DM News Essential Guide to Lists and Databases: CRM Update: Consolidation, Disruption and Loyalty

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What a year 2005 was. It started with Oracle putting the finishing touches on its planned purchase of PeopleSoft and closed with Oracle's proposed purchase of Siebel. In between, SSA Global bought E.piphany while private equity fund Francisco Partners acquired FrontRange Solutions. Analysts now expect enterprise vendors to gobble up smaller players to round out their offerings.

Mega-vendors like Oracle and SAP also are building out their next-generation products on the foundation of service-oriented architectures, Web services, predictive analytics and business process modeling tools. These technologies will let organizations implement solutions tying together cross-functional services covering a complete customer interaction, a totally different delivery model from the current application-per-department approach with separate databases for each.

The bigger the enterprise, the greater the likelihood that multiple people and departments touch that customer using various channels of contact (mail, telephone, Web, e-mail, instant message, self-service, etc.). Many companies are likely to opt for this kind of flexibility, even if it doesn't include best-of-breed functionality.

More companies are opting for hosted CRM solutions. What once was described as a "nice little business" by Siebel founder Tom Siebel is disrupting the dynamics of the industry. Led by, RightNow Technologies and NetSuite, the on-demand CRM market is growing as small and midsize enterprises new to CRM can afford to implement solutions and are growing more comfortable with the model.

In certain circumstances, large enterprises also are taking advantage of the lower upfront costs and shorter implementation times of hosted CRM. The Internet has increased the need to make quick strategic adjustments to competition and market conditions, and on-demand offerings let the focus remain on business and not divert to software maintenance or installation.

One major plus about the multitenant model is how seamlessly and swiftly vendors can push out new features and user interface changes. Where it might be years in between major upgrades for traditional software vendors, on-demand service providers have been known to release four major upgrades annually.

Improving the customer experience is key to creating profitable, long-lasting relationships. All these moves in the industry should be good for companies serious about CRM. And look for more consolidation and disruption this year. Options abound for virtually any scenario a company finds itself in, whether it is on premise or on-demand.

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