Consumer Goods Industry SFA 1H03 Magic Quadrant

Transcription

1 Markets, D. Hagemeyer Research Note 21 February 2003 Consumer Goods Industry SFA 1H03 Magic Quadrant The sales force automation space for the consumer goods industry is highly fragmented. No single player enables all the key sales processes. CAS and Siebel are positioned as visionaries, within striking distance of leadership. Core Topic Customer Relationship Management: Business Strategies, Technologies and Applications for Sales Key Issues How will sales organizations use technology to meet the challenges of changing internal and external forces and business and market dynamics? How will technology impact the evolution of sales channel and customer relationships? Industry Trends Consumer goods (CG) companies continue to invest in and focus their customer relationship management (CRM) efforts primarily on sales force automation (SFA), with the consumable CG enterprises being ahead of durable CG enterprises in adoption. This stems from the higher velocity of the transactions in consumables, as well as the more profound impact that the difficult economy has had on the sale of durable goods. Within SFA, the investment focus continues to be on trade promotion management, with roughly 80 percent of enterprises pursuing SFA to better plan and manage promotions with the retail trade. Notwithstanding this continuing trend, there has also been increased emphasis on automating category management functionality. We see this to be consistent with the vision we outlined for automating the key selling processes of the CG industry (see "Consumer Goods Field Sales: Focus on Five Key Processes" and "Consumer Goods Field Sales: Linking Five Key Processes"). CG enterprises are more frequently enabling the analytical category management processes as a precursor to customer planning so that the insights generated during the analysis can be incorporated in the planning cycle. Another industry trend is a dissatisfaction with reporting capabilities across many of the vendors, as evidenced by vendor reference checks. This is clearly a call to the vendors to take a look at their reporting capabilities and see how they can make them more flexible and easy to use. We are not surprised by this dissonance with reporting capabilities, which we interpret as a sign of how the SFA space is maturing. SFA systems are highly transactional in nature, but, as users get accustomed to their SFA systems, their requirements evolve from transactional to managerial. 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 Based on recent reference checks across the various vendors in the CG Field Sales Automation Magic Quadrant, we found that 29 percent of the SFA implementations among CG companies involved external service providers (ESPs), either in the strategy and process design phase or for data integration. The implication is that many vendors do not have ESP partners when the situation requires outside help, whereas other vendors are overly reliant on ESPs in a space where 71 percent of implementations are done in house by the vendor. The Magic Quadrant The criteria for inclusion in the CG Field Sales Automation Magic Quadrant (see Figure 1) were published previously in "Defining the Consumer Goods Industry SFA Magic Quadrant." Because the market is highly fragmented, with some vendors having no overlapping functionality in the field sales processes that they enable, we will apply the following designators to them: (S) SFA suites that include most elements of the other three functional areas (T, R and E) (T) Trade promotion management, customer planning and settlement (R) Retail execution and monitoring (E) Category management and sales effectiveness 21 February

3 Figure 1 1H03 Field Sales Automation Magic Quadrant for the CG Industry Challengers Leaders Ability to Execute SAP (T) PeopleSoft(T,R) Oracle (T) Kenosia Gelco Information Network (T) Group (E,T) CAS(S) MEI (S) Siebel Systems (S) (E) Interactive Edge (E) Thinque Systems(R) Synectics Vista Software Solutions (T) As of February 2003 Source: Gartner Research Niche Players Completeness of Vision Visionaries The Visionaries CAS and Siebel Systems continue to be visionaries as they provide the SFA suite functionality, embedded sales processes and other critical enablers. CAS has strong market share momentum in the United States and Europe, supporting warehouse and direct store-delivered selling models. Its visionary elements include a strong interface and functionality in its product, as well as embedding strategic account management capabilities, accompanied by specialized training and consulting that frames and guides strategic sales behavior. Another visionary and relevant service it is offering jointly with the IBM applications group is a scan-based point of sale (POS) analysis tool that will provide more-rapid understanding of POS data and is particularly timely given the trend of retailers no longer providing POS data to the traditional syndicated sources. POS analysis capabilities will complement CAS's category management capability. 21 February

4 CAS is also responding to the need for enhanced industry reporting requirements by developing a configurable analytics, report and visualization utility that will allow users to create a wide variety of reports, charts and graphs from within its SFA system environment. These will be configurable via pre-defined wizards and may be used in conjunction with an embedded reporting engine to access any information managed within the application or from external sources. Users consistently commented on the strength of the CAS technology and knowledge of the CG space, but pointed out that bench strength and support appeared to be experiencing growing pains during early To move to the Leaders quadrant, CAS must strengthen its consulting bench and support capabilities, implement a formal client satisfaction measurement capability, and expand global capabilities beyond North America and Europe. Siebel Systems continues to have the most global penetration and a broad offering that includes warehouse and direct storedelivered product, van sales, and apparel and footwear. It has strengthened its implementations through more general manager oversight and technical account manager involvement. Another positive step for Siebel has been the deployment of a CGspecific sales force, which allows for more industry expertise and better expectation setting during the sales cycle. The econsumer Goods product, in releases 7.0 and 7.5, continues to address key industry needs in sales volume planning, embedded processes from trade planning through execution, and usability of the interface in the handheld retail execution interface. Users generally responded positively about recent improvements in implementation and support. Some users also pointed out that they felt reporting capabilities were "oversold" and that deployment through ESP partners contributed to more-lengthy deployments. We believe that, given the highly complex nature of the CG industry, Siebel is taking a positive step in certifying its ESP partners but should look to do more of its own implementations to be more consistent with the 71 percent that are done in house across the space. The continued deployment of Siebel Analytics will address some of the need for more-robust reporting, because preliminary user feedback on Siebel Analytics has been positive. To move to the Leaders quadrant, Siebel must continue to focus on reporting and implementation. This will become particularly important in the midmarket, where the need to scale down the implementation by doing it in house becomes critical. Siebel will also need to provide more v.7.0 and v.7.5 installed references in the trade promotion area in North America, where there continues to be considerable market focus but relatively few 21 February

5 Siebel installs. There are only three today, but the pipeline will move the number to eight by year-end The Niche Players Gelco Information Network continues to be a solid customerplanning and trade promotion management solution in the North American midmarket, particularly for enterprises that want to reduce their total cost of ownership by going with an application service provider (ASP) model instead of purchasing and implementing software. It has a well-thought-out Web technology, both for individuals planning the promotions and for those clearing the deductions. Its partnerships with Cognos and awayx give it solid reporting capabilities as well as trade management for food service. Gelco's initiative with DemandTec should get traction as CG companies seek to optimize promotions and pricing. CG enterprises that are waiting for their enterprise resource planning (ERP) vendor to meet their planning and promotional requirements are finding Gelco particularly attractive because of the low cost of transition. Interactive Edge continues to be innovative in the new item sellin and promotional simulation, where it is unique among SFA vendors. It lost some momentum and client base briefly in the category management space with its CMS Pro product, because it required significant manual intervention for data loads and format customization. Nevertheless, Interactive Edge has addressed this issue with its new XP3 product, which features data autoloaders and a flexible interface that is oriented toward the sales user. The technology is Microsoft-centric and componentized based on user roles within the organization. Users commented that both pre- and post-implementation support was good and that projects were managed with strong adherence to established timelines. They also point out that the product is strong in multiple-source data analysis and that the inclusion of demographic data is a strong addition. A new entrant in the Magic Quadrant is Kenosia, which is part of Bristol Technologies. Kenosia's Data Alchemy product enables category management, including competitive analysis, pricing, promotions, lift analysis and other components of fact-based selling. The product is designed to have presentations and templates created by sales support, such as a trade marketing organization, with data being fed automatically from syndicated and other sources. The templates are then accessed by a Web interface by field personnel or brokers for analysis, some customization and presentation. The Kenosia solution uses a PowerPoint add-in tool that some users like because it doesn't rely on additional software, while others prefer to have the flexibility of working directly within a presentation package, such 21 February

6 as PowerPoint. Gartner, however, does not advocate proprietary components. Users also said that the tool is best utilized by "power users," who are dedicated to category management and the creation of selling presentations, because the system is very detailed and authorship is more complex than many sales users can handle. For MEI, 2002 was a pivotal year, as it got traction in the U.S. market. It has positioned itself well for the midmarket going forward, with a cost-effective solution that is typically implemented in house. By entering into a joint venture with VeriSync to provide ASP trade promotion management, retail coverage, UCCnet access and fact-based selling, it will be able to continue to grow its client base in North America. The past year also brought challenges, as MEI realized that the 18- to 20- week implementation it touted in Europe isn't sufficient for the U.S. market particularly where substantial interfaces are required for trade promotion functionality. MEI has remained neutral in the Java 2 Platform, Enterprise Edition (J2EE) vs..net debate by supporting both platforms. Its Web solution has an appealing interface that is particularly geared toward brokers and broker managers who favor simplicity over extensive functionality. Users cited strong project management during implementation but some declines in post-implementation service, due to stretched resources given the number of more complex U.S. installations under way. MEI could move to the Challengers quadrant, provided it can improve reporting, begin to disclose financial information, shore up its post-implementation service capabilities, increase its U.S. trade promotion installed base, and implement a solution through a major integration partner. Oracle also began to get traction in It has a wellarticulated plan for enabling the five key field sales processes. It delivered an "out-of-the-box" trade promotion management offering this year, but it is still developing the offering. Given time and continued focus, particularly in sales execution, Oracle will grow its installed base and be a force in the market by 2005 (0.7 probability). Its solution is built on the 11i technology and is one of the more friendly and ergonomic of the solutions from the ERP players. Users cited strong follow-up support, despite some rough startups associated with early efforts. PeopleSoft came into 2002 with the advantage of having purchased the intellectual capital of the Vista trade promotion management solution back in Nevertheless, it was often bundled with the ERP offering, and PeopleSoft has not been able produce a referenceable trade promotion management client. PeopleSoft has been able to add analytics and mobile order entry to its lineup. What PeopleSoft has not been able to 21 February

7 demonstrate is that enabling the five key CG selling processes is a priority or that it has a clear plan to do so. For now, we expect PeopleSoft to have a fairly low win rate even among its CG installed base and limited ability to sell beyond. Users commented that there was a slight dip in service early in 2002 that was firmed up later in the year. PeopleSoft's small group of three client references appears to be very satisfied. In late 2002, SAP released its v.3.0 trade promotion solution, which is its first out-of-the-box offering for CG. The user interface is substantially better than previous non-vertical-specific SAP offerings but still only average compared to most of the market (for example, CAS, Oracle, PeopleSoft, Siebel or Synectics). The solution, however, does not have the ability to work offline without the use of a Microsoft Excel add-in tool. This issue should be addressed in the 4.0 release, scheduled for mid Users who have SAP in the back office are supportive of the direction in which SAP is moving but point out that SAP is still two to three years away from meeting their SFA needs. SAP has not yet been able to provide live customer references on CRM v.3.0. SAP does plan to move beyond trade promotion management functionality and has a prototype handheld retail auditing solution with a pleasing interface that looks promising. We don't expect SAP to move quickly in enabling the key CG selling processes but believe that its move to develop out-of-thebox solutions instead of custom applications is a positive one. Synectics Group has upgraded to a.net platform and is poised to have an impact on the midmarket. It is one of the few vendors that are supplying their users with sufficient reporting. It does so by providing a plethora of standard, numbered reports. Any additional reporting needs that are subsequently requested by users are considered for inclusion in the next release. Synectics has trade promotion management and business analysis solutions with a friendly and ergonomic interface and provides the greatest amount of functionality of any vendor for the sales support staff who manage and clear deductions. Users commented on Synectics' deep understanding of the trade promotion management space and on solid post-implementation support, including product development. The only vendor in our Magic Quadrant that is dedicated exclusively to enabling retail execution and monitoring (that is, activities to be carried out at the retail level and the monitoring of product availability, competitive activity and promotional execution) is Thinque Systems. Thinque has delivered innovation this year in conjunction with a major beverage bottler, where Thinque provided the real-time radio frequency transmission capabilities for pre-sales agents to recommend an optimal assortment to a customer and to transmit the order 21 February

8 instantaneously, so that the truck could be packed for the next morning. Thinque has spread its wings to include mobile data capture for other vertical industries beyond CG. Users cited great support during implementation and pilots. Others felt that project manager support and reporting could be improved. Vista Software Solutions worked quickly in 2002 under new senior leadership to get its trade promotion management solution onto a Web format after emphasizing UCCnet-type exchange development for most of Its upgraded solution uses a Microsoft Excel add-in, which leverages Excel for formatting and data collection, both online and untethered. Sales agents in particular, such as brokers, like the familiarity of the Excel interface, but other users find that the roll-ups, reporting and query capabilities are not satisfactory. Acronym Key ASP Application service provider CG Consumer goods CRM Customer relationship management ERP Enterprise resource planning ESP External service provider J2EE Java 2 Platform, Enterprise Edition POS Point of sale SFA Sales force automation Bottom Line: Enterprises should weigh the relative merits of best-of-breed solutions and the sales force automation suites as they look to enable the key consumer goods (CG) selling processes with a highly fragmented vendor offering. The CG Magic Quadrant positions vendors at a given point in time based on the criteria and the relative weighting assigned to those criteria. Each enterprise should evaluate vendors by means of the criteria; however, they should alter the weighting of each criterion based on their unique requirements and environments, rather than assuming that the vendor closest to the Leaders quadrant will best meet their needs. 21 February