Markets, E. Thompson Research Note 28 February 2003 EMEA Sales Applications Magic Quadrant 1H03 Siebel Systems is the sole "leader" in the Sales Applications Magic Quadrant in Europe, Middle East and Africa. SAP has become a serious "challenger" and PeopleSoft is the only "visionary." Core Topic Customer Relationship Management: Business Strategies, Technologies and Applications for Sales Key Issue How will sales organizations use technology to meet the challenges of changing internal and external forces and business and market dynamics? Note 1 Other Sales Magic Quadrants "CRM Sales Suite Vendors: 2003 Magic Quadrant" (M-19-2668) "Sales Configuration Vendors: 1H03 Magic Quadrant" (M-19-2068) "The 1H03 Direct Sales Technology Magic Quadrant" (M-19-2408) In the sales applications market in Europe, Middle East and Africa (EMEA), vendors have different abilities to execute in terms of revenue, "mind share," direct operations size, partnerships and reference base. The EMEA Sales Applications Magic Quadrant (see Figure 1) represents the market for all sales applications not specific sales application types as covered in other Magic Quadrants (see Note 1). It aims to compare vendors as a whole, rather than compare functionality solely. To appear in this Magic Quadrant, vendors must satisfy the criteria in "EMEA Sales Applications Magic Quadrant Criteria." Other vendors are close to qualifying (see Note 2). "Sales ICM Magic Quadrant 1H03" (M-19-3051) "Partner Relationship Management: 2003 Magic Quadrant" (M-19-3400) Gartner 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.
Figure 1 EMEA Sales Applications Magic Quadrant Challengers Leaders SAP Siebel Ability to Execute Sage Pivotal SuperOffice Onyx Update FrontRange Oracle Selligent Software Innovation Ascent S1 (Point) Access Commerce Amdocs ACCPAC (eware) Blue Martini PeopleSoft As of February 2003 Niche Players Completeness of Vision Visionaries Source: Gartner Leaders Siebel Systems showed strong financial management in 2002 after a 40 percent fall in EMEA license revenue, it reduced head count and office space to end the year with $2.2 billion in cash. It has the most customers and proven large-scale implementations, and its third-party consultant alliances are the most developed of all CRM vendors. Siebel is about 18 months ahead of rivals in the depth of its business process support in CRM applications, but users would welcome more refinements for specific verticals. Siebel has the most comprehensive direct sales, partner sales, telesales and sales effectiveness functionality. Elsewhere, such as sell-side e-commerce, it is investing to close the gap with best-of-breed market leaders. Despite fierce discounting (as low as $600 per seat a 1,000 seats), implementation costs are above 28 February 2003 2
Note 2 Wild Cards CAS and MEI specialize in one industry: consumer goods. Here, they continue to outperform the competition. Buyers in consumer goods field sales organizations should consider them (see "Consumer Goods SFA IH03 Magic Quadrant" [M-19-2795]). Cegedim sells only to the pharmaceutical direct sales market. In Europe, it is second only to Siebel and leads its home market in France. Pharmaceutical sales organizations should consider it, but Cegedim's business model is an application and data service and not all EMEA countries are covered. E.piphany launched a sales offering in EMEA integrating marketing analytics and interactive coaching with the direct sales application. With enough implementations and references, this would have made it second only to Siebel in Vision. Though lacking references and deployment partners, E.piphany is using fierce pricing to enter the market. J.D. Edwards integrated YOUcentric and started selling J.D. Edwards CRM in October 2001 in EMEA. This resulted in over $5 million of CRM software revenue in Europe in 2002. Of over 130 deals worldwide in 2002, only 14 global and three EMEA customers are live, preventing it from qualifying. It will be a challenger in 2003 if it sells over $10 million of CRM applications software on the back of its v2.0 launch. Microsoft won't release its CRM product in EMEA until 3Q03, and then in only a few languages. But it will have a major impact on smaller, Microsoft-centric, CRM vendors selling to buyers of sub-50 seats in 2004 (see "Microsoft CRM: The Options for Competitors" [DF-18-9399]). Salesforce.com, a phenomenon in the U.S. CRM market, is starting to hit EMEA. Its user base has grown to over 5,400 customers worldwide, with a formula of ease-of-use, adequate functionality and low prices using an ASP business model. By 2004, it should have met the Magic Quadrant criteria for revenue and functionality. average because Siebel wins most of the larger, complex, sales application projects in EMEA. Upgrades to Siebel 7 and 7.5 have been slow: about 150 customers (60 new and 90 upgrades) are live. Reasons are lack of budget and poor delivery of "expected benefits" in sales organizations owing to poor process control and change management during deployment. Many clients report that Siebel 7's performance, especially for telesales in contact centers, is not good enough to justify upgrading, even with 7.04 and the IE Option Pack. Most would reselect Siebel and were content with its involvement in their sales deployment. Challengers SAP is the only other vendor generating significant revenue in EMEA for sales applications. In 2002, its worldwide CRM license revenue was $448 million, compared with Siebel's $700 million. But in EMEA, SAP's CRM license revenue was larger than Siebel's ($270 million vs. SAP had about 1,750 CRM customers in EMEA at year-end 2002, but the deals are mostly mysap Business Suite contracts. Though most customers intend to deploy mysap CRM, they won't necessarily do it soon. About 375 of SAP's European CRM applications customers are "live" and 220 use some type of sales application (compared with Siebel's 550). The gap between SAP and Siebel in vision is mainly owing to the size, simplicity and single-channel nature of SAP's sales references. User numbers at the references were typically midrange (50 to 150 seats for direct sales). Users were generally happy. Half the sales implementations customers used eselling for sell-side e-commerce in a business-to-business industry, the rest used direct sales. SAP needs to match the addition of basic incentive compensation functions in mysap CRM 3.1 with more investments in product configuration, partner relationship management (PRM) and telesales plus more verticalization of sales functionality. Visionaries PeopleSoft sales applications have a strong Internet architecture, data model flexibility, enterprise integration capabilities and mobile synchronization. In late 2002, PeopleSoft launched 8.8 and added incentive compensation management, advisor-based selling, pricing configuration and PRM functions. It also rewrote the Calico and Annuncio acquisitions for compatibility. But PeopleSoft needs more EMEA deployments, especially for mobile sales. PeopleSoft has over 100 PeopleSoft 8 CRM customers in EMEA (25 live). We estimate 12 users, 28 February 2003 3
mostly sell-side e-commerce and telesales, are using a form of sales functionality. Two years after the acquisition, far more live clients are on Vantive in EMEA than PeopleSoft 8. PeopleSoft needs to migrate these customers and provide more live largescale sales user references. Niche Players Access Commerce has 200 live customers across Europe. Most use guided selling and sales configuration functionality in discrete manufacturing. In 2002, it added basic opportunity management and team selling functionality and began competing in the direct sales market with multiple sales channels, qualifying it for the Magic Quadrant. It is strongest in France, its home market. ACCPAC International bought eware in January 2003. ACCPAC, an ERP vendor that is part of Computer Associates, had been reselling eware in 2002. The acquisition has improved its financial viability and partner network. But eware's small customer base is mainly midmarket and in Benelux, Ireland, the Middle East and the United Kingdom. References reported its functionality was easy to implement, though gaps remain in mobile sales. eware's wireless capability is innovative, but has few references. It needs to build support for other sales channels and increase customers. Amdocs (Clarify) is stronger in customer service and support than sales (see "EMEA CSS Magic Quadrant 4Q02"). In EMEA, Amdocs has a leading position in telecoms billing and call centers, with proven references and scalability in call management, including telesales and inside sales. But sales deployments in EMEA are drying up, despite having product configuration functionality, an adequate opportunity management system and thin-client versions of its sales products. It must expand its installed base, retrain consultants in sales, fill functionality gaps and improve its mind share with external consultants. Ascent, a private Microsoft-architected CRM vendor, has a fastgrowing client base. Clients were happy with deployment speed and cost, and content with basic direct sales functionality. But they are not very demanding yet. Many are Scala and Sage ERP users because Ascent has pre-configured integration to these products. Ascent needs to respond to Microsoft's entry to the market in 2003, widen its product functionality range and keep increasing its ERP and consulting partners. Blue Martini bought Cybrant in 2002 and has a wide range of visionary sales applications including sell-side e-commerce, 28 February 2003 4
guided selling, product configuration and PRM. It has a basic opportunity management system and will soon deliver mobile field sales. Successes are mostly in retail and discrete and process manufacturing. It has good partnerships with large consultancies, but needs to grow its installed base in EMEA and improve direct sales functionality and localization. FrontRange Solutions is best known for its GoldMine sales applications, which are mainly bought by small and midsize businesses with less than 50 end users needing direct sales functionality. Its installed base is over 250,000 in EMEA and 100,000 use GoldMine. It has two key challenges: responding to Microsoft s launch of Microsoft CRM in 3Q03 and building market acceptance for the more adaptable and configurable.net-based GoldMine CustomerIQ. Onyx has strength in its broad range of sales functions and integration with the rest of its CRM suite. But its opportunity management system has little that is unique and the mobile solution was not rated well by references. In Europe, it has vertical solutions for financial services, government and business services. Executing on a successful partnership strategy will be key to success, given that over two-thirds of its European sales implementations involve partners in deployment. Some European references revealed limited local support, especially in Germany, Italy and the Nordics. Version 4.0 of its Microsoft-centric solution enhances its support for Web services and Oracle RDBMS. Oracle sales applications in EMEA is a tale of unreached potential. Though bugs in versions before 11.5.4 have mostly been fixed and it has a wide geographic presence with internal professional service capability, Oracle featured less in 2002 shortlists. It has over 80 live customers. The most mentioned applications are: online sales, sell-side e-commerce (istore), telesales, sales configuration and incentive compensation management. Oracle 11.5.9 will see enhancements to its mobile sales product, which are almost nonexistent. Online sales references had their simple requirements fulfilled, but found the application inflexible. Given the potential for strong selling into its ERP installed base, Oracle needs to increase CRM sales and attract external partners and consultants to deploy its applications. Pivotal is more successful in selling CRM sales applications in EMEA than customer service and support. At least two pan- European projects are under way with over 1,000 seats each. Most business is from traditional direct sales. It also has a product configurator, basic PRM and sell-side e-commerce functions. It is top of the Niche Quadrant owing to its references, flexibility of its opportunity management system and its improving 28 February 2003 5
support for mobile field sales users. Its MarketFirst acquisition for marketing and analytics enhances its offering. Pivotal's innovative results-based pricing approach and localized partner strategy will win favor in its midsize target market. But Pivotal, like Onyx, lacks enough local technical expertise. Sage acquired SalesLogix in 2001, but has not capitalized on it. Sage aims to use its powerful reseller channels across Europe but is limited by language support. Most impact has been in France, Scandinavia and the United Kingdom. It plans to move into 100-seat-plus deals. Sage's opportunity management functionality is strong and its architecture and functionality give an advantage over larger rivals for mobile field sales users. But the lack of a thin-client application is keeping it off shortlists. Selligent, a Microsoft-based CRM suite vendor, gets most business from mobile and direct sales deployments. Two-thirds of its revenue is from France, where it is the fourth-largest CRM vendor. It has over 120 customers in the Netherlands and expanded into Germany in 2002. It is the only Microsoft.NET logo-compliant architecture of an EMEA-headquartered CRM vendor. References were pleased with its ownership of deployments and understanding of operating differences between local business and national or European headquarters. Selligent needs to build vertical functionality and adapt to Microsoft's market entry. Software Innovation generates most business in Scandinavia. 2002 was tough license fees fell from $19 million in 2001 to $9 million. Its sales applications (Enterprise SalesMaker, Medea, Multimark) focus on basic sales management and contact management functions. It needs to stabilize license revenue, promote its modular approach to applications purchasing and buying and rationalize its product range. SuperOffice is the strongest in the sub-50-seat sales application market. With over $10 million in European license fees in 2003, it remains in the top 10 vendors in EMEA. It has over 11,000 customers and 150,000 software users mostly in Denmark, Germany, the Netherlands, Norway, Sweden and the United Kingdom. Average customer seats have risen from 10 to 20 over the past year. References praised SuperOffice's price and implementation speed. SuperOffice NetServer, launched in 2002, provides a.net-based framework for partners to build e-crm and collaborative CRM solutions. SuperOffice will use it to face Microsoft's entry into the market. S1 bought Point Information Systems in April 2002. S1 is a financial services software vendor with revenue of $300 million in 2001. Ireland-based Point has breadth across Internet, partner 28 February 2003 6
and direct sales, is highly ranked in telesales. Vertical focus is on financial services and telecommunications. Mobile sales customers remain rare and references struggled with the embedded Synchrologic offline synchronization. S1 has increased Point's financial viability and will focus it toward financial services and larger businesses. Update is a Microsoft-centric CRM vendor. Its products tend to be bought for direct sales and marketing. Its strengths are selling into German-speaking countries and providing support in 17 languages, including all Central European ones. Partnership numbers and quality improved greatly in 2002 and a deal with Synavant should open opportunities in pharmaceuticals. Over 700 companies in Europe run Update's software. Most references were complimentary and many intend to increase investment. Acronym Key CRM EMEA ERP PRM Customer relationship management Europe, Middle East and Africa Enterprise resource planning Partner relationship management Bottom Line: Over 150 vendors supply sales applications in EMEA, but only 18 qualified for this Magic Quadrant. Only SAP and PeopleSoft threaten Siebel Systems' leadership. The others often show strong functionality but not across multiple verticals and sales functionalities. More importantly, many have the larger challenges of improving financial viability, partnerships and architectures. Most will be pressurized to consolidate in 2003 and 2004 as ERP vendors expand further into CRM, Microsoft joins the market and economies remain weak. 28 February 2003 7