Dynamic CRM Arrives as More Dollars Move to the Edge of the Enterprise

The demand shift from the core to the edge will have a profound effect on enterprise business-application infrastructure requirements and spending plans. Yankee Group research found that 71 percent of companies increased investment in edge-of-the-enterprise technologies.
Written by Sheryl Kingstone, Contributor

The demand shift from the core to the edge will have a profound effect on enterprise business-application infrastructure requirements and spending plans. Yankee Group research found that 71 percent of companies increased investment in edge-of-the-enterprise technologies. The portion of the budget allocated for these technologies grew 75 percent on average, while the overall IT budget grew only 3.7 percent (see Exhibit 1).

To date, companies have been primarily focused on automation of core or internal operations such as direct sales forces, marketing departments and internal call centers. Now that these initiatives are underway, new initiatives, based on automating external processes that drive sales and service, are absorbing budget dollars traditionally allocated to core IT spend. For example, more pharmaceutical companies are allocating dollars for physician and consumer portals. Telecommunications, retail and consumer packaged goods companies are focusing on improved dialog marketing, self-service and partner management.

Although many companies have discussed the move toward edge spending, there has only recently been a true shift in IT dollars. Few enterprises were technically or organizationally prepared to embrace true dynamic customer relationship management (CRM) for customer-facing initiatives, since many client/server CRM applications made it technically challenging to extend processes and functions beyond the four walls of the enterprise.

Trend Impact
The new dynamic CRM allows companies to focus on external customer and partner management. These new dynamic edge applications drive a more personalized dialog. As a result, many enterprises are not looking to traditional CRM vendors to support new corporate initiatives, especially the interdependencies of the extended enterprise. The shift in dollars affects not only traditional CRM vendors such as SAP, Siebel and PeopleSoft, but also nontraditional CRM providers such as ATG, Vignette, WebSphere, BEA and NCR Teradata.

CRM software is in the midst of a significant evolution—similar to the client/server shift of the mid-1990s. Dynamic CRM implies that the business process drives an interaction and can leverage both external and internal data, both real time and historical. However, dynamic CRM is not possible without technology advancement. We are on the verge of a new era of applications resulting directly from the convergence of four trends: composite analytic applications, Web services, J2EE and XML. These technologies enable assembly, distribution and management of application and technology solutions—in a way not possible before—to improve sales effectiveness, customer interaction and the end-user experience. These technologies help enterprises optimize edge applications to create a personalized dialogue between the company and each customer, consistently delivered at the most opportune time.

Content Management and Portal Vendors
ATG, Vignette, BEA and WebSphere have an advantage to deliver on the vision of dynamic CRM. These vendors provide applications that can deliver in-context information more dynamically, from multiple internal and even external systems. Critical functionality includes flexible content and data integration, exposed metadata, taxonomy and natural language search, and pure Web architectures.

Channel Management Vendors
Best-of-breed partner relationship management vendors that have moved their applications to J2EE architectures and support multitiered interactions across multiple enterprises will benefit from this trend. Enterprises that are serious about managing their indirect channel more effectively must select and implement applications from vendors such as ChannelWave, Comergent and Haht Commerce.

Analytic Vendors
Vendors in this market that moved beyond historical or operational data analysis based on prebuilt models, towards real-time multichannel interactive communications will begin to win more budget dollars. Leading vendors include Teradata, Epiphany, Chordiant and Unica.

Customer Data Integration
Since edge applications rely on multiple heterogeneous systems and have heavy integration requirements, vendors that assist with not only application integration needs, but also aggregate customer activity data from a variety of transaction and analytical systems will benefit. CDI technologies enable a comprehensive customer view that can be embedded as part of an existing business process that triggers the best course of action for elements such as alerts, events, and recommendations.

Vendor Recommendations

  • Traditional CRM vendors must move to improve their ability to handle unstructured content. This will permit them to deliver in-context information more dynamically from multiple internal and even external systems. With edge applications that touch customers and partners, change is the rule and dynamic assembly of information requirements are high.
  • CRM vendors must also move toward a more composite application model. For years, vendors have baulked at rearchitecting their solutions toward a composite application model because of the fear of losing control of the customer. However, the future viability of best-of-breed CRM is in jeopardy if vendors do not take the necessary steps today. By providing a more metadata-driven application combined with a flexible architecture and modular packaging of functionality, enterprises can maximize their existing investments and add functionality that can be used towards newer edge applications.
Enterprise Recommendations
  • Upgrade CRM system within the next 12 to 18 months. Moving to the most current version of SAP, Siebel, Oracle or PeopleSoft will make it easier to externalize data locked away in traditional client/server architectures.
  • Leverage existing investments in analytic and content management tools. For example, Teradata is not just a data warehouse vendor and Vignette is no longer just a content management vendor. These vendors offer packaged technologies that enable dynamic dialog with customers.
  • Don’t just provide a 360-degree view of the customer through data integration. Make the view more valuable through actionable and relevant alerts, recommendations, and triggered business processes.
The Yankee Group originally published this article on 20 November 2003.

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