IGG-10022002-02 B. Eisenfeld Article 2 October 2002 Management Update: The CRM Service Provider Magic Quadrant for the Americas Gartner presents its CRM Service Provider Magic Quadrant for the Americas, in which five major consulting firms are leaders. Gartner points out, however, that a leader is not always the best choice for every enterprise. Strong demand is driving the customer relationship management (CRM) service provider market. To help enterprises with their planning, Gartner presents its CRM Service Provider Magic Quadrant for the Americas, in which five major consulting firms are leaders. Gartner points out, however, that a leader is not always the best choice for every enterprise. A Booming CRM Service Provider Market Gartner forecasts that businesses worldwide will spend approximately $25 billion on CRM services in 2002. That is nearly seven times the projected spending for CRM software in 2002. To assist enterprises in making sound spending decisions regarding CRM services, Gartner has established high-level criteria to evaluate CRM service providers. The criteria are used to assess vendors in the market and evaluate their capabilities. In addition, Gartner provides frameworks such as the CRM Service Provider Magic Quadrant and evaluation matrices to support enterprises in making the best decisions when seeking services to help deliver their CRM initiatives. CRM Cost Components The largest cost components of CRM initiatives are service provider costs, which have been increasing steadily and now comprise as much as 48 percent of overall CRM program and project costs. That is even more than the cost of the software itself, which is typically 18 percent to 28 percent. Consequently, the largest component of CRM total cost of ownership (TCO) is services. Therefore, when selecting a service provider, it is paramount that the choice be driven by the ability of the enterprise to obtain the long-term, promised benefits projected in the business case. CRM Service Provider Magic Quadrant Understanding the positioning of vendors in the CRM Service Provider Magic Quadrant can help an enterprise to evaluate the most appropriate providers to assist in delivering a CRM initiative and enabling overall CRM goals to be achieved. The needs of enterprises across geographic regions Gartner Entire contents 2002 Gartner, Inc. All rights reserved. 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.
vary. The Gartner CRM Service Provider Magic Quadrant for the Americas (see Figure 7) evaluates providers that deliver CRM services in the United States, Canada and Latin America. Figure 7 CRM Service Provider Magic Quadrant for the Americas, 2002 Challengers Leaders Ability to Execute EDS Answerthink Unisys Fujitsu Group Inforte IBM Global Services CSC Andersen ZAMBA Solutions Headstrong Akibia C3i eloyalty Accenture PwC Consulting Deloitte Consulting CGE&Y KPMG Consulting American Management Systems Source: Gartner Research Peppers and Rogers Group Niche Players As of February 2002 Visionaries Completeness of Vision CGE&Y Cap Gemini Ernst & Young CSC Computer Sciences Corp. As the CRM market grows and evolves, so do the criteria Gartner uses to evaluate CRM service providers. The criteria are important to understanding the positioning of vendors in the Magic Quadrant. Important Provider Changes Have Occurred It is important to note that since the date the CRM Service Provider Magic Quadrant for the Americas was published February 2002 the market has experienced consolidation, and several external service providers (ESPs) in the Magic Quadrant have undergone significant changes. Acquisitions and mergers have occurred, and some providers have announced separation plans from their audit firms. The 2002 Magic Quadrant is based on analysis and research completed before those announcements and, therefore, the announced changes are not reflected in the February 2002 Magic Quadrant positioning. Gartner conducts its research and analysis of the Americas CRM ESPs yearly, so the next update will reflect analysis and the associated changes in future positioning.
Leaders Leaders are service providers that are doing well and have excellent prospects for the future. They have mature CRM practices, are financially stable, demonstrate long-term management commitment to their practices, and have thousands of CRM consultants who have delivered solutions in a number of industries. Leaders are capable of delivering complete solutions with the proven ability to execute across multiple geographies to support Americas-based clients global operations. Leaders generally sell into the senior management levels, have long-term relationships and serve in longterm advisory roles. They have strong and long-standing partnerships with the leading CRM-suite vendors. Accenture, based on Gartner s revenue estimates, is the largest vendor in the Magic Quadrant. It exhibits good thought leadership and has strong partnerships with leading CRM-software providers. Accenture has extended its CRM vision and has made efforts to extend the market for CRM services. Enterprises in the communications, high-technology and financial services industries will benefit from Accenture s great depth of experience in those segments. PricewaterhouseCoopers (PwC) Consulting goes to market through its key industry verticals, including pharmaceuticals, telecommunications and financial services. It furthers its clients business strategies by implementing broad solutions incorporating process and technological change. PwC Consulting recognized the benefits of business-case analysis and CRM ROI early on. Despite the loss of its global leader to Andersen, the CRM leadership team remains one of the market s most consistent. It has dedicated local resources in North America and South America. Deloitte Consulting provides straight talk and devises common-sense approaches to client engagements. Its unique approach gets rave reviews from its clients, and its investments in the practice continue to benefit its clients as its vision and execution continue to improve. Vertical industries in which Deloitte has significant experience include manufacturing, financial services and communications. Cap Gemini Ernst & Young (CGE&Y) continues to push its vision for CRM and make investments to further its delivery capabilities. It is particularly good at working with management to determine the CRM strategy and then put the strategy to work via a planned set of projects managed through an overall CRM program. CGE&Y takes a center-focused approach to delivery, leveraging global solution centers, and it became a Siebel Systems global strategic partner in 2001. Industry vertical strength is evidenced in financial services, life sciences and telecommunications. KPMG Consulting has a CRM practice with a heritage of innovation. However, during the past several years, it seemed to have lost some of its focus. Many veteran practice professionals and leaders had moved to other areas within the organization or left it entirely, and KPMG was focused on its initial public offering (IPO) in 2001. With the IPO behind it and a new leader at the helm, Gartner perceives that KPMG Consulting has a renewed focus, with emphasis on return on investment (ROI), verticalization and CRM and supply chain management integration. KPMG is unique among the leaders because it has a long track record of serving public-sector clients, and with that comes a deep understanding of opportunities and challenges associated with a growing segment of the market. Additional verticals include communications and consumer goods. When to Consider a Leader
Large multinational enterprises with complex business processes requiring global support that are looking for highly skilled and experienced teams, strong financial stability and a solid track record of execution for large, multiyear, multidomain initiatives are most likely to favor a leader. Enterprises with CRM initiatives that center on single projects or that require more flexible and innovative approaches should consider other, more nimble providers. Visionaries Visionaries are vendors that have great ideas for tomorrow but are not executing well or consistently in all areas. For example, they may be very capable in one or two domains, have solid methodologies and delivery track records, but have marketing budgets that preclude them from calling attention to their capabilities or cause limitations in their sales abilities. They understand business requirements, demonstrate innovation in service offerings with a particular industry focus and tend to have fewer resources focused on CRM. American Management Systems (AMS) is the sole visionary at this time. AMS s strength and experience in the financial services, telecommunications and public sector is impressive. It approaches the CRM market from a highly strategic point of view, working with senior management to develop the vision, strategy and project prioritization based on business needs before launching into development and integration. It has a smaller practice, with fewer dedicated resources focused on fewer verticals than vendors in the Leaders Quadrant. However, Gartner expects this to change over time. AMS is likely to focus to a greater degree on its hidden treasure strengths, as it begins to articulate its experience and increase its visibility in the marketplace. When to Consider a Visionary Visionaries demonstrate skills in creating and validating CRM initiatives, understand business requirements for fewer industries and offer unique services. Enterprises looking to gain competitive advantage that are willing to forgo strong viability to achieve service innovation, are looking for leading-edge, creative thinking, and are looking to work with smaller, but highly capable, partners should consider visionaries. Challengers Challengers are vendors that execute well, may dominate a large market segment, have a less mature understanding of market trends and directions, or don t articulate their vision well. They may not have all the elements to be successful in the future, but they have a solid track record of execution, financial resources and staying power, and are good choices if execution vs. strategy is key. IBM Global Services (IGS) has a firm grasp of the technologies relevant to CRM implementations, and it understands the intricacies of integration to legacy systems. Although IGS can articulate a vision for delivering strategy through ongoing operations (i.e., outsourcing), it is challenged to provide strong references backing up this claim in the Americas for enterprises considering the full breadth of services in the CRM market. For enterprises with heavy IBM infrastructures and middleware, or enterprises that desire heavy back-end and legacy integration with their front-office solutions, IGS is a likely leader, given IBM s coverage. Its vertical industry focus includes financial services, communications and distribution.
Computer Sciences Corp. (CSC) blends business and technology consulting and brings that integrated vision to its CRM practice. Its point of view is that CRM is the practical implementation of a business strategy. It has a unique methodology for prioritizing CRM projects by focusing on ROI, and it has strength in CRM data-architecture assessments. Besides planning and building CRM solutions, CSC has the capability and capacity to manage operations (i.e., outsource) in the long term. CSC has continued to demonstrate its ability to execute and is now working on expanding its vision. Vertical industries in which CSC has expertise include financial services, healthcare and manufacturing. Andersen provides end-to-end solutions from strategy through implementation. A consistent source of its CRM client base is derived from leads generated through its assurance and tax clients. As Andersen emerged out of the arbitration settlement in late 2000 with Accenture (formerly Andersen Consulting), it began a process of building out a more-defined CRM practice area and growing it over the course of 2001. Its focus in delivery has increased its capability in execution, but its vision is not as fully developed as yet. However, with its new global CRM leader (formerly PwC s global CRM practice leader), it will begin to focus on its vision. Andersen is strong in such industries as technology, communications and financial services. When to Consider a Challenger Challengers have many strengths and are good choices when execution and a strong emphasis on viability is more important than the development of an overall CRM strategy and vision. Niche Players Niche players include vendors that focus on a small segment of the market and do it well, and vendors that have modest horizons and possibilities owing to an inability to innovate or outperform other providers that participate in the CRM market. Niche players tend to deliver tactical implementations or strategy related to a single domain or project. They may lack an overall vision and execution for broader CRM (e.g., partnering with only a single CRM-suite software vendor). They tend to serve a smaller part of the CRM market and may be confined to a specific geography or vertical. When to Consider a Niche Player Enterprises should consider niche players for their particular strengths and their ability to focus and deliver. Niche players are often the best partners because they are focused and can deliver rapidly. Selecting the Best Choice Selecting a leader may not always be the best choice. All providers that appear in the Gartner Magic Quadrant have demonstrated positive business results for their clients and may be a viable option for an enterprise s specific CRM needs. Besides understanding vendor positions in the Magic Quadrant, enterprises must conduct due diligence and always check references to ensure that the cultures of the service provider and the enterprise are synergistic. Bottom Line
Enterprises increasingly expect their CRM ESPs to be neutral arbiters in projects that can have important political ramifications. However, ESPs will limit their risk and place responsibility with the client to ensure that business needs are defined. To assess the overall viability of CRM and the use of ESPs, Gartner offers the following recommendations: True vendor neutrality does not exist for CRM ESPs there is a limit to their expertise on vendors and technologies, and they will tend to play to their strengths. The best-of-breed vs. suite decision applies to ESPs as well, because many smaller providers with specialized skills may have a better fit with CRM projects. Through 2004, CRM ESPs will be the primary vendors for integrating different areas of CRM functionality. CRM ESPs are best used to support and supplement internal staff. The enterprise must be the driving force. Ensure that the enterprise gets skills transferred to build internal CRM skills. Consider a team of ESPs to assess the enterprise CRM program strategy and bring in fresh ideas to deliver the benefits. Evaluate credentials carefully, but do not underestimate the need to have a good working relationship. Written by Thomas Berg, Research Products Analytical source: Beth Eisenfeld, Gartner Research For related Inside Gartner articles, see: Management Update: CRM Sales Suites Lag Behind Best-of-Breed Vendors by Two Years, 17 July 2002 Management Update: Don t Bust the Budget With Enterprise CRM Spending, 8 May 2002 Management Update: How to Compete in a CRM Market Dominated by Siebel, 8 May 2002