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Customer relationship management (CRM) and customer experience (CX) are coming together, and this is reflected in the latest offerings from the major CRM providers.
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The key products in this market are all cloud-based. Gartner, Forrester and Nucleus Research have positioned Microsoft Dynamics 365, Oracle CX Cloud Suite and Salesforce as the leaders in this evolution of the traditional CRM market.
Market share data puts Salesforce in front, but both Microsoft and Oracle are working to close the gap. They each have plenty of customer references.
Computer Weekly looked at Gartner’s Magic quadrant for sales force automation 2016, Forrester’s The Forrester Wave: CRM suites for enterprise organizations and Nucleus Research’s CRM technology value matrix 2h2016 reports to gain some insight into each product offering.
While the products share some similarities, the analysts’ assessments suggest each product has its own particular strengths and weaknesses. This makes the task of deciding which one will best fit business requirements all the more difficult.
Pricing, limited integration and complexity are among the factors that negatively affected the analysts’ ratings.
For its fourth quarter 2017 SEC filing, Salesforce reported full fiscal year 2017 revenue of $8.39bn, a 26% increase year on year.
In Forrester’s analysis, Salesforce provides very strong marketing and customer service capabilities, as well as salesforce automation. It has industry-specific offerings for financial services, healthcare and government, and, according to Forrester, the multibillion-dollar acquisition of Demandware in 2016 has given Salesforce viable field service capabilities.
According to Forrester, Salesforce has a clear, well-communicated roadmap for each cloud product. “Customer references comment that the product is expensive and that the supplier has lost its personal touch as it has grown. Salesforce best suits organisations looking for a partner to help realise customer engagement transformation goals,” the analyst stated.
Gartner found that customer references gave Salesforce the lowest score of all providers for perception of product value. “They also gave Salesforce comparatively low scores for contract negotiations and pricing flexibility,” Gartner wrote. “Reference customers cited concerns about Salesforce’s relatively low capability in content management. They also noted concerns about the quality of its Outlook integration, with gaps in advanced analytic capabilities and a lack of mobile offline capabilities on iOS devices.”
Nucleus Research noted that Salesforce’s release cadence of new features sets a pace that is difficult for other suppliers of CRM to match. “Its recent investments in Lightning, such as Lightning for Outlook, continue to expand the usability of Salesforce, as well as positively impact the productivity of its users in terms of data capture,” wrote Nucleus Research. “Salesforce continues to deepen its functionality in salesforce automation, with Sales Path for sales coaching, Sales Cloud Einstein features, opportunity splits, forecasting and integrated CPQ [configure, price, quote].”
But Nucleus Research felt Salesforce lacked a companion portfolio, such as enterprise resource planning (ERP) and human capital management (HCM) software, which competitors such as Oracle, Microsoft and SAP do have. This could make it less attractive to large companies with numerous software needs which are looking for a single provider.
Oracle CX is the natural replacement to its on-premise Siebel CRM suite. It offers Commerce Cloud, CPQ Cloud, Data Cloud, Marketing Cloud, Sales Cloud, Service Cloud and Social Cloud.
In a transcript of the earnings call for its third quarter 2017 filing posted on the Seeking Alpha financial blogging site, Oracle chief financial officer Safra Catz said: “CX was up 16%, with marketing and service both over $100m in quarterly revenue.”
Forrester reported that Oracle is now in the process of maturing cross-cloud integration and building integration with third-party cloud and on-premise systems. It is also providing an integration framework as a service, as well as extending the products downwards from the enterprise to the mid-market.
One of the criticisms raised by Forrester was that some customer references found integration between the various products was neither sufficiently broad nor deep. This was also mirrored by Gartner, which stated: “Oracle received comparatively low satisfaction scores from its reference customers for its systems integration partners. References noted issues with getting access to qualified implementers with the quality of product knowledge, and with the quality of the implementation work performed.”
One of its strengths, according to Nucleus Research, is that Oracle offers one of the most robust platforms in terms of functionality. The analyst noted that it has the resources to devote to innovation that only a few competitors can rival.
But Nucleus Research highlighted its cost as a factor for mid-sized organisations. “Historically, Oracle CX Cloud has not been one of the most cost-effective solutions,” it wrote. The company has introduced new cross-cloud offerings for small to medium-sized enterprises (SMEs), designed to be more attractive to smaller operations. “It remains to be seen how these will be adopted and if Oracle will be able to gain ground in the high end of the SME market,” the analyst added.
Office 365, Azure and Dynamics 365 make up Microsoft’s commercial cloud. This business grew by 52% to $15.2bn in the third quarter of 2017. According to Forrester, Microsoft has a vision for CRM focused on deep intelligence and prescriptive advice to deepen customer engagement and make CRM users more productive.
It has 32 industry templates covering markets that include the public sector, retail, financial services, manufacturing, services and healthcare. These are complemented by those available from its partners.
Regarding its strengths, Forrester noted: “Microsoft Dynamics CRM provides strong CRM capabilities with high marks from customer references for usability delivered via a robust, scalable, and unified platform.”
It said Dynamics also offers very strong reporting and analytics, with many prescriptive advice scenarios to optimise sales processes, marketing offers and customer service agent activities.
Gartner noted the links with Microsoft’s Azure platform as both a potential strength and an area of concern. It said Dynamics CRM Online is supported by two different technology architectures: a product configuration architecture and the Azure cloud platform for advanced capabilities such as predictive analytics and offline mobile functionality.
“Clients and prospects with significant customisations should be aware that Microsoft plans to migrate all Dynamics CRM Online services to Azure, but has not yet publicly committed to a cutover roadmap with firm migration dates,” Gartner added.
For Nucleus Research, one of the strengths of Dynamics is that Microsoft has made considerable progress in building out its core CRM capabilities. At the same time, the product also takes advantage of the broader Microsoft portfolio to make it a head-to-head competitor against the likes of Oracle and Salesforce, it said.
“Microsoft’s investments in ancillary products such as PowerBI and machine learning capabilities through Microsoft Azure add to its functionality strength,” the analyst noted.
But the complexity of the feature set is a weakness. In fact, Forrester said Microsoft’s message and execution are diluted by its variable partner network. “Microsoft is best suited for B2B companies that are committed to the Microsoft technology stack and leverage other Microsoft solutions.”
When Computer Weekly began looking at how the analyst firms divided the customer relationship management software market, there were a couple of surprises. First was SAP. While SAP Hybrid Cloud for Customer featured in the various research reports, it was not truly considered a leader.
Nucleus Research, for instance, noted: “Like SAP’s other CRM offerings, Cloud for Customer is primarily sold to existing SAP ERP customers, and Nucleus has yet to see a CRM-led SAP deal.”
Gartner warned: “SAP offers competing solutions for scheduling, work order management and ERP integration. Organisations should look to partners or internally to fill spaces in functionality or integration.”
The other surprise was Pegasystems. Forrester weighted Pegasystems strongly in terms of business intelligence, platform and architecture, execution and roadmap. It scored less well in terms of pricing, third-party ecosystem and size of installed base. Its strengths, according to Nucleus Research, are in business process management (BPM) and case management.
Speak to any IT leader and the one common challenge they face is the need for their organisation to have a single view of the customer cross all touchpoints.
“Every time someone is sent a needless email, it devalues the brand,” says Conal Furie, head of innovation at Jardine Motors. “Throwing money to generate data at a single point in time doesn’t create value. You are burning opportunities,” he says.
As Quocirca analyst Clive Longbottom, pointed out in a recent Computer Weekly article, it is all about data. A good customer experience is about having the right data at the right point in the customer’s journey, whether it is an enquiry or transactional. The major products can only go so far and it may be necessary to integrate internal and external data sources.
“The key to next-gen CRM success is in putting together a platform that is suitable for aggregating, analysing and reporting on the different data sources and types available,” says Longbottom.
Key CRM products: analyst summary
- Salesforce: low score on product value and comparatively low scores for contract negotiations and pricing flexibility. – Gartner
- Oracle CX: one of the most robust platforms in terms of functionality but cost may be a factor for mid-sized organisations. – Nucleus Research
- Microsoft Dynamics: message and execution are diluted by its variable partner network. Best suited for B2B companies that are committed to the Microsoft technology stack. – Forrester