Eighty per cent of the vendors that create Web-based customer service software are likely to cash in their chips by 2004, according to a recent report.

The study, by Stamford, Conn.-based analyst firm Gartner Inc., predicts that the complexity of reworking soon-to-be-outdated e-business suites will force many firms – including major players SAP, Oracle, PeopleSoft and Nortel, and smaller players Kana, E.piphany, and E-share – to abandon the e-services market.

“A lot of these companies will realize that they are better suited to offer services in other areas of CRM. They may merge, or integrate their technology into another company’s offering – there are many different ways to get out of the market. Essentially, while we see about 50 vendors today, in a two- to three-year time frame we expect to see 10 to 12 vendors left,” said Esteban Kolsky, a Nevada-based senior research analyst with Gartner.

Although there is a strong possibility that Oracle and PeopleSoft will continue, Kolsky said only Siebel is guaranteed to survive the competitive and fast-moving e-service market.

His study also found that more than half of current e-service solutions have failed to include key components required to provide high-level customer service.

Kolsky identified automated e-mail management, interactive chat, and Web-based self-service as the three absolutely critical e-service tools, closely followed by voice-over-IP, FAQ capability and collaboration tools.

Companies exploring their e-service options need to find a vendor that can provide a solution that both includes the three critical components, and that fits within the company’s overall CRM strategy, said Kolsky.

“I can’t emphasize enough that to jump into this by simply picking a vendor or package and hoping it’s going to be OK will not work. [A company] shouldn’t just buy the cheapest one, or a solution from a vendor because they have used them in the past, but find out as much as possible about the provider’s vision of the future,” Kolsky said.

Citing an earlier Gartner study, which concluded that e-commerce without e-service, is doomed to fail, Kolsky said that companies are just stating to wake up to the possibilities and the importance of Web-based customer relationship management.

“If I buy through the Internet it’s because I prefer that channel, therefore an e-business should respect my wishes and provide that channel as a way of providing customer service. You can’t sell through the Web then give [your customer] a phone number and ask them to wit on hold for 20 minutes while you deal with them.”

Gartner Inc. is at