Siboni is chief executive of Epiphany, a CRM software company in San Mateo, California, that makes applications that are supposed to help businesses improve customer satisfaction and loyalty.
But increasingly, the news about CRM has been anything but encouraging. Recent studies indicate that CRM projects often fail, and that the software doesn't always work as billed
Siboni, who was a 20-year veteran of consulting company KPMG when he joined Epiphany in 1998, insists that his customers are not among the ranks of the disillusioned. Epiphany's customer list includes such marquee names such as Bank of America, The Home Depot, Verizon Communications and Walt Disney. According to banking group ABN AMRO, Epiphany has captured 3 percent of the CRM software market since its inception in 1996, facing off against bigger competitors Oracle, PeopleSoft, SAP and Siebel Systems.
Nonetheless, Epiphany is struggling with the same market downturn that's gripped the entire business applications market for the past year. The days of triple-digit growth now seem like ancient history. In 2001, Epiphany lost US$2.6 billion, and the company still has a battle ahead in 2002. A 44 percent downturn in revenue in the first quarter forced Epiphany to join the throng of software companies issuing profit warnings.
But with US$300 million in cash and a new version of its CRM package released in March, Epiphany is braced for the storm, says the 47-year-old Siboni. What's more, he says observers need to look beyond the headlines to get a fuller appreciation of what's going on in the CRM marketplace, as well as a more sober view of what it can -- and cannot -- do for business.
CNET News.com recently talked with Siboni to talk hear about the state of the CRM market and the prospects for his company.
Q: Customer relationship management software is getting a bad rap. Recent studies show that a large number of CRM projects fail to deliver on their goals, while dissatisfaction with the technology runs high within executive ranks. Is this another case of reality not living up to the hype?
A: You really have to look a little below the surface. CRM is a fairly large world. There are four big categories of CRM you have to look at independently. There's the customer analytics area, the area of marketing, the area of service, and the area of sales-force automation. Most of the negative things you hear are about sales-force automation. People who say they didn't get the bang for buck, they're talking about sales-force automation. But generally, people are feeling pretty good about (the other pieces).
What is sales-force automation exactly, and why has it been so disappointing?
The promise of sales-force automation is that by giving salespeople these tools, productivity will go up and the cost of sales will go down. The truth is, that hasn't really happened. Because if you really look at what sales-force automation has been so far, it's been about achieving contact management, sales-lead tracking and pipeline reporting. If you look at these three pieces of functionality, what you find is the technology is very hard to work with.
Once you surpass 100 or so salespeople, it's very hard to synchronise data when the salesperson has to use it on the road. The disconnected use has been very, very spotty. And contact management -- you get that with Microsoft Exchange. That's not that valuable. Sales-lead tracking, most can do that on an Excel spreadsheet. Pipeline tracking is useful to guys like me, in management, but it's of little use to the sales force. Nothing in that process makes you sell more effectively. Salespeople haven't really gotten anything out of it, so they're not willing to use it to the point that it really becomes so much shelf-ware. I've seen estimates that sales-force automation makes up 30 percent to 40 percent of CRM spending, historically.
But Epiphany sells a sales-force automation application, right? Do your customers have these problems?
We just released a new CRM suite with a new sales-force product. We call it "intelligent sales." What we're really doing is driving intelligence to salespeople from the marketing and service departments and then providing a path to find out what's working and what's not in the selling process.
How does it work?
One thing it can do is read the calendar of the salesperson, see what customer meetings the salesperson has, and show the customer service alerts, buying history and other information related to that particular relationship. It allows the salesperson to go into marketing organisation and to query what other salespeople have been effective at selling a particular product. It's much more focused on delivering intelligence about specific customers that salesperson has and breaking down silos between marketing, service and sales.
News.com ran a column recently that questions the extent to which software can really "manage a relationship." The columnist said that while software is a useful tool, you can't rely on it to improve relationships, because relationships are about people, not data. Do you agree that "customer relationship management" is a misnomer in that sense? Perhaps even misleading?
It has been a misnomer, but it's changing. If you look at the historic players in CRM -- Siebel, Vantive, Aurum, Clarify -- they've all, interestingly enough, been called CRM software. But there is very little they do that's about the customer relationship. These technologies are productivity technologies for people that interface with customers.
Sales-force automation, for example, is really just a sales productivity tool. It doesn't do much to make you understand the customer or to foster a better relationship with the customer. Call-centre software has traditionally been about how quickly you can get customers off the phone. It's more about saving money and does almost the converse of fostering relationships. Supporting the processes of people dealing with customers has done little to foster the relationship.
How is Epiphany different?
The reason why Epiphany was formed was to address the relationship. We take vast amounts of information about customers the companies have that they don't use and put it front and centre. We are trying to change the playing field of CRM technology to be much more about creating a knowledgeable, continuous, consistent customer experience across all customer touch points.
When customers talk to someone at a call centre or go to a store or go online, it's all part of a continuous experience. It needs to move from a series of isolated point interactions to a long-term customer interaction. CRM should be more about the customer interaction and less about the process. It's a very important transition.
The assumption is that CRM helps companies increase customer satisfaction and therefore increase revenue. Is that actually the case? Or is it, as you say, more about cutting costs?
Yes, it's the case. We've seen increases in revenues and customer retention -- or reductions in churn -- among our customers. Companies want to get to the right customers, keep them for a long time, and sell to them continuously. One of our technologies, for example, puts very focused intelligence in the hands of the customer service reps. It lets them see the customer's past actions so the agent has much more context when addressing a customer service problem.
The next thing is we have algorithms in our software that correlate the history of the customer, the current problem they are calling about, and the thousand products we're trying to sell to our customers, and they present a script the agent can use to talk to that customer about buying additional products. That's transforming (the call centre) from what has traditionally been a cost centre to a revenue centre. We've seen customers increase sales generated by marketing campaigns by 15 percent to 20 percent by engaging the call centre this way.
You have some pretty big, deep-pocketed competition including Siebel, SAP, Oracle and PeopleSoft. Some of these companies are sending the message that smaller companies like Epiphany won't make it through the downturn. How are these scare tactics affecting your business and your dialogue with customers?
When you don't have good technology, that's what you resort to. Fortunately for Epiphany, we have $300 million in cash. We work with over 35 percent of the Fortune 100. If you look at our cash position and our formidable customer list, and the aggressively open architecture we have, that issue more times than not goes away. There are times that customers are led into buying an inferior product because of fear tactics. Those products are very rigid and process-oriented, hard to install, and hard to configure. Epiphany is the reverse. It is a war out there. I guess the other side of it is we feel fortunate we're able to hold our own.
With the somewhat dismal first-quarter earnings season winding down, some analysts are questioning whether the business software market will bounce back later this year, as anticipated. What do you think?
Ever since the third quarter of last year, I have thought it would be a tough market for the balance of 2002. Technology, especially the kind related to productivity, always lags behind a recovery. It's common sense that companies have to recover and then have to get momentum before they resume their focus on productivity. So technology spending tends to be a lagging indicator, not a leading one, and as a lagging indicator I would say it won't pick up until the early part of next year. We have the cash and customers to ride the storm out.
You released a new version of your product in March. How is it being received by the market?
It's going quite well. Ten percent of our customers have downloaded it and started upgrades. Most are flagship customers.
Where does CRM go from here?
There are two big trends that I see. First is the whole transformation from interactions occurring in silos to a continuous intelligent conversation with customers through analytics and flexible systems that bridge different environments.
What's the distinction from a customer's perspective?
Imagine a salesperson calling on a customer. That person doesn't know if the customer has been calling the service centre complaining about a product. He doesn't know if they've been the target of a marketing campaign for certain products. It's breaking down these silos that act independently with customers.
And the second trend?
The second big trend is we're going to see a whole new universe of interaction points get looped into CRM, including automated teller machines, intelligent call centres, store clerks with handheld devices, in-store kiosks, and loyalty cards. In general, unifying all the channels and embedding them with intelligence is one big trend, and expanding to a broader scope of customer interaction points is the other.
When will this happen?
It's beginning to happen, but we won't see ubiquity for three or four years.