Magic Quadrant for CRM Customer Service Contact Centers

Transcription

1 Research G April 2012 Magic Quadrant for CRM Customer Service Contact Centers Michael Maoz Business requirements for customer-centricity start with consistent customer service across all channels, including the social media. Gartner's 2012 Magic Quadrant for CRM Customer Service Contact Centers looks at vendors that are responding to the challenge of "any channel" customer engagement. Market Definition/Description The customer service contact center refers to a logical set of technologies and processes that are engineered to support the customer, regardless of the channel. It is built in five logical groupings (the first of which is the focus of this Magic Quadrant). CRM Business Applications for Customer Interactions Customer service and support (CSS) problem management, trouble ticketing and case management Knowledgebase solutions and advanced desktop search Real-time analytics/decision support CRM databases for account/contact/offer information Desktop integration with telephony, cobrowsing, mobile and Web extension of the solution to online communities interested in peer-to-peer (P2P) collaboration management Social media engagement and sentiment analysis Real-time feedback and surveys The ability to connect to remote sensors embedded in equipment such as consumer electronics (For a breakdown on the weightings applied for the evaluation, see "Magic Quadrant Criteria for CRM Customer Service Contact Center, 2012" and "Use Gartner's Pace-Layered Application Strategy to Structure Customer Service Applications Based on Business Value.") Contact Infrastructures Telepresence 1-1A4DKTT

2 Interactive voice response Computer telephony integration (CTI) Automatic call distribution Chat response Instant messaging Alerts Workforce Optimization Tools Call recording Quality management solutions Workforce management E-learning Performance management solutions Enterprise Feedback Management Offline and Real-Time Analytical Tools The first layer, CRM business applications for customer interactions, handles a wide range of tasks, including case management. Other functions include advisory services, problem diagnostics and resolution, account management and returns management. Applications may also be industry-tuned for government, nonprofit agencies and higher education. They may include knowledge-enabled service resolution (such as advanced search tools), community management, offer management and service analytics dashboards. They are designed to enable employees or agents of a company to support clients directly, usually within a call or contact center, whether the product is a consumer good, a durable good or a business service, such as financial services, customer services (for example, retail banking, wealth management or insurance), hospitality, telecommunications, government, utilities or travel. The agent needs to be able to support the customer, whether the customer is on a website or a mobile device, at a kiosk or in a vehicle. This means: The agent sees what the customer sees. The agent knows the path the customer has taken before the voice conversation takes place (i.e., he knows the communication context of the interaction). The agent has the tools to solve the customer's problem or address his or her issue from a remote location. The customer service contact center needs to send out proactive, automated alerts. For example, when the status in a back-end system changes to one of which the customer needs to be aware (such as a bank balance, 2

3 credit card fraud, flight delays, available upgrades, price range reached, a special offer on cars or insurance policy exceptions), an alert is sent to one or several devices until the customer responds that he or she has received the notification. The application contains business rules for complex entities, such as contact, enterprise, subsidiary or partner, and the workflow processes to route a case, opportunity or order based on the rule set for the specific relationship. The application should be available as a subscription service in a cloud-architected model for all relevant industries. (Some industries, such as telecommunications and Federal Government agencies, may not be ready for this model, and on-premises software may be preferred.) A case may be routed from one department to another, depending on type. The case can link to all interactions across channels, whether , online, SMS or a phone call. An application supports multiple languages simultaneously. In some situations, real-time decision support is important. Multiple back-end systems synchronize using their own rules for example, credit card fraud; telecommunications-specific functions, such as telecommunication billing, service and resource management; product life cycle management; digital content; and advertising bundling and integrated order management. Magic Quadrant Figure 1. Magic Quadrant for CRM Customer Service Contact Centers Source: Gartner (April 2012) 3

4 Vendor Strengths and Cautions Amdocs Amdocs is a profitable company with more than $3 billion in sales, selling a comprehensive set of software and services to communications service providers (telecommunications, media and satellite), with a portion of its business directed at customer service contact centers and the customer experience. Strengths In the telecommunications industry, Amdocs has the advantage of a comprehensive set of products as part of the Customer Management Version 8.x release, ranging from an order management and billing platform, customer service functionality for the agent desktop, device management, a catalog and retail interaction manager, together with libraries of interaction flows. Amdocs is a strong and profitable company, with customers and professional services resources in every major geographic location. For prospects with deployed Amdocs assets, the company offers strong insight on the future of the telecommunications customer. It understands retail operations and the contact center in telecommunications and mobile, and it has good e-billing capabilities. Amdocs' consulting has strong experience in project management, best practices and key performance indicator mapping. Cautions Amdocs has not kept pace with the needs of clients in the areas of cloud-based systems, social CRM, and real-time decision making. Amdocs has been weak in built-in and easy-to-use configuration tools, but has worked to improve this in v.8.1. Amdocs needs to do more to support the mobile customer beyond Device Care, which has not yet been widely deployed. Customers not using Amdocs Smart Client Framework lack a robust development tool that can be used to build custom objects or new functionality and workflows. Amdocs is not recommended for customer service contact center shortlists across industries other than telecommunications, although it may be appropriate for consideration on longer lists. Despite articulating leading ideas for customer experience, we find that Amdocs is not best-of-breed in areas such as chat, knowledge management and virtual assistants. Amdocs has limited traction in growing third-party external service providers (ESPs) for consulting and implementation services. Astute Solutions Astute Solutions is a small (estimated revenue of less than $15 million in 2011) niche provider of cloud-based software as a service (SaaS) customer service functionality to the consumer market, primarily in the U.S. and the U.K. 4

5 Strengths Astute has continued to develop its products to meet changing customer demand, most recently with moreadvanced cloud capabilities and improved knowledge management. It also has a clean and useful social CRM product, Social Relationship Management (SRM). The vendor's epowercenter version 8.x has been successfully deployed, primarily across the U.S. and the U.K., and has been extended to more than 25 countries, primarily in small and midsize customer service centers (15 to 100 agents). The vendor has strong knowledge of and functionality for customer service processes in industries such as restaurants, hospitality, consumer goods and retail (nonbanking or other financial services). Cautions Astute is a small company (fewer than 100 employees), and has yet to build a software partner ecosystem or a proven integrator/consultancy partner practice. However, steps are being taken to address this. The product requires improvement to the configuration module and other components in multicountry/ multiclient operations environments that require large data volumes. In the design phase, new customers need to think through their requirements, rather re-engineering the system once it has been developed. The system is rarely deployed in large-scale, multichannel operations of large, distributed international service environments. Microsoft The Microsoft Dynamics CRM 2011 product is primarily used in nontraditional customer service contact center environments, where the real value may be in supporting a customer request for information, or the needs of students, citizens or government officials to interact with other people. There are many scenarios across industries (examples are government, healthcare, higher education, real estate and retailing) where the flexibility of the system to support a range of interactions makes it a good shortlist product. Microsoft has not been able to provide us with complex and scalable examples of the cloud-based version of the product for customer service contact centers. Strengths When deployed by a skilled professional services team, the Microsoft Dynamics CRM product has powerful capabilities, including built in workflows, multichannel process integration, and blended sales, service and marketing. The user interface has improved, as has integration with other Microsoft assets. The Microsoft Outlook look and feel, together with the integration with SharePoint and Microsoft Office, are commonly mentioned assets of the system for customers. The latest release has improved business intelligence (BI) capabilities, visual guides and workflow support, together with improved dashboards. Microsoft has a global reach of partners for professional services and complementary software. 5

6 Cautions Microsoft does not yet provide significant industry-specific templates for the customer service product line, relying instead on partners. These versions are not sanctioned by or supported by Microsoft, leaving the client with no direct Microsoft support. Due to the limited industry expertise, prospects that require complex customer service contact center processes, such as payer healthcare organizations, retail banking, telecommunications and utilities, should be cautious when considering Microsoft partners for their precise capabilities. Resources can be expensive and hard to find. We do not consider the new Microsoft Dynamics CRM Online (SaaS) version of the product mature enough for complex contact center environments. The product is not best-in-class in support of real-time decision making, knowledge management, proactive service, virtual assistants, mobile customer service or online Web communities. References have not pointed to Microsoft Dynamics CRM as a platform on which to build a social CRM discipline around customer service. Nice Systems Nice Systems has a broad set of customer support functionalities, which it lists as next-best-action, crosschannel interaction, process automation and guidance, interaction analytics, and compliance and recording tools. It is a nontraditional provider of CSS in that it does not own the customer record. They are more of a complementary offering, often making it a complicated purchase decision for customer service managers. Nice offerings enable agents to act in real time, as the interaction takes place, which is the key event in customer service. Strengths Nice's Real-Time Impact (RTI) product helps with decisioning and is useful for customer service organizations tasked with upselling/cross-selling during inbound interactions. The addition of real-time feedback and recent advances in support of the mobile customer, together with a partnership with Amdocs, are giving Nice greater appeal to prospects. References speak to the ease with which information and data from multiple systems can be assembled, and workflows created to drive the customer dialogue. The integration of RTI with the rest of the vendor's assets for recording, agent training, governance, analytics and back-office workflow support creates good synergies for prospects owning other Nice products. Cautions The company does not own the customer database, offer a full suite of CSS functionality or have a multitenanted SaaS technical architecture model. Few complementary software companies or consulting organizations are advocating the Nice RTI system for customer service agent effectiveness. There is a low level of client awareness of the capabilities of Nice in the customer service desktop space for retention, cross-sell/upsell or mobile. 6

7 Although Nice products are sold globally, the customer service RTI has less of a global presence. Oracle (RightNow Technologies) RightNow Technologies was acquired by Oracle in early 2012, and its products are in the process of a migration to parts of the Oracle technology stack (see "Oracle to Acquire RightNow Technologies, Boost Cloud Portfolio"). This product is now called Oracle RightNow CX Cloud Service. Strengths In addition to the customer service desktop application, Oracle RightNow CX Cloud Service, Oracle has a more significant installed base of Web customer service customers using capabilities such as knowledge management, chat and . It continues to improve its capabilities and connect the two products. Therefore, consumer-oriented customer service contact centers that need searchable content, integrated chat and , and solid scripting capabilities using a modern graphical user interface (GUI) will be attracted to the product. The acquisition of the product by Oracle will lead to greater scalability as it transitions to Oracle technologies. The system, delivered as a subscription service in a SaaS model, is straightforward to set up and configure, and doesn't require heavy IT involvement. Oracle RightNow CX Cloud Service has strong industry representation in high-tech, government agencies, retailers, education, travel, consumer electronics and branches of telecommunications, while not focusing deeply on industry-specific processes for example, billing, price catalogs, order execution and underwriting. Cautions As is true of any acquisition, it will take time to regain sales and marketing momentum outside the Oracle installed base, to train the Oracle sales force and partner network, and to integrate development efforts. Gartner has not seen large deployment teams or configuration teams from the largest system integrators (SIs) and global consultancies, such as IBM, Accenture, Deloitte and Capgemini for the contact center desktop product. RightNow built its products on the Microsoft.NET client, the open-source MySQL database and Red Hat Linux, as well as some other non-oracle technologies. The migration of parts of the technology to the Oracle technology stack will take time. Organizations leaning heavily in the direction of an all-microsoft environment or a non-oracle stack could face resistance from their IT organizations in regard to deepening the commitment to the Oracle RightNow CX Cloud Service product. Oracle RightNow CX Cloud Service has begun to offer end users stronger platform as a service (PaaS) capabilities, where the business can build its own modules and business objects; the coming year will be pivotal for this initiative. 7

8 The product lacks an on-premises software model, and prospects will need to consider an on-premises Oracle product or another alternative. Oracle (Siebel) The addition of RightNow Technologies to the Oracle CRM product line shifts the focus of the Oracle (Siebel) product. This could confuse prospects and the Oracle sales force. The Siebel product line still has strong nearterm viability, even as it migrates to Fusion. It has broad functional coverage, a good partner ecosystem and areas of deep industry expertise. It remains a standard for large-scale call/contact centers looking for scalability and access to a global pool of third-party professional services, and with an inclination for the Oracle product line. Strengths Siebel remains the only large-scale customer service contact center product deployed globally by large enterprises in 2012 across multiple business-to-business (B2B) and business-to-consumer (B2C) industries. The Siebel role-based, on-premises platform is best in industries where fulfillment requirements are high, introducing change is difficult and custom workflows are expensive. The product line has global software support and distribution, and a global presence of professional services for multiple industries. Oracle continues to fund enhancements to the v.8.1.x and v.8.2.x product lines, as well as extending integration in areas such as knowledge management, marketing, real-time decisioning, workflow and policy administration. Upcoming agile development capabilities and a better user interface will energize the product. Cautions Most of the large deployments observed in 2011 are upgrades from earlier versions. We have observed more companies migrating from Siebel CRM than moving to it in less-complex customer service contact centers. As Oracle Fusion is released, concerns about migration requirements weigh on decision makers. Despite the system's near 100% stability, users continue to experience performance degradation if the database isn't carefully maintained. Users with the High Interactivity Framework report glitches, and should be careful about tuning and integration. For customers looking to deploy in a cloud-model, Oracle RightNow CX Cloud Service may be an alternative to on-premises Siebel deployment. The combination of Siebel's migration to the Fusion application environment and the acquisition of RightNow Technologies has made it more complicated for the prospects with whom we have interacted to decide on the right product path. The Siebel customer service product is not best-in-class for providing a P2P community software option (social CRM) tightly connected to the customer service process. For users with a low level of complexity in the customer service area, and a small contact center (e.g., fewer than 250 seats), the Siebel product may be more complex than necessary. Prospects without an interest in a 8

9 deeper commitment to the Oracle technology and application stack for example, organizations moderately to heavily oriented toward Microsoft and.net, or building their own open-source CRM applications should look to other products first, but shouldn't exclude Oracle. Pegasystems Pegasystems grew approximately 25% in 2011, reaching more than $415 million in revenue, as it deepened its list of trained SI partners and its focus on customer-facing business processes. Continued competitive differentiation around case management, business process design and model-driven software aids industry acceptance. Strengths Pegasystems has become more savvy about using tools such as Facebook and corporate websites to improve workflow processes for its clients. The company has expanded the reach and depth of its professional service partner network, as well as improved slightly in the area of partnerships with complementary vendors. The company delivers industry-specific best practices, specifically for insurance, healthcare and financial services, as well as prebuilt templates, which accelerate adoption. Pegasystems' PaaS is an Internet-based development area in which teams or partners can collaborate on building solutions and designing best practices; PaaS is increasingly gaining adoption. Pegasystems offers a highly scalable solution (1,000 or more concurrent users in an integrated environment with 99.95% uptime) and provides good support. Cautions Not all IT-driven organizations favor Pegasystems' mashup and model-based approach, which is different from traditional software coding environments. Whereas industries such as insurance, healthcare, and financial services are drawn to a product with a rule engine to drive consistency, the product may not be the ideal choice for a shortlist where processes are mostly unstructured. Global organizations running a single instance of Pegasystems have found it complicated to synchronize CTI efforts across locations with disparate telephony environments. With the exception of the real-time decisioning product, the vendor has limited multi-industry experience outside North America and the U.K. The company has more work to do to demonstrate its vision for mobile device support and social CRM. salesforce.com Salesforce.com's Service Cloud has become the fastest growing product line at the company. Gartner estimates that it accounts for more than 30% of new subscription revenue. It is a clear leader in the market, although we 9

10 continue to find large, complex, multinational customer service centers a challenge for this cloud offering. It is largely absent from public sector, complex B2B, health insurance, telecommunications and banking. Strengths With revenue that could reach $2.75 billion in 2012, salesforce.com is the largest and fastest-growing software solution provider solely focused on customer engagement that can be verified (versus attributed revenue within a broader enterprise software sale). For B2B customer service operations, especially those with an established salesforce.com presence in the sales department, Service Cloud is recognized as a de facto shortlist product by most North American and Western European organizations. Key new customers both B2B and B2C have shown enough faith in the customer service contact center product to invest more than $10 million per year, and to retire homegrown systems and/or systems from competitors that were at an end-of-life stage, and consider the salesforce.com application platform a strategic asset. The salesforce.com product for customer service has an excellent GUI, simple design tools, intuitive navigation and a good understanding of the importance of Web communities. There is good integration with back-end systems, such as Oracle ERP. The added benefits of the customer portal, partner portal, social media monitoring and the Salesforce Ideas products draw customers to the Service Cloud. Cautions Organizations running connected, multinational customer service contact centers have cited ongoing speed and performance issues. The vendor is largely unproved in large, complex, retail, B2C contact centers that is, large-scale, highvolume call centers where processes must be continually synchronized and monitored, such as retail banking, loan origination, insurance policy administration, bill processing and fraud management. Very limited Asian, South American or Eastern European presence in larger-scale (more than 200 seats) customer service contact centers. The customer service product lacks a real-time analytics capability for agent decision support, and requires a more unified BI layer to look at ad hoc data analysis. The product's analytics capabilities and complex sentiment analysis functionality could use improvement. The company is in the process of addressing these areas. Clients that are scaling the product for several-hundred-seat customer service centers with complex, industry-specific needs have voiced concern about the long-term total cost of ownership, as well as the value of some of the AppExchange products. 10

11 SAP SAP references have already moved beyond SAP ERP and adopted SAP Web Channel, Marketing and Interaction Center. More work will be needed before references can demonstrate the benefit of an integrated all- SAP approach for CSS over best-of-breed choices outside SAP. Strengths SAP's marketing of an integrated business application suite that supports end-to-end customer processes is compelling to clients from an IT and line-of-business perspective, because it simplifies the application portfolio and promises better speed to solution delivery. The SAP CRM 7.0 product has improved, and has good uptake with businesses in every major geographic location and in many industries. The strongest industry offerings are consumer electronics, utilities and B2B equipment support within the SAP installed base. This is due to the set of products for warranty, contract, entitlements and analytics that fit with the product. SAP is a strong and profitable company, mitigating the financial risks of making a large and ongoing investment in the product. The SAP CRM Interaction Center product set has a complement of customer service offerings, reducing the number of vendors required to build an end-to-end contact center solution. Cautions Based on reference interactions, the cost to design, configure, test and deploy a midsize-to-large customer service center (for example, more than 500 users in a B2B model) is the highest of any package we have seen in the review period. To address this issue, SAP has brought to market a fixed-scope/fixed-price deployment option called SAP CRM Rapid Deployment Solution (RDS). The software cost is in line or less expensive than competing products. We have not seen SAP as a significant factor in our clients' decisions about the future of mobile computing for customer service and support, or for P2P support communities. B2C contact centers that require the support of high volume, complex business processes (for example, financial services, retail banking, retail mobile operators and healthcare) are not a core strength of the SAP CRM 7.0 or Interaction Center. Based on 2011 references, traction with non-sap customers remains limited. Our recommendation is that non-sap customers favor other products on their shortlists. SAP's multitenant SaaS delivery model, although improving, is not on a par with competitive offerings for customer service in the contact center. There is a growing, but still limited, pool of trained ESPs with consulting practices that offer help with SAP technologies and customer process design and configuration. 11

12 Sword Ciboodle Sword Ciboodle has experienced challenges expanding its market in the face of well-funded competitors. Despite good technology and a strong understanding of customer support processes, it will need a stronger partner network and more substantial support to grow the product. Strengths Sword's product is well-positioned for organizations that want to support a process-centric approach to customer service. Areas covered include complex case management with multichannel needs (telephone, , chat and legacy systems). The product can be configured for multiple user roles, which speeds the average handling time for a task, streamlines/shortens the training period and makes new processes easier to introduce. The vendor has a responsive professional services team with a solid understanding of business processes, and has expanded to support growth in the U.S. The underlying platform has good modeling capabilities and a strong set of customer service functionality. Ciboodle Crowd gives prospects a way to connect the customer service process to social media and collaboration. Cautions Some clients have reported steep learning curves for application configuration, when working with Sword's application development tools, which some consider nonintuitive. Limited (but growing) sales and marketing resources have affected the awareness of the Ciboodle product in the market. Risk-averse buyers may mistake the lack of broad deployments and adoption as a sign of product weakness, rather than a lack of visibility. The geographic scope of the product's availability seems limited primarily to English-speaking geographies. Prospects should perform the standard due diligence before purchasing the product. Sword is not known as a best-of-breed knowledge management tool or a social CRM platform to extend a business's reach to the end customer. The product is not architected and deployed as a multitenant SaaS platform. The product line would benefit from deeper strategic CRM application partnerships to round out product offering. Ciboodle showed solid growth in 2011, following a period of increased (albeit modest by industry standards) sales and marketing investment. Vendors Added or Dropped We review and adjust our inclusion criteria for Magic Quadrants and MarketScopes as markets change. As a result of these adjustments, the mix of vendors in any Magic Quadrant or MarketScope may change over time. A vendor appearing in a Magic Quadrant or MarketScope one year and not the next does not necessarily indicate 12

13 that we have changed our opinion of that vendor. This may be a reflection of a change in the market and, therefore, changed evaluation criteria, or a change of focus by a vendor. Dropped Oracle EBS: This product continues to be sold, although we have little exposure to the product or the active installed base. Pitney Bowes: Pitney Bowes has a good set of products, primarily involving real-time decisioning, marketing and analytics. However, we have seen insufficient examples of the product as a core customer service contact center desktop. Inclusion and Exclusion Criteria The vendor must have 15 customer references for CSS functionality in the contact center, of which at least five are new customers in the past four quarters in at least two geographic regions (for example, the Asia/Pacific region, Latin America, South America, North America or Europe). The product needs to have generated at least $7 million in software revenue for core CSS in the contact center (i.e., as the desktop of record) from new clients during the past four quarters. For 2012, this revenue should equal or exceed the revenue from the previous four quarters of business results. The product should appear regularly on client shortlists, and the company needs to have built a practice with sufficient third-party consulting and integration firms to grow at a double-digit pace for five years. The technology needs to support an extension to cross-channel customer service (e.g., Web, kiosk, in-store or mobile), without the need to code in a new development environment. That will make the company and/or its product a demonstrated trendsetter or market mover. In the short term, the company must be financially viable. That is, it must have sufficient cash to continue operating at the current burn rate for 12 months. Evaluation Criteria Ability to Execute Product/Service: Advances in software architectures particularly in Web orientation, support of mobile devices, video and Web communities are all Web 2.0 requirements that complicate the user's choice. The vendor needs to have a scalable SaaS model or have the option of an on-demand delivery model for some part of its platform to be a Leader. We weight the extent to which the company offers a componentized offering, as well as complete functionality across several service models. We continue to see greater need for strong mashup capabilities that enable organizations to embed applications in the customer service representative's desktop. We also see a strong demand for declarative 13

14 systems that enable flexible logic flows. User organizations prefer to design their own business objects, workflows and business processes, without resorting to vendor support. We expect this demand for composite applications (through in-house development and application extension to the Internet/website) to accelerate. We see a great need for advanced (real-time) decision support and complex knowledge solution capabilities, business rule engines and customer feedback management. The CSS application should have out-of-the-box functionality, which means a strong set of industry- and process-specific business logic and data. Through process design or functionality breadth, the system must support end-to-end customer service processes (from customer need to resolution) for the chosen market. Published APIs are critical to connect (or expose) an application's customer service functionality with another system or process. Vendors will be measured on the capabilities of their product releases to support customer service, and on the technical support of their multichannel and cross-channel environments. The vendor must have a stable product development team for each product module it sells, or a demonstrably successful strategic partnership. Overall Viability: We evaluate the vendor's capability to ensure the continued vitality of a product, including a strong product development team to support current and future releases, as well as a clear road map regarding the direction the product will take until The vendor must have the cash on hand and consistent revenue growth during four quarters to fund current and future employee burn rates, and to generate profits. The vendor is also measured on its ability to generate business results in the CSS market. We examine the deployment partners, software partners and the consultancies that are trained and experienced with the product. Sales Execution/Pricing: This involves the vendor's ability to provide global sales and distribution coverage that aligns with marketing messages. The vendor must also have specific experience selling its CSS to the appropriate buying center. The strength of the management team and the partner strategy are key. We evaluate the ability to provide a revenue stream from CSS, and an observable deal flow from clients, vendors and ESPs. Market Responsiveness and Track Record: We consider the vendor's capability to perceive evolving customer requirements and articulate that insight back to the market, as well as create the products for readiness as demand comes online. Marketing Execution: This refers to the vendor's ability to consistently generate market demand and awareness of its CSS solution through marketing programs and media visibility. In an ideal world, marketing execution should be less critical than some other factors; however, the business reality is that marketing success can fuel growth and improvements. Customer Experience: The vendor must produce a sufficient number (the recommended number is five) of quality clients and references, with varying levels of sophistication to prove the viability of its product in the marketplace. References are used as part of the evaluation criteria for the ability to execute and create a vision for how organizations can improve customer service. Included in this criterion are implementation and support. The vendor must be able to provide internal professional services resources or must partner with SIs with vertical-industry expertise, CSS domain knowledge, global and localized country coverage, and a broad skill set (such as project management or system configuration) to support a complete project life cycle. The critical point 14

15 on customer experience is to ascertain the degree of change management that accompanied the implementation. Often, the end user experiences discomfort from the change processes that were introduced with the new system, not from the new software. The vendor's customer support organization must also provide satisfactory, prompt service to its customers in all regions of the world. Operations: The vendor needs to offer consistent and comprehensible pricing models and structures, including for such contingencies as failure to perform as contracted and mergers and acquisitions. The vendor is measured on its flexibility to support multiple pricing scenarios, such as on-premises licensing, as well as application ondemand offerings, such as hosted and multitenant. The vendor must have sufficient professional services inhouse or through third-party business consultants and SIs to meet evolving customer requirements (see Table 1). Table 1. Ability to Execute Evaluation Criteria Evaluation Criteria Product/Service Overall Viability (Business Unit, Financial, Strategy, Organization) Sales Execution/Pricing Market Responsiveness and Track Record Marketing Execution Customer Experience Operations Weighting Standard High High High Standard High Standard Source: Gartner (April 2012) Completeness of Vision Market Understanding: The market for customer service is highly diverse, because of the multichannel nature of customer interactions and the wide-ranging industry processes that need to be supported. To succeed, a vendor must demonstrate a strategic understanding of CSS opportunities that are unique to its target market. This may be new application functionality, evolving service models or in-line analytical capabilities for unique customer segments. Market Strategy: The vendor can describe its go-to-market strategy as something other than "growing until we are acquired by a larger company." Even with this as the endgame, it must be clear how prospects will be protected or benefit from such a strategy. We look for a well-articulated strategy for revenue growth and sustained profitability. Key elements of the strategy include a sales and distribution plan, internal investment priority and timing, and partner alliances. 15

16 Sales Strategy: This refers to the strength of the sales force and the channel, because these make the difference between floundering and steady/rapid growth. We are looking for highly trained sales leaders who can quickly differentiate the value proposition of products and services, as compared with the competition. Offering (Product) Strategy: We look for a componentized offering and complete functionality across several service models. Specific vision criteria include: Supporting a threaded service task across functional areas (including midoffice, back-office and partner), regardless of the channel. Providing for the creation of content about the most likely customer intentions and how to address them, based on continuously variable business scenarios. Continuously variable means that, depending on the business context of the interaction, the steps and decisions in a service procedure may vary. Having the ability to sell successful tools to support customer participation in the service process via Web communities. Communicating openly with customers (and Gartner), a statement of direction for the next two product releases that keeps pace with or surpasses Gartner's vision and our clients' expectations of the CSS market. Offering a sufficiently broad set of products to ensure the success of the product. Providing a SaaS product; without this, a vendor cannot be considered as Visionary. Business Model: To be a Leader through the first half of 2013, an on-premises application provider needs to have deployed a SaaS option that is appropriate for its customer base. Application modules should be tightly integrated, and have business process modeling capabilities and advanced workflows. The company should have a strategy to appeal to its key vertical industries that is, it integrates with systems unique to an industry, delivers packaged functionality and workflows for an industry (such as those for the telecommunications, automotive and consumer goods industries), and delivers B2B and B2C interactions. Gartner should observe deployment partners, software partners and consultancies that are trained and experienced. Vertical/Industry Strategy: Unless a product is deployed as a strong add-on to an existing technology stack, a deep understanding of one or more vertical industries will be crucial to offer differentiation. Innovation: Innovative vendors incorporate concepts that extend to consumer technologies, virtual service agents and customer service functions embedded in virtual communities (such as Facebook and Get Satisfaction). The vendor needs to understand major technology/architecture shifts in the market and communicate a plan to use them, including potential migration issues for customers on current releases. For most vendors (any founded before 2000), the architecture is built to operate in a SaaS delivery model and onpremises. We examine how well the vendor articulates its vision to support service-oriented business applications. The customer service application should provide a catalog of Web services that enable interoperability with disparate business applications, without requiring extensive point-to-point custom integration. It should have a smart client, and be decomposable as widgets or as part of a larger mashup. Applications must help optimize a predictive customer analytics system directly or through tightly integrated partners. These predictive analytics 16

17 alert management, agents or customers when service patterns are detected that might signal the need to adjust a business strategy or direction, or indicate that the likelihood of a particular business scenario has changed (for example, customers responding to a notice on defective parts, an accident or financial news). The vendor will be measured on the capability of its architecture to support global rollouts and localized international installations. The vendor must have the tools for IT and business users to extend and administer the CSS application. The customer is the final arbiter of whether a company is a Visionary. Geographic Strategy: The vendor understands the needs of the three largest markets the EU, North America and the Asia/Pacific region and knows how to build a strategy to focus on aspects of the overall market (see Table 2). Table 2. Completeness of Vision Evaluation Criteria Evaluation Criteria Market Understanding Marketing Strategy Sales Strategy Offering (Product) Strategy Business Model Vertical/Industry Strategy Innovation Geographic Strategy Weighting Standard Standard Standard Standard High Standard Standard Standard Source: Gartner (April 2012) Quadrant Descriptions Leaders Leaders demonstrate market-defining vision and the ability to execute against that vision through products, services, demonstrable sales figures, and solid new references for multiple geographies and vertical industries. Clients report that the vendors deliver a high level of value and return on their commitment. The development team has a clear vision of the implications of business rules, and the impact of social networking on customer service requirements. A characteristic of a leader is that clients look to the vendor for clues as to how to innovate in customer service in areas such as embedded sensors in equipment, mobile support and extension to social communities. The vendor does not necessarily drive a customer toward vendor lock-in, but rather provides openness to an ecosystem. When asked, clients reply that a Leader's product has affected the organization's 17

18 competitive position in its markets and helped lower costs. Leaders can demonstrate $50 million in sales to new customers during the past year. Challengers The vendors in the Challengers quadrant demonstrate a high volume of sales in their chosen markets (i.e., more than 30% of new business by percentage comes from more than one industry, and more than 50% of new sales come from sales into the broader installed customer base). They understand their clients' evolving needs, yet may not lead customers into new functional areas with their strong vision and technology leadership. They often have a strong market presence in other application areas, but they have not demonstrated a clear understanding of the CSS market direction or are not well-positioned to capitalize on emerging trends. They may not have strong worldwide presence or deployment partners. Vendors in the Challengers quadrant can demonstrate $50 million in sales to customers during the past year. Visionaries Visionaries are ahead of potential competitors in delivering innovative products and delivery models. They anticipate emerging/changing customer service needs, and move into the new market space. They have a strong potential to influence the direction of the CSS market, but they are limited in execution or demonstrated track record. Typically, their products and market presence are not yet complete or established enough to challenge the leading vendors. Niche Players Niche Players offer important products that are unique CSS functionality components or offerings for vertical segments. They may offer complete portfolios, but demonstrate weaknesses in one or more important areas. They could also be regional experts, with little ability to extend globally. They are usually focused on supporting large enterprises, rather than small and midsize businesses. Context The established business applications for the CSS function are largely obsolete. They are simplistic and restricted by inflexible configuration rules and procedures that govern the input, retrieval, and flow of data and information. They support collaborative interactions poorly. Despite the high value of these systems, they have failed to evolve to incorporate new ideas, such as social experience design concepts, into customer interaction applications for customer service. Without collaboration capabilities baked into the software, interaction among employees and between employees and customers is limited, and best practices are hard to capture or suggest. The major vendors developing customer management software fail to see sufficient economic value in rearchitecting their software for social experience. They are aware of the innovations brought on by communication software and social software, but believe that the social revolution in software will not adversely affect core systems. Instead, they are pursuing a tactic of acquisition and integration as an interim measure, until they sort out the importance of social CRM. Microsoft, Oracle and salesforce.com are making good progress, whereas other vendors covered in the Magic Quadrant lag behind in innovation in this area. 18

19 The philosophy among the largest software vendors serving the large and midsize enterprise could be described as follows: No major competitor will disrupt the sale of its enterprise business applications, because none has developed a social-centric system. Therefore, partnerships with or the acquisition of social media technologies will be sufficient. The result is that none of the major software platform providers has a commanding presence in social CRM software. The opportunities for a new and disruptive vendor to enter and impede the progress of the established vendors are great similar to the market opportunity that salesforce.com has experienced in the sales force automation (SFA) area. SFA was considered a commoditized market, yet a more than $2 billion newcomer, salesforce.com, has emerged. So far, no business has entered with a strong, competitive socialcentric product, thus limiting innovation. Organizations are rarely able to migrate from an old system to a new one. More than 100 companies have demonstrated that it is possible to take an augmentation approach by which social CRM tools and internal social tools for collaboration and sharing are integrated into the CSS environment. Workflows and rules are written, often in the CRM system, and passed to the social system. This is not ideal it's a stopgap step that supports some experimentation and sets the stage for more-complex deployments, as experience is gathered. An incremental approach to moving toward social-centric CSS systems enables the enterprise to gather facts, establish metrics and analyze the impact of creating greater collaborative capabilities. As more-complete socialcentric CSS systems, which have a deeper mastery of real-time analytics, reach the marketing stage in 2014 and beyond, the business case for migrating to the new tools will be easier to demonstrate. There are industryspecific and geography-specific considerations that will cause businesses to accelerate investments in innovation in social-centric interfaces. The U.S. is at least two years ahead of Europe and other geographies in social media for business processes. High-tech, media and entertainment, retail, consumer goods, telecommunications providers and banking need to move forward during 2012 and Mining, chemicals, industrial machines, and oil and gas industries are under far less pressure to evolve. Market Overview The market for CSS applications for the contact center is fragmented, based on the complexity of the information required to support the customer and the complexity of the business rules or processes that form the steps in an interaction. In many parts of the world, such as India and China, Cloud-based customer service business applications are not yet the preferred model. There are many good vendors not found on the Magic Quadrant, including: New vendors in the community space, such as FuzeDigital and ZenDesk Open-source options, such as SugarCRM CRMNext Infor (Epiphany CRM) Consona (formerly Onyx) Kana Jacada 19

20 Neocase Software CDC Software Coheris BPMonline Vertical Solutions Gartner has been surprised that some companies, such as Parature, have not scaled their products for customer service contact centers. Gartner analysts are available for assistance with evaluations and comparisons of these companies and products, and others. By 2013, many industries (for example, telecommunications, travel, financial services and high-tech consumer products) implicitly will include in their definitions of a CRM customer service contact center access to mobile users and community participation in knowledge creation. Throughout 2012 and 2013, agent real-time access to a view into the customer's activity including Facebook, on the organization's website and beyond will be attempted by 15% of customer service centers. As a delivery model for customer service contact centers, SaaS is being accepted by many organizations. However, Gartner has observed resistance to SaaS in several areas, including: Locations in which there is greater caution due to fears regarding data privacy, latency and application availability for example, Central and Eastern Europe, many parts of Asia (such as India and China) and South America National/federal governments and healthcare organizations in which regulations inhibit penetration More-complex environments with high call volumes, high transaction volumes and real-time integration with legacy systems, which can slow performance In our evaluations, we point out when we foresee a potential challenge for a product based on these limitations. Through 2H13, complete customer service solutions delivered in the SaaS model will be most prominent in the B2B, low-volume call/contact center. As the market matures, the rating scales from one year to another can shift. The result is that a product that has not improved or declined could still show a shift in position on the Magic Quadrant that has resulted from a change in the weighting of a criterion between 2011 and By 2014, as more applications are built in a cloud-based model, SaaS will emerge as a critical selection factor at all levels of the customer service contact center. By 2013, at least 75% of customer service centers will use some form of SaaS application as part of the contact center solution. This could be for knowledge management, desktop CRM functionality, feedback management or chat. Through 2013, fewer than 20% of organizations will select SaaS for complex business process support. 20