Tech Guide: Vertical CRM Stands Up to Scrutiny - InformationWeek

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Tech Guide: Vertical CRM Stands Up to Scrutiny

Companies today are demanding specialized customer-relationship management solutions that meet their needs in every possible way, and there are dozens of vendors fighting to win their business. Here's how to sort through the maze

The days of one-size-fits-all customer-relationship management technology are numbered, a victim of increasingly sophisticated and demanding customers.

Companies have long turned to some form of CRM, a suite of automated tools that helps manage customer relationships, to better identify and target customers, manage marketing campaigns and generate sales leads, improve account and sales management, and build better relationships with customers and business partners.

But until recently, companies had few options when choosing their CRM vendor and approach. In most cases, they would turn to a large enterprise suite vendor such as Oracle, PeopleSoft, or SAP--companies that have developed fully functioning, all-purpose CRM suites. But as tales of failed implementations and poor return on investment spread, technology executives became concerned that the standard CRM approach simply wasn't worth the time and effort. That realization, coupled with an oversaturated market that vendors simply couldn't rely on for steady growth, has changed the CRM landscape.

Today, most experts believe that traditional, horizontally focused CRM is dying a quick death. In its place comes a dizzying array of options, each suited to a specific industry or market. Led by industry leader Siebel Systems Inc.--the first major vendor to realize the importance of creating CRM applications for individual market segments--the concept of vertical CRM has mushroomed. Not only do vertical CRM solutions require less customization, proponents believe, but because they can be installed and deployed more quickly, they show a better return on investment.

But as companies wade through their growing number of choices, experts recommend remaining just a bit skeptical, evaluating each vendor on its own merits. Not all vertical CRM solutions are created equally--some are more "vertical" than others, while some provide better options for later customization.

Choices, Choices
Companies today have many options when choosing a CRM package to fit their needs, including:

  • Traditional out-of-the-box CRM. All current enterprise vendors fit into this category, including Oracle, PeopleSoft, SAP, and Siebel. These solutions are rich with horizontal functionality, such as marketing automation, sales-force automation, and customer support. To optimize the software to a specific business and industry, the user, sometimes in concert with a systems integrator such as Accenture, BearingPoint, or IBM Global Services, must customize the system, adding some elements and removing others. A notable offshoot is upstart Microsoft, which offers base CRM functionality to a growing list of value-added resellers--small companies with expertise in a specific industry. VARs can then customize a CRM solution, based on the base functionality, using their unique knowledge of a particular industry and company.
  • Traditional CRM with templates for specific vertical industries. Most major enterprise vendors, with the exception of Oracle, offer this option. PeopleSoft and Siebel, for example, each offer CRM solutions in as many as 20 vertical categories, while SAP also has many. To make best use of this approach, a company's IT department picks and chooses the functionality it needs for its specific business. In most cases, the IT department or a designated consultant still must customize the template--sometimes extensively --to meet the organization's specific needs.
  • Traditional out-of-the-box CRM with application development hooks. CRM systems in this category provide a series of reusable software objects that can be used in Legolike fashion to build an application best suited to the company's needs. Examples of vendors in this category include Chordiant Software, E.piphany, Kana, and Oracle. Oracle is the only enterprise vendor that has steadfastly refused to follow the path of its strongest competitors. Instead of developing industry-specific templates, Oracle's CRM package not only contains the basic CRM functionality needs necessary for every business, but features and capabilities that address the most salient needs of a variety of industries. To make the best use of the software, users must enable the functions they need and disable those they don't.

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