Customer Relationship Management

Sector Outlook, Fourth Quarter, 2003

In the software industry in 2003, no term is more abused and misunderstood than Customer Relationship Management. We track this market closely, and we are always surprised at how few people understand it and (perhaps this is related) how abusive some of the marketing claims are.

The biggest news in the fourth quarter of 2003 is that the clear industry leader, Siebel, has been faltering. We have looked at most of the leading products, ERP or not, and despite many faults, we think Siebel has the best designed product overall and the greatest depth. So why is it losing market share to SAP?

The first reason is simply the aforementioned abusive marketing. SAP and others have succeeded in convincing analysts and journalists that it's OK to redefine the CRM market so that sales of their traditional software now count. So, in 1998, for instance, when SAP sold 100 seats of its SD module, that didn't count as part of Siebel's market. But today, when SAP sells the same seats for software that does the same thing, it does.

But there are more real and more substantial reasons. Siebel is also losing market share because people are growing disillusioned with CRM. "CRM doesn't work," has gone from something that no one would dare utter--Tom Siebel would be on the phone in seconds--to something that is repeated over and over again in the press. People have come to realize that when Siebel made a sale to a company, that doesn't mean that the seats that were sold were actually used. There's a lot of shelfware out there.

We discuss the reasons for this in our research report, "The Jagged, Fractured CRM Market." We also explain why Siebel is often getting a bad rap, being blamed for other people's wishful thinking, rather than for delivering bad software.

Of course there's more to CRM than Siebel. These days there are any number of best-in-breed players that are starting to get it right, ranging from Interface software, which does relationship-based contact management to Channelwave, which does channel management.

Our research reports are available only to customers. For a complete list of past reports or for information on how you can benefit from our research into CRM, please contact us.