Vertically oriented CRM gathers steam

Rather than deploying generic CRM applications and having them custom-tuned to meet their needs, many enterprises these days purchase vertically oriented software that already has boilerplate functions specific to their industries, to minimize customization requirements.

CRM companies such as Siebel Systems Inc., PeopleSoft Inc., and Oracle Corp. all are pursuing opportunities in this vein, with varying strategies. Also a player is Epiphany, which may add specific solutions for vertical industries to its lineup of generic, horizontal products.

Siebel already has established a lengthy roster of vertical applications, with more than 20 industry-specific CRM offerings in industries such as apparel, health care, consumer packaged goods, and insurance.

“The vertical strategy actually started about five or six years ago when we were shipping a horizontal-based Siebel application,” said Ed Abbo, senior vice president of industry applications at Siebel, in San Mateo, Calif. Customers in CPG (consumer packaged goods) began looking for something more, according to Abbo.

“That’s where we started the idea of why don’t we work jointly with customers to configure our applications to better meet their needs and deliver something to them that’s a closer fit and therefore a lower cost of ownership [to] reduce the deployment cycle and reduce their investment going forth,” he said.

The company is now on its fourth generation of vertical applications, in an effort that has included taking the base Siebel platform and reconfiguring it for specific industries, and even the acquisition of pharmaceuticals software supplier Nomadic in 1997.

“Today, roughly 75 per cent of our revenue is derived from our vertical product,” Abbo said.

Each vertical application offers roughly 85 per cent to 90 per cent of the functionality customers need, with the remaining 10 per cent to 15 per cent requiring customization, Abbo said. Siebel’s utilities package, for example, features processes tuned for tasks such as handling of residential telephone accounts, said Abbo.

Siebel’s generic, horizontal offerings provide about 60 per cent to 65 per cent of what customers need in vertical markets, he said. Siebel’s horizontal packages are best suited for high-technology and industrial customers, Abbo said.

At cBeyond Communications, an Atlanta provider of telephony and broadband Internet services, the company uses Siebel’s eCommunications package for a variety of functions including order entry and management, customer care, and incentive compensation, said Joe Osterling, vice president of IT at the company. A customer and channel partner self-service portal also has been deployed.

“What the communications vertical provides is it takes basically generic functionality like order entry or customer care and it already has a communications slant to it before we even get it,” Osterling said. “We were able to implement our processes much more quickly and do less customization because our starting point was closer to the end goal.”

Fields provided in the application, such as one for telephone numbers, saved a lot of time on implementation, according to Osterling.

CRM vendors such as PeopleSoft and Epiphany also are eyeing vertically oriented CRM opportunities. Pleasanton, Calif.-based PeopleSoft is planning new releases of its communications and financial services packages this month and also is pondering products for industries such as CPG, utilities, and government.

Epiphany, SAP, and Oracle currently do not offer specific, vertical applications like Siebel and PeopleSoft. But both stress a commitment to meet the CRM needs of vertical industries.

“We don’t have packaged vertical offerings, but what we do find is these large companies need to have the flexibility of adapting their CRM applications to their own unique notion of who a customer is and how they want to treat customers,” said Paul Rodwick, Epiphany vice president of market development and strategy, in San Mateo, Calif.

Specifically packaged vertical applications might be on the horizon, however. “That may be a future step for Epiphany,” Rodwick said.

Thus far, the company has targeted markets such as financial services, communications, travel, retail, and manufacturing. “The way that we’ve approached these verticals is we’ve done many implementations of these, so we’re able to help a prospective client to understand how we have solved a problem just like theirs in this specific industry,” Rodwick said.

At SAP, the company adapts its product for vertical markets.

“We’ve had 22 industries where we’ve focused,” such as utilities, said Jon Wurfl, SAP director of global CRM communications, in Palo Alto, Calif.

“We look at requirements for the industry for CRM and we adapt [mySAP for CRM] to make sure it meets the business requirements for that industry,” Wurfl said. vOracle, according to Mark Barrenechea, Oracle senior vice-president of application development, in Redwood Shores, Calif., is “focused on over a dozen different industries today that vary from high-tech to transportation, government, financial services, and telco.” But the company does not distinguish these offerings by labeling them for different vertical markets; instead everything is part of the Oracle E-Business Suite, Barrenechea said.

Oracle’s strategy is to provide automated solutions for the top 12 industries, he said. The company’s trade management module, for example, enables companies in industries such as high technology and CPG to do budgeting and claims management, said Barrenechea.

Web services also is part of Oracle’s plan, he said.

“Our Web services strategy for e-business is industry by industry; we’re going to continue to expose our Web services, but we’re also going to provide integration with Web services to third-party applications, those applications we don’t intend to build,” such as publishing or billing, Barrenechea said.