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By Jason Watkins, Principal In Charge, Texas Region, The Alexander Group, Inc.
Why "Niche" Applications Will Continue to Play a Role in the CRM and Sales and Marketing Automation Environment.
Managers are being led to believe that one-size-fits-all bundled suites are the answer to implementing CRM and automating the sales and marketing functions.
This is apparent when, as a consultant, I hear clients pledge allegiance to a big name software company even though bringing in a specialized niche application would better meet their needs.
Oracle’s recent advertising campaign suggests that their bundled suite dismisses the need for complex integration and coordination of multiple software vendors. Sounds fantastic! Truth be told, Oracle has the right idea.
Trouble is, from a business management perspective, no robust bundled suite exists that is deep in functionality in terms of CRM, sales and marketing automation, and certainly not for e-service suites.
Every day our clients are surprised to learn that there are no dominant players or solutions that meet the needs of their business processes. After they launch the initiative, they find themselves in a sea of ever-changing requirement documents and vendor pitches.
Enterprises are often forced to choose between the functionality needed to solve the deepest business problems and the perceived ease of implementation supposedly available from the breadth of a bundled suite.
Depth vs. Breadth
Depth or breadth? That is the question. During the Renaissance, cultured people were expected to know many subjects in the emerging arts and sciences, and to know a few of them very well. From this came the term “Renaissance Man.” The rest of the world may be recovering from Y2K hysteria, but software, sadly, is still in the Middle Ages when it comes to combining depth and breadth.
Regardless, the CRM market topped $3.3 billion in 1999, according to International Data Corporation (IDC), and is expected to continue to grow at a compound annual rate of nearly 30% through 2004, building a market opportunity of $12.1 billion.
Interest in these business tools comes from their ability to produce big jumps in organizational effectiveness. Namely, in customer attainment, retention, penetration, and satisfaction.
Key areas that the software in question affect are: sales (sales automation), sales operations (e.g., sales compensation automation), indirect sales (partner relationship management), marketing automation, customer support and call center automation.
However, to realize the gains a manager dreams of requires a choice: go for the “best of breed” in each key area, or sacrifice functionality. Depth vs. breadth, that is the question.
The Big Lie
Let’s create an illustrative company, XYZ Corp. XYZ Corp. manufactures and sells optical networking equipment used by most of the major telecommunications and networking companies. They go to market via a direct sales force, indirect partners (VARs, VAPs, ISVs, Resellers, Consultants), a call center, and, to a growing degree, via the Web. Their channels have independent databases, for the most part, and they’ve already installed a top sales and call center automation package.
Energy around a major CRM initiative has taken root at the highest levels of the organization. The charge: tie the databases together then evaluate, select, and implement the right CRM system to realize tremendous gains in effectiveness and revenues.
Let’s face facts -- the CRM and marketing automation markets are large and complex, with over 500 vendors and growing. XYZ Corp. develops a multi-faceted requirements document that includes business requirements, technical requirements, and user requirements. During this process, management realizes the company requires more functionality than first thought -– content management, campaign management, database structuring, data mining, sophisticated segmentation capabilities, additional front office automation, additional back office automation, incentive compensation automation, partner relationship management, and pricing and configuration, to name a few.
As XYZ Corp. begins to move into vendor evaluation, management quickly realize that “CRM” is claimed by many but delivered comprehensively by none -- the big lie.
It’s About The Functionality
“Niche” applications may be defined as software deep in functionality in a more narrowly defined area of CRM or sales and marketing automation. For example, sales compensation automation providers who have built their entire company on one application have rich and flexible applications that can administer multiple plans at once, handle roll-ups and organization changes, split credit for sales, and model the effects of compensation plan changes.
Although some of the larger players in sales force automation and ERP solutions are offering a commissions module to expand the breadth of their offering, the depth of functionality still pales in comparison to the pure application providers.
Similarly, “true” partner relationship management (PRM) providers offer deep functionality in terms of the partner extranet, including lead routing, establishing partner reporting and metrics, establishing security and access levels based on business rules, and developing and deploying marketing programs. Here, too, we see the “big boys” quickly developing modules to expand their reach, but with limited success so far.
Count on this: The major players will eventually catch up to the “pure plays”. The challenge for the niche application providers will be to continually reinvent themselves and expand the impact of their offerings on the corporation while remaining focused on their core space.
Finding The Balance
All this being said, XYZ Corp. is still faced with the CRM initiative bought in by the most senior levels of the company. Management still has to choose between depth and breadth. Many decision-makers continue to mistakenly allow the systems needs, or a systems oriented pitch, to erroneously drive the choice of application in key areas.
Why the disconnect? Business leaders may be led astray several ways:
- They may not always understand the deep functionality that the niche applications provide in critical areas of automation. Many managers don’t recognize the deep functionality they could be sacrificing by overlooking niche applications.
- They are led to believe that buying bundled systems and applications are the easiest to integrate. This is a myth.
- They may not understand how easily niche applications can be integrated into the CRM and ERP environments. Many niche application providers are programming open systems and/or using web-based architectures, easing integration pain.
The enterprise must determine which business processes and areas require functional depth, and those which might be well-served by the broader bundles. This may best be accomplished by formalizing the requirements documentation for the initiative well in advance of vendor evaluation.
At the minimum, requirements should be developed in three areas: 1. Business and strategic needs, 2. Technical requirements, and 3. User needs. By involving multiple constituencies in this process, then prioritizing the requirements in terms of level of importance, management can then begin to determine those areas that require functional depth.
Managers must push their folks to think in terms of integrated channel strategy, integrated marketing and marketing communication strategy, and the integrated sales strategy. This approach will help to define the areas that require depth vs. breadth.
Clients are diving into CRM initiatives head first, which, as any water safety instructor will tell you, isn’t the best idea. CRM and sales and marketing automation should be viewed as an opportunity to define, even redefine, critical business processes prior to developing the requirements, and certainly prior to vendor evaluation. Test the depth, and breadth, of the water, and decide what it is your company needs more of. You’ll be glad you did.
About The Alexander Group, Inc.
The Alexander Group, Inc.® (AGI) is a management consulting firm that helps companies achieve excellence in marketing, sales and customer service execution. We work closely with our clients to increase sales and profits though the effective development and implementation of go-to-market strategies, the deployment of customer contact personnel, and the automation of sales support processes.
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