EMEA CRM Analytics Suite Magic Quadrant 3Q02

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1 Markets, J. Radcliffe, G. Herschel Research Note 26 September 2002 EMEA CRM Analytics Suite Magic Quadrant 3Q02 SAS Institute leverages its strength in analytics to take the lead in the immature CRM analytics suite market. Best-ofbreed vendor products appeal to business users. Enterprise suite vendors lag behind. Core Topic Customer Relationship Management: Business Strategies, Technologies and Applications for World-Class Marketing Key Issue Who will be the leading analytic CRM vendors during the next three years? The customer relationship management (CRM) analytics suite market in Europe, the Middle East and Africa (EMEA) contains most of the global vendors and products already found in the North American market as assessed in "North American CRM Analytics Suite Magic Quadrant 1H02," M However, there are some important differences: Vendors have a different ability to execute in EMEA, in terms of revenue, "mind share," size of direct operations, partnerships and reference base. Additional players that don't market their products in North America, but do sell them in EMEA, are included. CRM analytical capabilities can come from different sources There are several approaches to building up an enterprise's CRM analytical capabilities. The three most common, described further in "CRM Analytics Key Criteria for 2002," M , are: 1) Building a solution with business intelligence (BI) tools and data mining tools; 2) using embedded analytic capabilities in point CRM applications to support that application; and 3) using a suite of analytic applications as the basis of a complete solution across CRM (and potentially enterprisewide). The third approach allows the greatest leverage for the creation, deployment and use of CRM-wide analysis and is the focus of this Magic Quadrant (see Figure 1). "EMEA CRM Analytics Suite Magic Quadrant Criteria 3Q02," DF , details the criteria that vendors must satisfy. In addition to the vendors that satisfy those requirements, some that partially fulfill the requirements, or approach the task from other perspectives (see Figure 1 sidebar). Gartner Entire contents 2002 Gartner, Inc. All rights reserved. Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice.

2 Figure 1 EMEA CRM Analytics Magic Quadrant 3Q02 Challengers Leaders Other Vendors Worth Consideration: Amdocs, Angoss Business Objects Ability to Execute SAP Oracle PeopleSoft Alterian Blue Martini SAS E.piphany Norkom NCR Teradata DD SPSS Quadstone Unica eudaptics software Experian Fair, Isaac; Gemplus Graham Technology Kana, KiQ Software MarknadsAnalys Sand Technology Siebel Systems smartfocus thinkanalytics As of September 2002 Niche Players Visionaries Completeness of Vision DD - DataDistilleries Source: Gartner Research The EMEA market is still immature in the creation and deployment of customer insight. Most EMEA enterprises are at an early stage in using CRM analytical applications. They struggle to answer deceptively simple questions, such as: Who are the most profitable customers? Am I likely to lose this customer? Will this customer buy my product? Many are still trying to create a rich, quality, customer information base the essential prerequisite for CRM analytics. However, business-to-consumer (B2C) enterprises, such as retail banks and telcos, in very competitive markets have already built sophisticated analytic applications, based on a data warehouse infrastructure and BI tools, to analyze historical events. This allows them to measure past customer trends and quantify current customer value an essential prerequisite for valuebased segmentation. 26 September

3 Many of these enterprises are also using data mining tools to build sophisticated models to predict future behavior and potential lifetime value, thus maximizing customer development and retention. At whatever stage the enterprise is, there is a need to determine the customer insight that will be necessary during the next few years. Working back from that vision, and prioritizing the requirements, enterprises should create a road map for incrementally building an appropriate CRM analytics capability. Enterprises should use that road map to guide their choice of suitable CRM analytics vendors. The Leaders E.piphany has been visionary in making the creation and realtime deployment of customer insight a centerpiece of its strategy and baking that capability into its CRM applications. It has a broad range of predictive modeling, measurement and reporting analytics, for easy use by business users. However, users with advanced requirements often find that its depth of functionality is limited and need to augment it with a more heavyweight solution, such as that from SAS Institute. E.piphany's analytics typically serve as a base for E.piphany's applications suite, as opposed to being the basis of an enterprisewide analytics solution. E.piphany has developed good mind share in EMEA in the marketing arena, and now has direct operations in six countries. It needs to translate its strengths into revenue and a stronger reference base. SAS Institute has a long track record in data mining, BI and data warehousing. It has a strong EMEA organization and loyal customer base. SAS Enterprise Miner is the market leader for modeling and predictive analysis, having a greater depth and range than its competitors. It is the predictive analytics tool of choice in large B2C enterprises, such as retail banks. SAS is in a good position to leverage those strengths with its CRM analytic applications, but historically, Enterprise Miner has been designed for statisticians, not business people. SAS's main challenges are to: 1) Improve the user interface of its data mining products for the business user audience; 2) increase the range of prepackaged CRM analytical applications; and 3) make the analytics actionable with less latency. The Visionaries DataDistilleries is a Dutch vendor with a strong user base in the Netherlands, plus offices and customers in Belgium, France, Germany and the United Kingdom. Its greatest strengths are in financial services and telecoms, and it appeals to business users, rather than statisticians. It is best known for its product preferences, risk analysis and customer loyalty analytics, 26 September

4 although it is also used for customer segmentation. Its range of modeling functionality was limited, but is improving with version 3.2, which also adds customer profitability and lifetime value analytics. NCR Teradata has a broad range of CRM analytical capabilities, based on a number of different products. Value Analyzer and Behavior Explorer focus on profitability and behavior respectively. Originally developed solely for financial services, they are now being customized for other verticals. Teradata Warehouse Miner, now integrated with the Teradata Relational Database Management System (RDBMS), provides a heavyweight, predictive analytics environment for nonbusiness users. NCR Teradata's challenges are to improve the integration between offerings, harmonize the user interfaces, increase the range of predictive applications and extend the applicability across more verticals. The CRM analytics are very linked to Teradata's data warehouse technologies and industry models. They can leverage considerable strengths, but this requires buying into the full range of products. Norkom is an Irish vendor with a data mining background. It has direct operations in six EMEA countries and a high proportion of its revenue comes from the United States. During the economic slowdown, it has continued to grow successfully by offering its products on a managed services basis and introducing products for the detection and management of fraud and risk. The Norkom Alchemist product offers a broad range of functionality for modeling, prediction and reporting, and its agent technology is effective in making the insight actionable. Quadstone is a Scottish vendor, with offices and the bulk of its customer base in the United Kingdom and the United States. It has had a difficult 12 months, but it is now rebuilding. Quadstone's Transactionhouse, Decisionhouse and Actionhouse products perform customer behavior measurement, modeling and scoring respectively. Quadstone has also created specific solutions for the financial services, telecoms, retail and marketing services verticals. The product set is strong in data visualization, modeling and predictive analysis, and is suitable for business users. Quadstone was slow to address real-time analytics requirements and offer a Windows-based interface. SPSS has a strong heritage in the data mining and analytics markets, principally selling tools for statisticians, rather than applications for business users. SPSS has much of the necessary functionality for a CRM analytics suite, but has found it difficult to execute on a visionary strategy. In 2001, it set up its CustomerCentric Solutions business unit in an effort to focus on the CRM market. However, following their NetGenesis 26 September

5 acquisition in early 2002, it switched to a tactical focus, leveraging the NetGenesis base and its Web analytics technology. It has recently reorganized and is well positioned for a strategic approach to CRM analytics again. Unica has a broad, marketing applications product set, including a CRM analytics module called Affinium Model. This offers comprehensive, CRM analytics functionality for supporting marketing requirements. Unica has more than 30 indirect EMEA customers for its analytics products, through its partners Experian and Group 1 Software. However, in direct sales, customer relationship optimization (CRO) is the main focus, displacing the analytics products. PeopleSoft also has a coselling arrangement with Unica to cover its lack of predictive analytics functionality, but has no customers in EMEA sales. To become a leader, Unica should increase the visibility of its CRM analytics offerings and build up revenue and a reference base. The Niche Players Alterian, a U.K. company, made its reputation as supplier of a database engine that allows train-of-thought analysis. It is well known in the United Kingdom and is developing a U.S. presence. There is a wide range of CRM analytics applications based on the Alterian database, from Alterian's partners, such as eware, Experian and MarkIT. Now, Alterian is fleshing out its own set of CRM analytic applications and going direct to the market. It has excellent data discovery and visualization capabilities, but, so far, its predictive modeling capability is limited. To improve its rating, Alterian needs to build its presence and mind share in continental Europe, build a stronger reference base of direct customers and execute well on its ambitious development plans. Blue Martini Software focuses on the retail and manufacturing verticals and is strong in its use of the e-channel for marketing and sales. For this reason, it tends to be regarded as good, but niche, although its applications and analytics are more widely applicable. It has built up good CRM analytics capabilities, including data visualization and behavior prediction to drive personalization and marketing measurement and reporting. The Enterprise Suite Vendors (that is, Oracle, PeopleSoft and SAP) are taking their established strength in enterprise performance management (EPM) applications in the enterprise resource planning area and using it as a base for building up their CRM analytics capabilities. They are all in a good position to offer a well-integrated picture of customer key performance indicators (KPIs) through managing much of the necessary operational data and providing a cross-application analytic framework. 26 September

6 Oracle is leveraging its BI tools and EPM capabilities together with the predictive analytics capabilities derived from the Darwin data mining technology, which is now integrated into the Oracle 9i RDBMS. It has made good progress, although there are still gaps in functionality and the ability to support all channels and customer interaction types. For example, real-time scoring is limited to 9i Personalization in the e-channel. Oracle's customer profitability analytics, initially developed for financial services, is now more widely available, but not fully integrated. Additional models, such as customer lifetime value, are necessary. Oracle's ranking will improve as it fleshes out its CRM analytic suite and makes the capabilities channel-neutral. PeopleSoft is a leader in customer, product and channel profitability analytics, based on its CRM Warehouse infrastructure. It is also strong in the balanced scorecard area with its Customer Scorecard product. The Customer Behavior Modeling product includes analytics for product and channel preferences, customer loyalty, risk analysis and customer segmentation, but PeopleSoft lacks its own modeling and predictive analytics tools to support these capabilities and needs to rely on relationships and prebuilt interfaces with Angoss and Unica. PeopleSoft's main challenges are to build a strong reference base for its Customer Behavior Modeling product and reduce its dependence on third parties. SAP is leveraging its Business Information Warehouse (BW) platform, improved in version 3.0b, and applying it to CRM. The result is an increasingly wide range of measurement and predictive CRM analytics focusing on customer behavior. mysap CRM version 3.1 improves the visualization and introduces churn management and customer loyalty analytics, but the functionality needs further development to appeal to demanding B2C enterprises. Also, SAP's use of BW is a double-edged sword. Established customers can leverage existing skills and investment and derive integration benefits, but new customers with established data warehouse and analytics investments will find it less attractive. Bottom Line: CRM analytics is an immature market with many players approaching it from different directions. It is likely that enterprises will have to combine products from different vendors to meet requirements. The need for deep functionality may have to be sourced on a tactical basis by the smaller, best-of-breed players, but the larger players, such as SAS Institute, SPSS, NCR and the enterprise suite vendors will steadily flesh out their offerings, enabling a wider, enterprise-level approach to analytic requirements. Enterprises should also bear in mind the different user communities within the enterprise (that is, statisticians and 26 September

7 business users) take account of the shift to empower business users and ensure that the chosen products are fit for purpose. 26 September