Tech Guide: Vertical CRM Stands Up to Scrutiny - InformationWeek

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7/30/2003
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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

  • Industry-specific vertical CRM packages. This category has mushroomed in the past few years. Virtually every vertical industry has at least one or two CRM applications aimed at them. In financial services, vendors include Chordiant, Metavante, Onyx, Pegasystems, Pivotal, and S1. Dendrite leads the pharmaceutical space, while Interface Software Inc. is one of the CRM packages of choice in the legal world. In the automotive marketplace, Reynolds & Reynolds reigns supreme, while choices in the health-care space include Firepond, Kana, and Pegasystems. For the consumer-goods industry, vendors include CAS and MEI Group, while the retail segment claims Blue Martini, JDA, Retek, and others. Other vertical industries with multiple CRM tool choices include government, insurance, energy, travel, and high-tech.
  • Custom solutions from vertical systems integrators. This category includes vendors such as Accenture, Computer Associates, Convergys, IBM Global Services, and Unisys. These vendors tend to market their services to companies with very unique or specific business or industry needs. To custom-build a CRM system for a specific business, they start with their vertical templates, adding functionality as appropriate.

With so many choices, companies clearly have their work cut out for them. While some tackle the process internally, others turn to outside consultants to help sort through the confusing array of options. But no matter which method is chosen, it helps to outline current and future business goals and examine the scope of the problem you're trying to solve before contacting vendors. By doing so, your firm can better decide which type of CRM solution best fits its needs.

Typically, the specialty players--those with industry-specific solutions--focus on specific business problems within an industry, while traditional CRM suite providers provide a broader array of functions and options. Depending on a company's business model and goals, each can be a good choice. A pharmaceutical company with a longstanding, solid business model may be a good candidate for an industry-specific solution such as that provided by Dendrite, a niche player in the health-care industry. On the flip side, a pharmaceutical company that plans to develop a call center next year and begin marketing to consumers following that expansion may be better off with an enterprise solution with hooks to the pharmaceutical market, which will provide it with more options as it expands the business model.

Knowing your relationship with your customers also can help guide your decision. Companies in which most customer interaction is restricted to one topic--such as discussions about billing in the utility industry or ordering replacement printer cartridges from a printer manufacturer--might be best suited to a traditional enterprise CRM solution. And because those customer interactions tend to focus on areas related to the back office, enterprise players like Oracle, PeopleSoft, and SAP could be a good fit good fit.

Large multinational companies that play in many industries might also turn to a more traditional CRM package. Companies such as General Electric, IBM, and Siemens function as service companies in some areas, high-tech manufacturers in others, and medical-device companies in others. Such companies could choose a horizontal enterprise CRM system with customization from a systems integrator. Alternatively, they might choose Oracle's approach--a one-size-fits-all CRM system with functionality for every conceivable industry.

Companies best-suited to industry-specific vertical CRM packages are often those focused on one specific market niche, such as health care, automotive, financial services, or retailing. "It's an issue of configuration versus customization," explains David Strauss, senior VP of product marketing at Chordiant Software. "If you buy a horizontal [CRM] application, you need to customize it at three levels--to the vertical industry, to the subindustry, and at the company-specific level. But if you go with an industry vertical, you can skip at least the first step, and you're likely to get an application that's friendly toward your custom needs. It allows you to at least start in a place where some of the processes meet your needs."

For companies with business processes that are difficult to change because of industry regulations or customer expectations, opinions are mixed. Some believe it might make sense to skip the industry-specific CRM and go directly to a systems integrator, which generally uses an enterprise CRM package as a basis for customization. "You can't expect a retail bank to change the way they do business to meet the requirements of an application," notes Chris Fletcher, VP for CRM at the Aberdeen Group. "The company knows it will take money and time to get what they want, but when it's finished, it will fit like a glove."

Vertical CRM vendors that have developed niche applications within a particular industry--such as retail banking within the financial services industry--might beg to differ. They argue that because they have optimized CRM processes to a specific subindustry, companies in that sector will find products that meet more of their needs, including regulatory-compliance requirements, without significant customization. The commercial banking field, for example, requires unique lead generation, relationship-handling and tracking, guided selling capabilities, and more, says Richard Eyram, VP of vertical solutions for Pivotal, which offers CRM applications in the financial-services, home-building, health-care, and life-sciences/medical-device fields.

Caveat Emptor
Although vertical CRM clearly represents the future of the industry, experts recommend choosing carefully, because not all vertical CRM packages are created equally. Some are so broad that they can't solve the problems of an individual company--at least not without significant customization--while others may be wolves in sheep's clothing.

PINNING DOWN VERTICALS
Top verticals and functionality by enterprise vendor
Vendor Top verticals Secondary verticals Commonly deployed
Siebel Systems Financial services, Communications, High-tech Life sciences/Pharma consumer goods, energy Field sales, call center, services
PeopleSoft Financial Services, Services, insurance, Communications Higher education, government, high-tech Technical support, call center, sales, marketing
SAP Manufacturing, Engineering and Construction, Consumer products Retail, utilities, Pharmaceutical, public sector E-selling, call center (order management), e-channel (order management for partners), field sales
Oracle Manufacturing, High-tech, Public sector Telecommunications, consumer goods E-commerce, service, contracts, product configurator
Data: Giga Information Group

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