Analytics redraw CRM lines

As enterprises demand better tools to exploit mounds of customer data locked away in CRM systems, CRM companies are rushing to add analytical capabilities to their applications.

The push for better data is creating a convergence between traditional business intelligence and CRM, as transactional CRM vendors integrate business-intelligence functions through internal product enhancements or via third-party support.

CRM giant Siebel Systems Inc., based in San Mateo, Calif., plans to announce within the next few months adapters that link its CRM applications to business-intelligence products from companies such as SAS and SPSS to provide predictive analytics. The move follows Siebel’s October announcement to acquire data analysis software vendor nQuire Software Inc., an effort designed to boost its stable of business-intelligence technologies.

For its part, online CRM vendor Inc. is expected to announce in December an agreement with MicroStrategy Inc. to provide data mining and analysis to customers.

A company executive said will deepen partnerships with business-intelligence vendors early next year to improve data-extraction services.

Pleasanton, Calif.-based PeopleSoft Inc. in December plans to ship its Customer Behavior Modeling product to complement its CRM platform, PeopleSoft 8. The application uses customer data integrated with behavioural metrics and demographics information to define and select populations of customers and apply data mining to build predictive models and score customers based on relevant criteria.

PeopleSoft 8 itself also features data analysis capabilities, which the company says can detect, for example, which customers are likely to switch to a competitor.

“We believe that analytics are a prerequisite component of any CRM deployment,” said Robb Eklund, vice-president of CRM product marketing at PeopleSoft.

The benefit of combining the two functions is not lost on IT executives.

“We have all this great information, but like most people, we can’t get it out in an easy manner,” said Todd Inlander, CIO of Fleetwood Enterprises Inc., in Riverside, Calif. Fleetwood, a maker of recreational vehicles and manufactured homes, is currently working out how to integrate its Siebel-based CRM and business-intelligence systems for business advantage.

Some argue that bolting on analytics to operational CRM may create more work for enterprises. CRM outfit E.piphany Inc. says it has offered business intelligence in its applications from the start.

“The way that the various CRM vendors are attacking the problem of trying to have some degree of analytics is either through partnerships or trying to build their own,” said Paul Rodwick, vice-president of market development strategy at E.piphany, in San Mateo, Calif.

“In the end, that yields an integrated solution that requires many user interfaces and is difficult to adapt over time,” Rodwick said.

In August SAP AG enhanced its CRM product, mySAP CRM 3.0, by adding out-of-the-box analytical capabilities. And in early November, New York-based InStranet Inc. released InStranet 2.0, which allows business users to incorporate data generated in e-business applications with “unstructured business content” contained in the likes of typical office applications.

Where CRM customers are concerned, integration should be the key word driving vendor feature sets.

Deutsche Bank AG, in Frankfurt, Germany, is blending its Siebel CRM applications with an internally developed data warehouse and an analytical server from Alphablox Corp. Inc. The system is designed to enable the bank to isolate related information from the warehouse. “It might be looking at a specific sub-product in a sub-sector,” said Edwin Ball, global MIS coordinator at the bank’s London branch.

Online and catalogue retailer Fingerhut Companies Inc., of Minnetonka, Minn., has linked SAS business-intelligence modules to internally developed contact optimization applications, which the company characterizes as CRM systems.

“The prediction of future customer behaviour is what feeds our contact optimization system,” said Randy Erdahl, director of business intelligence at Fingerhut. This data is used to determine which catalogues customers should receive, which in turn saves Fingerhut money, Erdahl said.

At Huntington Bank, the company uses a variety of CRM tools as well as Oracle’s Profit+ system – part of Oracle’s financial applications suite – for business intelligence. The company integrates some 50 applications into its infrastructure, which keeps track of 2,000 cost centres – or points of contact within the organization – and millions of accounts, said Jeff Wagner, senior vice-president of profitability and analysis at the bank, in Columbus, Ohio.

The system allows the bank to determine who are its profitable customers and understand capacity utilization, Wagner said. Building the CRM and business-intelligence infrastructure required “a fair investment in both time and money,” Wagner said.

Erin Kinikin, vice-president of CRM at Giga Information Group Inc., in Santa Clara, Calif., supports these experiences, commenting that companies with CRM systems and accompanying transaction data are looking to analyse that data.

“Business intelligence is the tools and customer analysis is the results, and this is probably the biggest new growth opportunity for both (CRM and business-intelligence vendors),” Kinikin said.

Some observers believe the integration trend could render business-intelligence vendors redundant as stand-alone offerings, whereas others point to new opportunities for enterprises to finally realize solid ROI from costly CRM implementations.

Whereas Kinikin believes CRM and business intelligence will remain separate markets, one Oracle Corp. executive remains unconvinced, questioning the long-term viability of stand-alone business-intelligence vendors.

“It’s a fading proposition,” said Lisa Arthur, vice-president of CRM marketing at Oracle, in Redwood Shores, Calif.

“(Stand-alone business-intelligence vendors) can’t offer operational intelligence unless they have customer relationship management applications,” Arthur said.

Officials at business-intelligence software companies naturally disagree.

“There’s always going to be a spot for business intelligence because business intelligence looks at more than just CRM data,” said Jennifer Cullen, senior manager of CRM markets and applications at Ottawa-based Cognos Inc. Business intelligence also is useful in examining ERP data, she said.

Cognos partners with a variety of CRM vendors, including Siebel and Onyx Software Corp., Cullen said. Informatica also links with back-end applications and complements operational CRM, said Sanjay Poonen, general manager and vice-president of applications at Informatica Corp., in Redwood City, Calif.

A MicroStrategy official said separating business-intelligence functions from CRM can assist with gathering intelligence from fragmented business divisions and make operational CRM systems stronger.

Despite the trend of CRM vendors to get into the business-intelligence game, separate business-intelligence systems will not go away, said Tom Villani, vice-president of product management at MicroStrategy, in McLean, Va.

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