MarketScope: Sales Configuration Systems

Transcription

1 Markets, R. DeSisto Research Note 27 May 2003 MarketScope: Sales Configuration Systems Gartner's Sales Configuration MarketScope replaces the Sales Configuration Magic Quadrant. In this market, enterprise resource planning vendors will make it difficult for best-of-breed vendors to maintain market share. Core Topic Customer Relationship Management: Business Strategies, Technologies and Applications for Sales Key Issue How will sales organizations use technology to meet the challenges of changing internal and external forces and business and market dynamics? Note 1 Product-Based Sales Configuration STO products have little variability other than a predetermined set of attributes, such as color and size. Some office equipment, household appliances and televisions fall into this classification. The role of a configurator is to match customer needs with product attributes that best serve those needs. In many cases, this problem is solved by using a simple parametric search engine or relational-database technology. ATO products are configurable offerings made up of standard components. They are configured based on customer needs and intercomponent attribute relationships (such as compatibility). Computers and telecommunications equipment fall into this classification. ATO configurators model products in terms of attributes whose values may be data-driven or formulaic. Formulas can represent simple-weight calculations or product resource use (for example, equipment power consumption). ATO configuration engines dynamically create bills of material for order fulfillment. ETO products are configurable offerings that consist of standard and customengineered components. They have the same features as ATO products, but involve some level of engineering analysis to be configured. Commercial aircraft, power generation equipment and heat exchangers fit into this classification. ETO configurators can model engineering processes, create complex bills of material, generate engineering drawings and computer-aided design information, and resolve unpredictable spatial constraints. Sales configuration functionality has become commoditized, and many enterprises are on their third generation of sales configuration system (SCS) deployments. Because of the market's maturity, we have decided to retire the Sales Configuration Magic Quadrant and introduce a new Sales Configuration "MarketScope." The MarketScope will provide specific guidance for enterprises that are deploying or have deployed sales configuration solutions and for potential new users seeking to purchase a sales configuration solution. Market/Market Segment Description: SCSs are used to configure ship-to-order (STO), assemble-to-order (ATO) and engineer-to-order (ETO) products (see Note 1) and to configure nonproduct information, such as pricing, discounts and customized financing plans (see Note 2). Sales configurators reduce complexity and improve productivity by helping salespeople match customer needs to unique products and service offerings. Rating for Overall Market/Market Segment: Our outlook for investing in sales configuration technology is "promising" because large vendors, such as Oracle, PeopleSoft and Siebel Systems, combine strong functionality with good vendor stability. Market Rating: Promising Evaluation Criteria The sales configuration ratings (see Figure 1) were based on the following four criteria: Financial viability and market commitment ability of the vendor to generate sustainable revenue and profits and demonstrated commitment to be successful in the sales configuration marketplace 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 Note 2 Non-Product-Based Sales Configuration Pricing configuration enables selling channels to deploy customized trade promotions and implement complex pricing and discounting strategies. It can provide competitive advantage through quick deployment of up-to-date pricing policies based on product, sales territory and customer information. Finance configuration enables selling channels to calculate financial justifications (for example, return on investment or life cycle costs), provide lease vs. buy analysis and generate customized financing plans. Access Commerce Baan BigMachines Blue Martini Chrome Systems Cincom Click Commerce Comergent Firepond i2 Technologies J.D. Edwards Oracle PeopleSoft Pivotal Resolution EBS SAP Selectica Siebel Systems Tacton Systems Source: Gartner Research (May 2003) Targeted delivery ability to implement and partner with external service providers to deliver sales configuration solutions Functionality and vision breadth, depth and vision for sales configuration functionality to support multiple industries Application agility openness and flexibility of the application platform to execute in multiple selling environments (for example, Web and field sales) and integrate with external applications such as enterprise resource planning (ERP) and customer relationship management (CRM) suites Figure 1 Sales Configuration MarketScope Strong Negative Caution Promising Positive Strong Positive Access Commerce: Like most small vendors in this market segment, Access provides compelling functionality but, because of its size, is a viability risk compared with larger suite vendors. In 2002, 30 percent of its license revenue came from North America, compared with 16 percent a year prior. Enterprises have cited its multilingual capabilities and ability to support complex ATO environments as aspects that the product does well. Some users cite Web-based maintenance of sales configuration rules as a functionality gap. In its September 2002 release, Access improved its ability to handle object pooling, 27 May

3 which allows common rules and data to be stored in memory once and be shared by multiple users. Rating: Caution Baan: Baan has a compelling functionality vision for its sales configuration product, especially for enterprise integration. However, recent statements by Invensys about selling off the Baan unit raise caution (see "Who Will Buy Baan This Time?"). Baan's Enterprise version of its sales configurator provides consistent access and deep integration of configuration models across all enterprise functions. Enterprises that implemented the older Baan Configurator may have to rewrite some of their configuration rules to take advantage of improved features. Baan focuses on specific vertical industries aerospace and defense, automotive, electronic manufacturing services and peripherals, and industrial machinery. Rating: Caution BigMachines: BigMachines is rated "caution" because it is a small vendor with a small customer base (10 customers) and little market awareness. BigMachines provides compelling packaged functionality for industrial product manufacturers (for example, pumps and compressors) and enabling technology to support ETO manufacturing processes. BigMachines claims to provide industry templates (data model) for pumps, valves, machine tools, oil and gas field machinery, power transmission, and material handling. Rating: Caution Blue Martini Software: Blue Martini offers compelling sales configuration functionality for product and pricing configuration. Blue Martini has become a viable player for manufacturers with partner relationship management (PRM) suite needs. Its architecture supports a many-to-many partner relationship model, in which resellers, distributors and manufacturers require a high degree of collaboration. To maintain its "promising" rating, Blue Martini must show more production PRM suite deployments, where sales configuration is a component of the implementation. Rating: Promising Chrome Systems: Chrome has shown excellent vision for preand post-sales vehicle configuration for automotive dealership deployments. Its narrow focus and limited presence rate it as a "caution." Only customers deploying sales configuration to automotive dealerships should consider Chrome. Rating: Caution Cincom: Cincom provides a good solution for ETO enterprises and has a good maintenance environment for all product configuration environments. Enterprises have found that Cincom provides good functionality and support. It must improve its market awareness for its sales configuration product. Rating: Caution 27 May

4 Click Commerce: The lack of market momentum for the product and Click Commerce's decline in revenue in the past few years are the primary reasons for the "caution" rating. The sales configurator's 4.3 release included integration with the Relationship Manager to exploit security, personalization and globalization features. The 5.0 release included integration with the Partner Portal catalog and order management features, allowing for the ordering and assembly of complex products. It also included improvements to the user interface, including a new wizard for product add-ons. Rating: Caution Note 3 Sales Configuration Constraint Engines Constraint engines enable users to select an invalid choice and have the model automatically deselect choices that were previously selected, to keep the model in a consistent valid state. Comergent Technologies: Comergent has appeared on more shortlists in the past 12 months, primarily during evaluations where enterprises are looking for order management and PRM suites with sales configuration functionality. Comergent customers like the simplicity of the maintenance environment for administering product configuration rules and ERP integration capabilities. Enterprises implementing an order management or PRM suite of applications should consider Comergent's sales configurator. Comergent lacks a true constraint-based configuration engine (see Note 3), which could be problem for some users. Enterprises have found that Comergent provides a reliable architecture for managing product information, a good customer support organization and a scalable architecture. Rating: Promising Firepond: Firepond's revenue decline during the past few years remains a concern and is the primary reason for its "caution" rating. Firepond provides proven sales configuration and interactive selling solutions for discrete manufacturing organizations. Enterprises have reacted favorably to Firepond's workbench for maintaining product and pricing configuration rules and models. Rating: Caution i2 Technologies: i2 is rated "caution" because of an uncertain financial situation and moderate traction of its sales configuration product in the market. i2's back-end maintenance environment for modeling pricing and product configuration rules is good. Some enterprises believe that i2 consultants lack sales configuration deployment experience. i2 represents one of the more-compelling solutions for integrating demand and supply chain management functionality with sales configuration. Rating: Caution J.D. Edwards: J.D. Edwards continues to lack a true constraintbased configuration engine, which is the primary reason for the "caution" rating. Its new advanced configurator is best-suited for current or future customers of J.D. Edwards' ERP system OneWorld that do not require a full constraint-based evaluation engine. Users state that J.D. Edwards' advanced pricing tool has 27 May

5 met their needs and was a big improvement over its traditional pricer. Rating: Caution Oracle: Oracle has continued to increase the number of reference customers worldwide, offers deep integration with other Oracle applications, such as manufacturing, has demonstrated an easy-to-use rule maintenance environment, and has very strong business viability. Oracle has shown the ability to solve simple and complex configuration problems. It has a large global support team worldwide. Oracle does not have any live references in a mobile environment on the 11i version of its sales configurator. Oracle's Advanced Pricing provides a flexible rule engine. It is based on PL/SQL, leading to some user performance issues. Oracle will replace the current PL/SQL engine with a Java-based engine by mid-2004 (0.7 probability). The pricing maintenance environment is cumbersome for pricing managers and can't be deployed on a mobile laptop. Rating: Positive PeopleSoft: PeopleSoft has successfully integrated Calico Commerce's configurator for its connected version of PeopleSoft 8.8, but users must run the configurator as a separate application if they desire a mobile platform. The latest version of the configurator offers pricing and product configuration, with compelling maintenance environments. PeopleSoft is rated "promising" because it has been successful in investing in and converting Calico's vision into released software. PeopleSoft must generate referenceable accounts, standardize on the Calico technology across its manufacturing suite, and more tightly integrate the mobile sales product with the sales configurator. Rating: Promising Pivotal: With its latest release, Pivotal has integrated its sales configurator with its direct-sales application. The integration is functionally complete, but we rate Pivotal a "caution" until it is proven in more production environments. Its product configurator will support large-market opportunities and provides a pure thinclient administration environment for configuration rules. Enterprises believe that Pivotal provides good functionality at less cost than best-of-breed competitors. Enterprises state that Pivotal's error reporting and integration with legacy systems could be improved. Pivotal claims that it has addressed these two issues with the release of Pivotal 5 and its new Pivotal Assisted Selling product. Rating: Caution Resolution EBS: Resolution EBS provides nested-configuration capabilities, pricing configuration and strong back-end maintenance tools for managing configuration rules. Enterprises report that its maintenance environment simplifies configuration model complexity. Some enterprises cited as a challenge a 27 May

6 limited math function set to solve ETO configuration problems. However, its limited distribution and market awareness rate it a "caution." Rating: Caution SAP: SAP is rated "promising" because it has an extensive base of manufacturing customers who value deep integration of product information with deployed R/3 installations. SAP CRM 3.1 offers enhanced administration functionality for maintaining configuration models and rules. However, it must improve the pricing rule maintenance environment. Enterprises have found that SAP provides tight integration with R/3 master data and order execution capabilities. If SAP's sales configurator does not support current SAP user requirements, enterprises should look at best-of-breed vendors. SAP's key challenge is to integrate its new product modeling environment with its traditional R/3 sales and distribution, and with product life cycle management. Rating: Promising Selectica: Selectica's "positive" rating is based on its proven experience with handling complex configuration problems, expanded pricing configuration functionality, a good user interface for maintaining sales configuration rules, and strong scalability. Enterprises report that Selectica can improve the ability for rule modelers to share configuration models during the model-building process and enable easier integration of the enduser deployment interface with the configuration knowledge base. Some Selectica references were quite satisfied, whereas others believed that they had received just adequate support. Selectica's biggest challenge will be how to spend its large cash reserve ($110 million). It must expand its CRM application breadth to ensure longer-term viability. Rating: Positive Siebel Systems: Siebel rates "positive" because: it has deployed to a large number of enterprises with simple/moderate requirements; it features good vertical-industry expertise, such as telecommunications; it provides strong multichannel support (mobile, call center and Web); and it enables integration with its CRM suite platform. Siebel has been used in some complex, high-technology environments; however, some enterprises report that the rule maintenance environment and rule testing tools could be improved. Users said that Siebel's sales configurator could solve nested-configuration problems, but it was somewhat difficult to model. Rating: Positive Tacton Systems: Tacton has a simple-to-use environment for modeling product configuration rules. However, it has limited distribution and implementation in North America, and company size causes us to rate it as a "caution" for this market. Tacton has appeal for European midmarket enterprises that are seeking a cost-effective solution. Rating: Caution 27 May

7 MarketScope Rating Framework A Gartner MarketScope rating does not imply that the vendor meets all, few or none of the evaluation criteria. The Gartner MarketScope evaluation is based on a weighted evaluation of each of the vendor's products in comparison with the evaluation criteria. Enterprises should consider Gartner's criteria as they apply to the enterprises' specific application requirements. Clients should contact Gartner to discuss how this evaluation may affect their specific needs. In Table 1, the various ratings are defined: Strong Positive Positive Promising Caution Strong Negative Table 1 MarketScope Rating Framework Solid provider of strategic products, services or solutions. Customers: Continue investments. Potential customers: Consider this vendor a strong strategic choice. Demonstrates strength in specific areas, but is largely opportunistic. Customers: Continue incremental investments. Potential customers: Put this vendor on a shortlist of tactical alternatives. Shows potential in specific areas; however, initiative or vendor has not fully evolved or matured. Customers: Watch for a change in status and consider scenarios for short- and longterm impact. Potential customers: Plan for and be aware of issues and opportunities related to the evolution and maturity of this initiative or vendor. Faces challenges in one or more areas. Customers: Understand challenges in relevant areas; assess short- and long-term benefit/risk to determine if contingency plans are needed. Potential customers: Note the vendor's challenges as part of due diligence. Difficulty responding to problems in multiple areas. Customers: Exit immediately. Potential customers: Consider this vendor only if there are no alternatives. Source: Gartner Research (June 2002) Acronym Key ATO assemble-to-order CRM customer relationship management ERP enterprise resource planning ETO engineer-to-order PRM partner relationship management SCS sales configuration system STO ship-to-order Bottom Line: In the sales configuration system market, enterprise resource planning vendors, such as Oracle, PeopleSoft and SAP, will continue to expand functionality and tighten integration, making it more difficult for best-of-breed vendors to maintain market share. Other than for small vertical niches, by year-end 2004, vendors that provide only sales configuration functionality will cease to exist (0.7 probability). Until then, enterprises should continue to evaluate best-of-breed vendors, because there are still functionality gaps in the larger suite vendors' offerings, especially where a heterogeneous ERP or customer relationship management environment may exist. 27 May