRM suites thus far," says Rod Johnson, AMR Research's VP of customer-management strategies.PeopleSoft also is making it easier to link its software to back-office and front-office applications from other vendors. In its upcoming CRM release, the vendor will add 10 integration points to the more than 90 it already has, all enabled by Web-services standards, including XML and Soap.SAP is perhaps the least concerned among the major CRM vendors with integrating with other applications. The vendor tells anyone who'll listen that it expects to knock off Siebel as the No. 1 CRM vendor next year, and its approach is to sell to its large installed base of ERP customers without targeting companies using back-office software from other vendors. However, the company is adding new functions to its 3.1 release, due in September, including improved portal technology for data access and business-process flow integrations that tap other SAP applications. In August, the vendor will detail enhancements to its interaction center, electronic selling and service tools, and sales incentive/commissions-management applications, says Carol Burch, SAP's senior VP of global sales operations.Where does this leave the future of CRM? Companies have made clear what they want: a single, accurate picture of each customer. Businesses have come to realize that the value of CRM software doesn't come from the apps themselves, but from how well they can combine information from multiple systems to understand the customer. It's up to CRM vendors to answer that call. How well they do so will determine whether CRM software is the star of companies' efforts to navigate the customer-driven economy or merely a solid member of the supporting cast. CRM's Big Four SIEBEL

2001 sales
$2.05 billion

Siebel defined the CRM category and remains the clear No. 1. The biggest question mark:
Will CRM survive as an independent category, or be absorbed into ERP and other tools?

Siebel says purchasing CRM
within ERP doesn’t solve the integration problem, because CRM needs to link to thousands of apps in a major company. It’s investing in improving integration to third-party applications, plus improved tools for customer data analysis. PEOPLESOFT

2001 sales
$2.07 billion (doesn’t separate CRM sales)

PeopleSoft 8 CRM debuted in 2001, after the vendor rewrote the suite it acquired with Vantive in 1999. The Web-based suite has 1,200 CRM customers.

PeopleSoft is taking a two-pronged approach: It sells its own CRM offerings to existing customers of its HR management and other enterprise apps, and is architecting the suite to more easily integrate with third-party apps. SAP

2001 sales
$7.03 billion,
$429 million in CRM sales

SAP is loudly proclaiming its mySAP CRM suite will overtake Siebel as the market leader. It’s won more than 1,600 customers.

SAP is targeting its existing R/3 customer-base for its CRM software offering. But some analysts suspect that will change over time. ORACLE

2001 sales
$9.7 billion
(doesn’t separate CRM sales)

Oracle’s CRM suite has gotten a lukewarm reception. But the company has made considerable effort to solve quality complaints and has a strong installed base to target.

Oracle is concentrating on preintegrating end-to-end business processes within its ERP and CRM suites. It still supports open standards, but contends that only a single-vendor CRM and ERP package will deliver the best results.

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