E-Marketing MQ, 1H03: Multichannel Marketing Emerges

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1 Markets, W. Janowski, A. Sarner Research Note 12 February 2003 E-Marketing MQ, 1H03: Multichannel Marketing Emerges E.piphany is the only e-marketing Magic Quadrant leader, but other CRM suite vendors are challenging its position. E- marketing solutions will consolidate into the broader market of multichannel marketing automation by year-end Core Topic Customer Relationship Management: Business Strategies, Technologies and Applications for Marketing Key Issue How can the marketing function better focus on value creation by leveraging technology in its operations? Strategic Planning Assumption By 2004, e-marketing will consolidate into the broader market of multichannel marketing automation (0.9 probability). The Internet is maturing as a business channel, strengthening its role as an enabler of multichannel enterprise marketing efforts. Enterprises are recognizing e-marketing's role in their businesses, and they are looking for solutions that will integrate online marketing with other marketing activities, instead of approaching the Internet as a "siloed" business segment. Thus, we have refined the inclusion criteria for the e-marketing Magic Quadrant (see "E-Marketing Magic Quadrant Criteria for 2003"). There's a greater emphasis on addressing e-marketing as part of an integrated marketing solution, and less focus on e-marketingrelated functionality for example, affiliate marketing and online advertisement management which is more-frequently addressed by function-specific point solutions. Therefore, several vendors that are not traditionally considered e-marketing players, but have their e-channel functionality transparently woven into their multichannel marketing solutions, have been added to the Magic Quadrant (see Figure 1). Gartner Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice.

2 Figure 1 E-Marketing Magic Quadrant, 1H03 Challengers Leaders Ability to Execute Teradata SAP SAS PeopleSoft Siebel Systems Unica Kana Oracle BroadVision Blue Martini Software ATG Vignette E.piphany Source: Gartner Research As of February 2003 Niche Players Visionaries Completeness of Vision In the 2002 e-marketing Magic Quadrant (see "E-Marketing Magic Quadrant, 1H02: Raising the Bar"), Gartner noted that for the traditionally single-channel-focused "e-players" to survive, they would have to focus on ways to help enable enterprises to integrate channel activities (for example, ATG); forge strong partnerships with, or be acquired by, larger suite players looking to offer integrated e-channel functionality within broader product offerings (for example, BroadVision and Teradata); or evolve to focus on strengths beyond e-marketing (for example, Vignette and Blue Martini Software). Since then, we have seen examples of all of these approaches. Leaders No new vendors have advanced into the Leaders quadrant to join E.piphany. However, the challengers and some visionaries are making steady progress toward the leadership position, with Siebel Systems and Oracle well-positioned to enter this quadrant in the next 12 months. Market leadership requires not only the ability to execute, but also a compelling vision that drives the market, supports customer demand for competitive differentiation and forces other vendors to seek to match what leaders are doing. Enterprises should consider a leader when financial and market execution are important, usually also associated with strong partnerships with implementation companies. Leaders are steps ahead of the competition in most functionalities, and they have a clear vision for the future of the market. 12 February

3 E.piphany is a leader in e-marketing, but it must continue to develop on its strengths in analytics and personalization if it expects to maintain its lead over other vendors, particularly the customer relationship management (CRM) vendors that are approaching the Leaders quadrant. It is critical that E.piphany does not lose focus on its marketing expertise while it fleshes out its offerings in sales and customer service. Users cite results such as increased average-order sizes and higher campaign response rates that were based on implementing E.piphany. Challengers Challengers' success often is driven by supporting the needs of their established (and typically large) customer bases. However, the lack of a strong vision to drive the market limits their leadership capability. Challengers are often excellent choices for enterprises looking for robust functionality and stability today, but willing to grow with the vendors toward future functionality. Enterprises should consider challengers when there are concerns regarding vendor stability, integration is key, and there is less focus on functionality. They should be willing to grow with the vendors as they flesh out their offerings. Although PeopleSoft has executed on its earlier e-marketing vision, particularly with the acquisition of Annuncio, integration of the Annuncio user interface with the PeopleSoft browser interface has not occurred. PeopleSoft has shown promising direction in the area of customer dialogs, but it does not have an overall e-marketing vision for the future. The Annuncio acquisition brought strengths to execution, and less to broader e-marketing functionality, which PeopleSoft is developing. Enterprises cite reduced campaign creation time and the ability to "add a large amount of customer contacts that we've made in the past year using this tool," and confirm PeopleSoft's strong execution capabilities. SAP is positioned in the quadrant as a strong challenger, but its strength of execution is mostly driven by its ease of integration into its installed customer base. It has had more-limited penetration in enterprises that do not have SAP applications inhouse. Although it offers baseline e-marketing functionality, SAP's position is also a reflection of a strong financial outlook. Although e-marketing rarely drives the sale of SAP products, SAP is beginning to demonstrate traction for its overall marketing functionality. SAS and NCR's Teradata Division are new entries to the e- marketing Magic Quadrant. SAS and Teradata have good e- marketing functionality and strong ability to execute, although 12 February

4 they do not position their functionality in ways that drive the market. Their e-marketing functionality is more an integrated component of their overall marketing functionality (as it should be), but it is not positioned as a primary strength. Although the evolving success criteria for e-marketing have caused many players to move back since the 2002 e-marketing Magic Quadrant, Siebel Systems has held strong and is wellpoised to move into the Leaders quadrant. Siebel must grow its vision of an e-channel that integrates into a robust, multichannel, customer-analytic solution. If this is accomplished, we expect Siebel to move into the Leaders quadrant in the next 12 months. Enterprises indicate that Siebel's e-marketing functionality was promising and is being used as a part of their overall Siebel implementations, with the functionality added over time. Current users appreciate the ability to automate their processes and deliver campaigns quickly and consistently. Visionaries Visionaries have a good understanding of market direction, but sometimes struggle to be heard in the market. Visionary vendors may have the right pieces in place for execution, but they haven't fully proven that vision in the market. The challenge to these vendors is to execute on their vision before their competitors pick up on the vision and run with it. Enterprises should consider visionaries when cutting-edge functionality is key, and there is understanding of where the market is, and where it is heading. They should be willing to risk using a less-proven application or vendor in exchange for competitive advantage. ATG has a strong vision focused on its e-channel routes, positioning it as an e-channel enabler to other multichannel solutions. However, like many early e-channel players, ATG is struggling to find an appropriate financial model. Blue Martini Software is focused on two vertical industries, retail and manufacturing; it's making good progress in both. It has strayed from its e-marketing roots to try to become a moremultichannel CRM player (see "Retail Is in Blue Martini's Future" and "Blue Martini's Manufacturing CRM Suite Has Promise"). References cite good e-merchandising functionality and indicate that Blue Martini is easy to maintain and has good order processing and ability to serve content. Oracle's vision has strengthened since the 2002 Magic Quadrant, with a well-placed focus on areas such as dialogs and workflow. Future positive movement will depend on its ability to 12 February

5 successfully execute on this vision. If it finds traction, it will be well-positioned to move into the Leaders quadrant in the next 12 months. Vignette and BroadVision are focusing on their strengths in content management and portal applications, areas with which the market identifies these vendors. Vignette's acquisition of Revenio, and BroadVision's strengthening partnership with NCR, display their commitment to enhancing their e-marketing functionality. However, both are struggling financially in the aftermath of the dot-com bust. Niche Players Niche players may have vision and functionality to support a specific target market. Alternatively, they may be new entrants that are building the pieces to move into the Challengers or Visionaries quadrants. Finally, they may be established vendors that are falling back to niche status because their offerings are failing to keep pace with the market's evolution. Enterprises should consider niche players when they are focusing on a piece of functionality, technology or industryspecific solution. Enterprises can benefit from selecting a niche player if they are focused on tactical requirements. Kana has repeatedly delayed the consolidation of its Broadbase acquisition; its business model is in transition. Its position makes Kana an acquisition candidate for a large software vendor that is considering entering or expanding its presence in the CRM market by using Kana's Java 2 Platform, Enterprise Edition architecture (see "Kana's Execution Will Lead to Acquisition"). Enterprises commented that Kana is an excellent tool for workflow and rules-based e-marketing campaign management, but the stability of its application could be improved. Although Unica is a strong vendor of marketing applications, its e-marketing strengths are primarily in marketing management. Comments from references indicate that Unica does what it promises to do, and connects to databases from all sources relatively easily. The Future for E-Marketing Vendors and Solutions Because the benefits of e-marketing are with integration into a broader marketing multichannel scenario, offerings from e- marketing vendors will continue to consolidate into base capabilities that are added to broader suites. Therefore, traditional CRM suite vendors, such as E.piphany, Oracle, PeopleSoft, SAP and Siebel, likely will enhance (through 12 February

6 acquisition or development) e-marketing functionality in their multichannel offerings. Type A, B and C Enterprises Gartner classifies enterprises based on how early and rapidly they adopt innovative IT. Type A enterprises are typically technically aggressive and well-funded, and use IT to gain a competitive advantage. Type B enterprises, which are in the majority, are mainstream IT users with adequate funding that use IT for productivity. Type C enterprises are technologically conservative and risk-averse, and seek to control IT costs. Gartner also is tracking the emergence of marketing automation suites. Marketing is a large enterprise expense component with low levels of automation, and marketing automation suites will seek to concentrate on the marketing function, while bringing deep functionality tailored for unique marketing needs. The analytic vendors, such as SAS, Teradata and Unica, which seek to develop the relevancy behind the marketing message, are well-positioned to develop suites of marketing applications that address the spectrum of enterprise marketing, including e- marketing functionality. Bottom Line: By 2004, e-marketing will consolidate into the broader market of multichannel marketing automation (0.9 probability). The ability to integrate e-marketing into an overall multichannel solution has matured into a mainstream requirement. Type B enterprises should already be in the process of doing this. Type C enterprises that deploy e-marketing strategies from a single-channel perspective will be at a significant competitive disadvantage. Type A enterprises should strive for seamless, real-time integration from all customer touchpoints, including the e-channel (see "E-CRM: Driving Customer Value Through the E-Channel"). 12 February