EMEA CRM Analytics Suite Magic Quadrant Criteria 3Q02
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1 Decision Framework, J. Radcliffe Research Note 26 September 2002 EMEA CRM Analytics Suite Magic Quadrant Criteria 3Q02 Europe, the Middle East and Africa Customer Relationship Management Analytics Suite Magic Quadrant has different characteristics and requirements to those from North America. 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? Customer relationship management (CRM) analytics are a key part of any CRM initiative. They are part of the value chain whereby enterprises generate customer insight (for example, current and potential customer value and predicted behavior) and market insight (for example, market basket analysis) from a rich, high-quality base of customer and market information to: 1) Create strategic, value-based segmentation schemes, with associated customer value propositions; 2) undertake customer relationship optimization (CRO) (see "Customer Relationship Optimization What's in a Name?" M ); and 3) tactically plan the next best activity with the customer (for example, making cross-sell or retention offers). When planning how to meet their customer insight requirements, enterprises should bear in mind these guidelines: The objective of CRM analytics is not to use specific analytic techniques, but to solve CRM business problems. Most business problems can be solved using a variety of techniques. No single vendor can offer every type of analysis that is relevant to CRM and suitable for business and statistician users. Therefore, a multivendor strategy may be necessary. Analytic capabilities need to span the past, the present and the future. CRM analysis should include aspects of historic reporting, current operations and future predictions to ensure that full business value is obtained from the data. CRM analytics cover a wide range of different analytic techniques, such as online analytical processing and data mining, and there are several approaches to choosing technology for generating customer insight. Those that are most appropriate will depend on enterprises' needs. In "CRM Analytics 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 Suite Key Criteria for 2002," M , Gartner discusses the three most common technology approaches to CRM analytics: Building a solution with business intelligence (BI) and data mining tools: These tools bring a lot of flexibility to meet specific requirements, but time and the necessary skills are needed to build applications. Also, vendors may not bring domain expertise. Using embedded analytic capabilities in point CRM solutions to support that application: These are ready-built analytic solutions for operational CRM applications, but are usually too tightly bound to a single vendor's environment to be of wider use. Using a CRM analytics application suite as the basis of a complete analytical solution across CRM: This approach gives the greatest potential for the creation, deployment and use of CRM-wide (and, potentially, enterprisewide) analysis, but it is the least mature. This Research Note focuses on the CRM analytical application suite as the best vehicle to meet enterprise CRM analytics requirements. It defines the functionality criteria associated with a CRM analytical application suite and it defines criteria that are specific to buyers of CRM analytics applications in large and midsize enterprises in Europe, the Middle East and Africa (EMEA) recognizing the different characteristics of the EMEA market. In rating the various CRM analytical application suites Gartner evaluates: 1) The ability to handle pre-analysis data integration; 2) the comprehensiveness of business-oriented analytic applications and; 3) the capability to deploy the analytical results across the enterprise. About 70 percent of the rating is related to the business-oriented analytic applications that map onto the objectives of measurement, customer analysis, financial analysis and market analysis (see Figure 1). 26 September
3 Figure 1 The Many Objectives of CRM Analytics Channel Preferences Product Preferences Customer Loyalty Customer Analysis Risk Analysis Lifetime Value Customer Profitability Fraud Detection Financial Analysis Measurement Product Management Channel Management Customer Base Description Balanced Scorecard Market Basket Analysis Customer Segmentation Demand Forecasting Market Analysis Event Trigger Identification Channel Profitability Product Profitability Source: Gartner Research The key applications, attracting the greatest weightings are: The Customer Analysis objectives of customer loyalty (for example, propensity to churn) and product preferences (for example, propensity to buy) The Measurement objectives of product management, channel management and customer base description The Customer/Financial Analysis objectives of customer lifetime value and profitability The Market Analysis objective of market basket analysis Different CRM Analytics Criteria in EMEA To be included in the EMEA CRM Analytics Magic Quadrant and to achieve a good rating, the vendor must have a clear understanding of the requirements of the various EMEA regional marketplaces, a strong revenue stream and a proven ability to deliver in these geographies. Therefore, the vendor needs to have a direct presence, be actively prospecting for business and have solid reference accounts, in multiple countries, within EMEA with particular emphasis on the major European economies of France, Germany, Italy and the United Kingdom. It should also be able to demonstrate active partnerships with external service 26 September
4 providers that specialize in marketing services or that have a relevant practice area in those countries. The vendor must be able to demonstrate a credible skills capability level within EMEA, to allow it to engage with customers on CRM analytics topics at both a business and technology level ideally with a vertical market dimension. First-line technical support needs to be provided in the correct time zone and in an acceptable language, if dealing with business users. The vendor needs to provide functional capabilities to make its software viable in the EMEA market, including national language support (preferably Unicode), local currency support and the ability to comply with European Commission and national data privacy regulations. Finally, the vendor needs to demonstrate: 1) That it has achieved, and is maintaining, "mind share" in the EMEA market (based on visibility in the press and at public events); 2) the extent to which it is reaching evaluation short lists; and 3) the number of Gartner clients requesting an opinion on the vendor and its products. Inclusion and Niche Players Quadrant Criteria Vendors in the Niche Players quadrant either do well in a small segment of the market or they are unable to innovate or outperform other vendors in the market. Niche Players quadrant criteria are the minimum requirements for a vendor to be included in the EMEA CRM analytics Magic Quadrant. Vendors must be the originators of the applications and not resell them or provide infrastructure software as a base for partners' applications. Vendors must have: Revenue: Generated at least $1 million in CRM marketing application revenue in EMEA on a rolling, 12-month basis. CRM marketing applications include CRO, CRM analytics, e- marketing, marketing resource management and partner relationship management applications. References: At least four customer references in EMEA using business-oriented CRM analytics suite applications functionality. Service and Support: At least 10 trained professional service personnel in EMEA for its CRM analytics applications (either employed by the vendor or a partner). Geographic Coverage: EMEA distribution and support capabilities in at least three countries in EMEA, including a direct presence in at least one country and with proven ability to support implementations in those countries. 26 September
5 Verticals: Vendors should be operating in at least two verticals, with the exception of a true Niche Players vendor that can operate in only one vertical (for example, telecommunications). Application Functionality: Provide capability in at least two of the four main areas of CRM analytics (that is, measurement, customer analysis, market analysis and financial analysis) in the context of a business-oriented CRM analytics suite. Vision: A vision and strategy for providing customers with a comprehensive, business-oriented suite of CRM analytics applications. The vendors in the Niche Players quadrant fall into different categories: 1) True niche vendors that choose, by design, to focus on a narrow set of CRM analytics functionality or a limited set of vertical or geographical markets; 2) major application vendors that are early in their development and delivery of CRM analytics suite capabilities; and 3) vendors that have fallen behind the leaders in their CRM analytics suite vision and execution. Visionaries Quadrant Criteria Visionaries are vendors that have a strong vision for applying technology to CRM analytics business requirements in an applications suite manner, but are not executing well or broadly enough in the EMEA market. Specifically, Visionaries must have: Revenue: As for Niche Players quadrant. References: At least four customer references in EMEA using CRM analytics suite application functionality in at least two verticals. Service and Support: As for Niche Players quadrant. Geographic Coverage: As for Niche Players quadrant. Verticals: Operating in two verticals or more. Application Functionality: Achieved visionary capability for the four main areas of CRM analytics (measurement, customer analysis, market analysis and financial analysis) in the context of a business-oriented CRM analytics suite. Vision: The vendor shows the ability to enable its customers to become leaders in their respective industries through implementation of the vendor's CRM analytics solution. Gartner, customers and competitors recognize the vendor as a CRM analytics suite market thought leader and innovator. 26 September
6 Challengers Quadrant Criteria Challengers are those vendors that execute well, may dominate a large market segment, but have a less-mature understanding of market trends and directions, or do not articulate a marketleading vision. They have a solid track record of execution, financial resources and staying power and have the potential to challenge the leaders in the future. Specifically, Challengers must have: Revenue: Generated at least $5 million in EMEA CRM marketing application revenue on a rolling, 12-month basis. References: At least 12 references in EMEA using businessoriented CRM analytics suite applications functionality in at least three verticals. Service and Support: At least 25 trained professional service personnel for its business-oriented CRM analytics suite applications in EMEA (either employed by the vendor or a partner). Geographic Coverage: EMEA-wide distribution and support capabilities with direct operations in at least five countries in EMEA, including at least three of the four major European economies of France, Germany, Italy and the United Kingdom. Verticals: Has a vision and strategy to provide support for cross-industry functionality and best-of-breed functionality for between three to five industry verticals (for example, financial services or telecommunications). Application Functionality: As for Niche Players quadrant. Vision: A vision and strategy for providing customers with a comprehensive business-oriented suite of CRM analytics applications. Leaders Quadrant Criteria Leaders are executing well, generating new business, accumulating positive customer references and have great prospects for the future. Specifically, Leaders must have: Revenue: Generated at least $8 million in EMEA CRM marketing application revenue on a rolling, 12-month basis. References: At least 20 references in EMEA using businessoriented CRM analytics suite applications functionality in at least five verticals. Of which, five customer references should demonstrate the use of three out the four main areas of CRM analytics (measurement, customer analysis, market analysis and financial analysis). 26 September
7 Service and Support: At least 40 trained professional service personnel for its business-oriented CRM analytics suite applications (either employed by the vendor or a partner). Geographic Coverage: As for Challengers quadrant. Verticals: A vision and strategy to provide support for crossindustry functionality and best-of-breed functionality in at least five industry verticals (for example, financial services or telecommunications). Application Functionality: Achieved visionary capability for the four main areas of CRM analytics (measurement, customer analysis, market analysis and financial analysis) in the context of a business-oriented CRM analytics suite. Vision: The vendor shows the ability to enable its customers to become leaders in their respective industries through implementation of the vendor's CRM analytics suite. Gartner, customers and competitors recognize the vendor as a CRM analytics suite market thought leader and innovator. Choosing Between Vendors in the Different Quadrants Figure 2 provides a decision framework for enterprises when considering different CRM analytics suite vendors and their products. 26 September
8 Figure 2 CRM Analytics Magic Quadrant Decision Framework Ability to Execute Challengers Consider when: There is already a major commitment to this vendor for its enterprise suite, CRM suite or business intelligence and data warehouse products Leading CRM analytics suite functionality is not required and the vendor's CRM analytics road map is consistent with the enterprise's CRM analytics road map Vendor viability is essential Consider when: The product and vendor is focused on a limited, but sufficient, set of functionality, vertical and geographical markets, and good service and support is provided Or the product is from the chosen enterprise suite vendor. Leading CRM analytics suite functionality is not required and the vendor's CRM analytics road map is consistent with the enterprise's CRM analytics road map Niche Players Leaders Consider when: Leading CRM analytics suite functionality is required, now or in the near future The product must be proven across EMEA The vendor must have in-depth skills across EMEA Vendor viability is essential Deep vertical knowledge is required Consider when: Leading CRM analytics suite functionality is required, now or in the near future The product does not need to be proven across EMEA It is sufficient for the vendor to have limited coverage and skills within EMEA Vendor viability is not a strong concern Visionaries Completeness of Vision Source: Gartner Research Bottom Line: CRM analytics are key to any CRM initiative. They give enterprises the ability to generate customer insight from a high-quality base of customer information. Insight is the essential precursor to the creation of strategic, value-based, segmentation schemes, CRO and the tactical planning of the next best activity with the customer. Although many EMEA enterprises are still at the beginning of the CRM analytics journey, they should create a CRM analytics road map and evaluate CRM analytics vendors' functional ability to enable that road map. Equally important will be the need to evaluate the CRM analytics suite vendors' viability and strength in the relevant EMEA geographies and verticals. 26 September
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