crm in italy: a market appraisal and overvie...crm in italy: a market appraisal and overview this...

GartnerEntire contents © 2003 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 bereliable. 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 interpretationsthereof. 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.

R-21-6111J. Davies, D. Sepulcri, E. Thompson

Strategic Analysis Report2 December 2003

CRM in Italy: A Market Appraisal and Overview

This Strategic Analysis Report is designed to provide a concise overview of Gartner’s customerrelationship management (CRM)-related research, focused on the Italian market.

Management Summary

This Strategic Analysis Report is designed to provide a concise overview of Gartner’s current CRMrelated research, tailored for the Italian market. It is designed to help to Italian organizations of all levels ofmaturity, size and vertical industries with their CRM programs. The report is divided into four key life-cyclestages that provide insight into CRM education, alignment and readiness, technology and applicationselection, and improvement. Key findings of this report include:

• IT spending per capita in Italy is one of the lowest in Western Europe, with only Spain, Portugal andGreece investing less per capita in 2002 according to Gartner Dataquest. This lack of IT infrastructureand application software has a direct bearing on the adoption of CRM as a strategy. Italianorganizations should first focus on the non-technology aspects of CRM that help deliver a successfulCRM strategy — as detailed in this report.

• Italian business culture is different from an Anglo-Saxon business culture. Relationships withcustomers is considered to be personal and not something that can be addressed with technology or,at least, with technology alone. The main Italian way of doing business is through long-term personalcontacts. It is generally agreed that there is a perceived problem with introducing CRM systems, asmany enterprises feel it is a threat to the established set of personal relationships. The resistancetoward the adoption of sales force automation (SFA) modules gives an example of the importance ofpersonal relationships in the Italian business culture. In many organizations, the sales force sees SFAtools as a hindrance to the improvement of relationships with their customers. They are perceived asan instrument to give management control over their activities and an undermining factor to theindividual relationship that they have built with clients over time. Consequently, enterprises need to bewary of pushing CRM technology into an organization without extensive consideration and funding ofthe change required of employees. What may have worked in other geographies will not necessarilywork in Italy. However, if done successfully, technology can enhance personal relationships. The useof tools such as contact management systems can aid sellers, marketers or service providers to showup on time, balance their appointments and remember important personal information such asbirthdays, family member names and important customer professional events (such as promotions). Inaddition, it can further improve attentiveness to personal relationships by helping those in customerservice to answer the phone quickly and easily with appropriate customer information already to hand.


Copyright 2003R-21-61112 December 2003 2

• Investment in CRM is currently limited to large organizations. It is likely that the top 30 organizations inItaly account for more than half of CRM applications software spending and the top 150 account formore than 80 percent.

• Small and midsize Italian businesses are reluctant to invest for numerous reasons ranging from theperceived need to the financial ability to invest and the availability of appropriate solutions. However,small and midsize businesses (SMBs) — especially in the industrial north — are under intensecompetitive pressure. The adoption of CRM as a strategy may be the key differentiator that will helpdrive business during the coming years. Through 2004, SMBs should educate themselves as to whatCRM is and what it can realistically achieve within their organizations. Midsize organizations have twochoices: either invest in CRM to gain competitive advantage, or ignore it as there are few competitorsadopting CRM.

• Italian customers do not necessarily have the same high levels of expectations as other Europeancustomers, and the level of care that they have from companies reflects exactly what they wouldexpect. However, as competition increases from across an expanding Europe, customers will begin toenhance their expectations based on the experiences they receive; and, consequently, Italianorganizations need to ensure they are in a position to compete against this. The top 150 organizationsthat have not yet embraced CRM at an enterprise level need to do so urgently, or risk being leftbehind by local as well as international competitors.

• Traditional "CRM-aware" industries (such as telecommunication and financial services) are theprimary investors in CRM, although manufacturing also features highly. This investment is driven fromthe industrial north of the country, with minimal investment coming from the more agricultural south.Organizations within other industries (such as retail, transportation, construction, healthcare andutilities) should not dismiss CRM but carefully assess its value to their organization and invest only ifclear benefits can be achieved. Financial services, banks, insurers, telecommunication, utilities andsome manufacturing sectors like consumer goods, pharmaceuticals and automotive companiesshould prioritize CRM more than other sectors.

There are a limited number of viable CRM application suppliers within the Italian market, especially forsmaller businesses. This situation is slowly improving as various international vendors begin to establish alocal presence, but care must be instilled during selection process as customer references will be sparseand local skills in short supply for many of these vendors. Enterprises should weigh the availability of localconsulting and technical skills and the viability of the application vendors more highly than the functionalityavailable from the vendor when buying it Italy.



CONTENTS

1.0 Introduction................................................................................................................................7

1.1 Should Italian Enterprises Be Investing in CRM At All? .........................................................7

1.2 Key Issues Facing Italian CRM Managers ................................................................................8

1.3 What Are the Economics of the Italian IT Market? ..................................................................8

1.4 What Are the Economics of the Italian CRM Market?..............................................................9

1.5 How Mature Are Italian Organizations' CRM Initiatives?.........................................................9

1.5.1 Large Organization CRM Maturity...........................................................................................10

1.5.2 Small and Midsize Organization CRM Maturity......................................................................11

1.6 How Do Regional Factors Influence Investment in CRM? ....................................................12

2.0 CRM Education ........................................................................................................................12

2.1 The Eight Building Blocks of CRM .........................................................................................13

2.2 Which Building Blocks Are More Difficult to Master? ...........................................................14

2.3 What Is Hot in CRM?................................................................................................................15

3.0 Alignment and Readiness .......................................................................................................15

3.1 Is the Enterprise Aligned and Ready for CRM? .....................................................................15

4.0 Technology and Application Selection ..................................................................................17

4.1 Who Are the Active CRM Vendors in Italy?............................................................................17

4.2 How Big an Impact Do the Local CRM Vendors Have? .........................................................19

4.3 What Vertical Solutions Are Available in Italy? .....................................................................19

4.4 What Will Be the Impact of Microsoft CRM? ..........................................................................19

4.5 What Selection Criteria Should Enterprises Use?.................................................................20

4.6 How Do Enterprises Buy? .......................................................................................................20

4.7 What Functional Areas Should Enterprises Prioritize?.........................................................21

4.7.1 Sales Maturity and Investment Direction ...............................................................................22

4.7.2 CSS Maturity and Investment Direction .................................................................................23

4.7.3 Marketing Automation Maturity and Investment Direction ...................................................24

4.8 How Appropriate Are the Active CRM Vendors? ...................................................................25

4.9 Which Service Providers Can Help With CRM Initiatives?....................................................27

5.0 Implementation and Ongoing Improvement ..........................................................................28

5.1 What is ROI, and How Can It Be Measured? ..........................................................................28

5.2 What Can Be Learned From Others?......................................................................................29

Appendix A:Description of Associated Departments Within Gartner ................................................30

Appendix B: ............................................................................................................................................31

Profile Tables..........................................................................................................................................32



Appendix C: ............................................................................................................................................53

Acronym Key ..........................................................................................................................................54



FIGURES

Figure 1. The Five Value States of CRM................................................................................................10

Figure 2. The Eight Building Blocks of CRM ........................................................................................13

Figure 3. Difficulty in Mastering CRM's Building Blocks.....................................................................14

Figure 4. Aligning CRM Application Focus With Goals and Strategies..............................................16

Figure 5. High-Level, Baseline Weighting Criteria ...............................................................................20

Figure 6. CRM Functionality: 2001 Through 2003 ................................................................................21

Figure 7. Sales Technology Value Framework.....................................................................................22

Figure 8. Customer Service and Support Technology Value Framework ..........................................23

Figure 9. Marketing Automation Technology Value Framework.........................................................24

Figure 10. Integrated CRM .....................................................................................................................30



1.0 Introduction

1.1 Should Italian Enterprises Be Investing in CRM At All?

Gartner defines CRM as a business strategy whose outcomes optimize values such as profitability,revenue and customer satisfaction (that is, the “what” and “why”) by organizing around customersegments, fostering customer-satisfying behaviors and implementing customer-centric processes (that is,the “how”). CRM technologies should enable greater customer insight, increased customer access andmore effective customer interactions, as well as integration throughout all customer channels and back-office enterprise functions (that is, the outcomes).

All organizations can benefit from CRM. As a result, its advocates tend to promote unquestioning supportfor CRM and its underlying principle of treating different customers differently. However, not allorganizations benefit equally. Finite budgets, competing demands for resources and limited time horizonsmean that deciding what priority to give CRM is an issue that must be addressed systematically on thebasis of more than just subjective judgment.

As a rule of thumb, Italian enterprises competing in global, competitive and commoditized markets needCRM more. This is a useful generalization, but it is too broad to help an individual manager decide howmuch to invest in CRM for a specific business. Before undertaking any significant CRM investment, Italianenterprises should systematically question whether it could offer a long-term advantage. To understandhow relevant CRM is to business, enterprises must consider five strategic dimensions before embarkingon major investments:

• Market size and structure

• Customer attitudes and needs

• Product and service attributes

• Channel numbers and ownership

• The enterprise itself

These five dimensions form a series of filters that will help assess how relevant and realistic CRM is as agoal for a business. In some enterprises, it may have little relevance. It may even be a wastefuldistraction. The key is to use the estimates of an enterprise's position on these five strategic dimensionsto identify the relative value of CRM against other competing investments. This self-assessment processwill help to find realistic answers to the two key questions:

• How strategically important is CRM to the business, bearing in mind its markets, products andservices, and the customer attitudes?

• If CRM is strategically important, is it practically feasible in view of possible channel and organizationalconstraints?

GartnerG2's report, "How to Tell How Much Your Business Will Benefit From CRM" (rpt-0403-0034), 9April 2003, explores this concept in detail.



1.2 Key Issues Facing Italian CRM Managers

In a recent global survey that included Italy, Gartner asked CRM managers what the key issues were thatthey were facing. The response highlighted a broad range of topics, all of which are either discussed — orreferenced through linked research — in this document. The top fifteen issues were:

• What is CRM, and where does an enterprise start?

• How much does CRM cost?

• How does an enterprise prove the business case for CRM through benefit identification, total cost ofownership (TCO) and return on investment (ROI)?

• How does an enterprise avoid the mistakes others have made in CRM?

• How does an enterprise ensure executive support and commitment for CRM?

• What is happening in the enterprise's industry sector with CRM?

• What is a CRM strategy, and how does an enterprise create one?

• What are the best practices in change management for a CRM initiative?

• How will CRM impact the enterprise's current business processes, and which processes should befocused on first?

• How does an enterprise improve the customer experience through CRM?

• How does an enterprise integrate and ensure clean, consistent, high-quality data for CRM?

• How will CRM impact an enterprise's technology architecture and infrastructure?

• What should be measured to make the CRM initiative a success?

• Which consultants and integrators should be considered for getting help from for CRM?

• How do business-to-business (B2B), business-to-business-to-consumer (B2B2C) and business-to-consumer (B2C) CRM differ?

1.3 What Are the Economics of the Italian IT Market?

Italy is the fourth largest country in Europe with a population of just over 58 million. Its size is the primaryfactor contributing to its overall fourth position (that is, spending $59.8 billion) in Dataquest's estimation oftotal IT spending in Europe in 2002, behind the United Kingdom, Germany and France. IT spendingcombines investment in hardware, software, IT services and telecommunication. However, to provide amore accurate view of the Italian IT market, it is necessary to look at how penetrated IT is within thecountry. A key indicator of IT penetration is the IT spending per capita. By combining IT spending datafrom Dataquest's June 2003 Market Handbook and population data from Global Insight's March 2003World Overview, it can be derived that Italy has one of the lowest IT spending per capita ratios in WesternEurope, with only Spain, Portugal and Greece investing less per capita in 2002. Italy's $1,030 per capitafalls well below the leaders Norway and Denmark (that is, more than $3,000) and the chasing pack ofSwitzerland, Sweden and the United Kingdom.



1.4 What Are the Economics of the Italian CRM Market?

In 2001, Dataquest reported that the European CRM software market generated $1.306 billion in licenserevenue, and Italy accounted for $82.2 million. In 2002, this figure dropped to $1.017 billion (that is, downby 22 percent) with Italy accounting for $65.4 million. This positions Italy in fifth place behind the UnitedKingdom, Germany, France and the Netherlands.

1.5 How Mature Are Italian Organizations' CRM Initiatives?

The maturity of Italian organizations' CRM initiatives vary considerably depending on the size of theenterprise and the industry it is in. Italy is a country dominated by SMBs. Of the estimated 4.12 millionorganizations in Italy, 3.94 million have fewer than 10 employees, and only 2,600 have more than 250employees. Larger organizations with a greater appreciation for CRM (such as financial services andtelecommunication) are much further along the CRM journey

All organizations must be clear about where they are in their CRM evolution when evaluating vendors.Typically, enterprises begin by trying to solve one part of a bigger departmental problem. This generallyleads to wider attempts to become more efficient, normally centering on cost reduction. From there,enterprises aim at revenue enhancement, which calls for a different vendor solution and creates a shift inemphasis in the enterprise. Enterprise CRM tries to gain a competitive advantage by creating a unified,enterprisewide view of the customer and a single face to the customer. Enterprises should makeinvestments in CRM based on where they are in the continuum, but also set themselves up for the futureinvestments needed to move to higher levels. It is likely that costs for implementing CRM will nearlydouble if the necessary investments are not carefully planned for early in the process. Gartner’s CRMmaturity model identifies five key evolutionary stages (see Figure 1). An organization’s maturity should beassessed against each of the eight building blocks of CRM (see Section 2.1 for a detailed explanation ofGartner’s eight building blocks of CRM).



Strategy

Vision

Technology

Organizationalcollaboration

Customerexperience

Processes

Information

Metrics

Initialproductivityand visibility

Function orchannel

effectiveness

Intra-enterpriseintegration

Value networkenabled

None

None

Unknownconcept

Designs itself

Inward focusSilo structures

Basic andfragmented

None

Inward focusSilo-oriented

Isolated projectsInitiated bottom

up

Changing cultureand incentives

Silos

Start optimizingfor efficiencySilo-oriented

Value-basedcollaboration formutual benefit

Enterprise-levelCRM program

More "joined up”thinking,but still

silo oriented

Customer centricReorganize by

segment

Shared customercentricity

Goal alignment

Understanding ofwider scopeCollaboration

Cross line-of-business

understandingand focus

Enterprise leveloptimization forcost and value

Optimization atsilo level for cost

and valuereasons

Understandingand focus at

silo level

True end-to-endprocess

optimization

Independent-based.

FragmentedMinimal insight

Team-basedshared information

and siloedInsight developing

Sharedinformation andinsight acrossthe enterprise

Sharedinformation andinsight beyondthe enterprise

Enterprise- andcustomer-focused

balancedhierarchy

Focus on siloefficiency

Operationalfocus

Fragmented andfew individual

metrics

Shared objectivesand balanced

metricsAligned

First signs ofcustomer-

centricity Silos

Unknownconcept

Designs itself

Veryfragmented

Weakfunctionality

FragmentedLimited

functionalityand focus

Strongfunctionalitywithin silos

Strongfunctionality

with enterpriselevel integration

Strongfunctionality

Integrated beyondthe enterprise

States---> First Second Third Fourth Fifth

Source: Gartner Research

Figure 1. The Five Value States of CRM

1.5.1 Large Organization CRM Maturity

The vast majority of investment in CRM comes from the large enterprise market segment in responsiveverticals such as telecommunication and financial services. It is likely that the top 30 organizations in Italyaccount for more than half of CRM-related spending, and the top 150 account for more than 80 percent.However, most of these implementations are departmental and disparate. It is only at the very high end ofthe market where organizational CRM maturity is on a par with other European countries (such as theUnited Kingdom France and Germany). Large organizations need to ensure senior management supportand direction to realize the benefits of an enterprisewide CRM program.

In general, CRM implementations usually start either with a call center or with SFA modules and then aredeveloped with the addition of components such as customer service and support and marketingautomation. Due to the immaturity of the Italian CRM market as a whole, many large enterprises in non



CRM-savvy verticals are still building their initial CRM infrastructure, and the dominance of componentssuch as sales and call center is set to last at least for the next five years.

1.5.2 Small and Midsize Organization CRM Maturity

Overall, the vast SMB segment of the Italian business economy has yet to embrace CRM and is not likelyto in the near future due to the lack of a perceived need to invest in technology to "optimize relationships."There are a few midsize organizations that buck this trend; but in a country with 3.94 million out of 4.12million employers having fewer than 10 employees, it is this micro-culture that dominates investmenttrends. Any investment that is made is likely to focus on internal efficiency due to the strongly product-process oriented culture (that is, a manufacturing heritage) of many of these organizations. Where CRMsystems are deployed, these tend to be simple homegrown solutions to track customer records. TheItalian SMB segment is firmly positioned at the initial “first-generation” stage.

Other influencing factors include:

• Financial constraints: In the United States and the United Kingdom, a variety of sources of finance areavailable to SMBs; whereas in other European countries, and particularly in Italy, these means are stilluncommon. This lack of financial flexibility limits the ability to invest in technologies for the long-termbenefit of the enterprise. In addition, there is still a traditional opposition within many SMBs to"external control," and this drives a reluctance toward external financing.

• IS infrastructure: Most SMBs do not have the required dedicated IS staffing levels required to sustaina complex infrastructure.

• Strategic planning: The exploitation of technology investments for strategic purposes requires apreliminary effort, consisting of defining a competitive strategy, planned by the top management andshared within the enterprise. The lack of such a long-term vision within many SMBs compromises thepotential derived from its strategic use. An effective connection between IT investments and strategiccontrol of the enterprises is still lacking. IT adoption is often considered just an operational cost,without any clear understanding of its strategic implications.

The Italian "family run" SMB culture is driven by a strong outsourcing infrastructure and various pressuressuch as trade union constraints, health and safety regulations, strikes, and tax and social securitycontributions. Many of these constraints were due to the Statuto dei Lavoratori, and small firms enjoymajor concessions from the Statuto. Small firms (that is, with fewer than 14 employees) were exemptedfrom the main provisions of the Statuto, especially those relating to trade union representation. Moreover,they were exempted from value-added tax, or Imposta sul Valore Aggiunto as it is known in Italy, up to agenerous limit and from social security payments; and they were to be assessed for local taxes at a lowerrate than larger firms are.

The existence of small firms is permanent and structural. Small firms dominate totally in the traditionalmanufacturing areas (such as fabrics, textiles and clothing, shoe-making and leather goods, ceramics,carpentry and furniture). The flourishing of small enterprises reflects both the fragmentation of theindustrial system, with specialized manufacturing and services contracted out by large companies to smallones, and creative entrepreneurialism in a decentralized country. Regional and family loyalties combine inlocal networks that embrace trade unions, bankers, businessmen and politicians. The Italian small firm is,therefore, more a cultural entity, which includes familiar, social aspects as well as economic ones. Thereare no equity shareholders in the majority of small firms, so the possibility of take-over is unlikely. Neithergrowth nor profit maximization can be considered the principal reason for the existence of the small firm,



whose main features are decentralized production in small and midsize rural towns, and geographicalspecialization in the kind of product made.

In general, SMBs are aware of the importance of IT, but some midsize enterprises are characterized by ahigher organizational managerial coherence and have more resources to spend on IT adoption andmanagement. On the other hand, small companies are characterized by a limited technical knowledgeand managerial and organizational deficiencies, which represent the major barrier to maximize theprofitability of IT investments. However, a delay in a strategic use of IT could cause small enterprises tolose their ability to compete, and it can even compromise their future. SMBs are under intense competitivepressure. The adoption of CRM as a strategy may be the key differentiator that will help drive businessduring the coming years. Through 2004, SMBs should educate themselves as to what CRM is and what itcan realistically achieve within their organizations. For example, the use of tools such as contactmanagement systems could aid sellers, marketers or service providers to show up on time, balance theirappointments, remember important personal information such as birthdays, family member names andimportant customer professional events (for example, promotions). In addition, organizations couldpotentially further improve their attentiveness to personal relationships by helping those in customerservice to answer the phone quickly and easily.

1.6 How Do Regional Factors Influence Investment in CRM?

Although Italy is made up of more than 200 industrial districts, at a high level it can be split into two keyregions: the north (including central) and the south. The north is dominated by manufacturing and thesouth by agriculture. CRM software investment is predominately driven from the north. The manufacturingculture initially drives investment in enterprise resource planning (ERP) from enterprise software vendorslike SAP, but software that could drive a CRM business strategy often follows as an "already paid for" partof an integrated business solution. Organizations that already possess licenses for CRM software need tofocus on the other elements (such as vision, strategy, customer experience, collaboration, information andmetrics) to embark on the CRM journey. In addition, the large Italian financial and telecommunicationcompanies are mostly based in the northwest around Milan and Turin, or in the capital, Rome. Theseindustries are typically aggressive adopters of CRM and account for a significant percentage of thecountry's overall CRM investment.

Primarily in the north, small firms group together to form industrial districts (particularly in regions such asLombardy, Tuscany, Emilia Romagna and Veneto), each of which displays similar characteristics (such asthe dualism of competition and collaboration). They collaborate closely on the development of new tools,but they compete fiercely for contracts. These networks of small companies do not traditionally invest inCRM. However, they should educate themselves as to what CRM is and what it can realistically achievewithin their organizations. Some of these enterprises will find that a clearly defined CRM business strategy— which could focus on customer selection, acquisition, retention or growth — will provide the competitiveedge they need to succeed in such an aggressive environment.

2.0 CRM Education

What is CRM? CRM is a business strategy whose outcomes optimize values such as profitability, revenueand customer satisfaction (that is, the “what” and “why”) by organizing around customer segments,fostering customer-satisfying behaviors and implementing customer-centric processes (that is, the “how”).CRM technologies should enable greater customer insight, increased customer access and more effectivecustomer interactions, as well as integration throughout all customer channels and back-office enterprisefunctions (that is, the outcomes). However, CRM is far more than just technology, and any organizationthat fails to comprehend this will never realize the full benefits that could be achieved. CRM embraces



things such as brand value, organizational culture and the customer life cycle. Ultimately, technology isjust one of eight key components (that is, the building blocks) that make up CRM.

2.1 The Eight Building Blocks of CRM

CRM initiatives need a framework to ensure that programs are approached on a strategic, balanced andintegrated basis. Gartner has developed such a framework, called the Eight Building Blocks of CRM (seeFigure 2).

1. CRM vision

2. CRM strategy

8. CRM metrics

7. CRM technology

6. CRM information

5. CRM processes

4. Organizationalcollaboration

3. Valued customerexperience


Figure 2. The Eight Building Blocks of CRM

Vision — creating a picture of what the customer-centric enterprise will look like to build a competitivemarket position based on value propositions that are defined, communicated and personified by theenterprise brand

Strategy — developing a strategy to turn the customer base into an asset by delivering customer valuepropositions. This includes setting objectives and determining how resources will be used to interact withcustomers.

Valued customer experience — ensuring that the enterprise’s offerings and interactions deliver ongoingvalue to customers, are delivered consistently and achieve the desired market position

Organizational collaboration — changing cultures, organizational structures and behaviors to ensurethat employees, partners and suppliers work together to deliver customer value

Processes — effectively managing not only customer life-cycle processes (for example, welcoming newcustomers, handling inquiries and complaints, and winning back lost customers), but also analytical andplanning processes that build knowledge of the customer

Information — collecting the right data and routing it to the right place

Technology — managing data and information, customer-facing applications, IT infrastructure andarchitecture



Metrics — measuring internal and external indications of CRM success and failure

Gartner has an extensive range of educational research pertaining to CRM, including specific research foreach of the eight building blocks. Examples include:

• "Management Update: The Eight Building Blocks of CRM," IGG-06252003-01

• "Creating a CRM Vision," TG-14-9470

• "Developing a CRM Strategy," TU-14-9475

• "Customer Experience: The Voice of the Customer," TG-14-9567

• "True CRM Requires Organizational Collaboration," DF-14-6658

• "Customer Process Re-engineering: Talk to Your Customers," DF-14-8380

• "Customer Information Is the Lifeblood of CRM," DF-14-9264

• "Technology Decisions Are Key to Enabling CRM Strategies," DF-14-8082

• "Getting the Best Out of CRM Performance Metrics," DF-13-1433

2.2 Which Building Blocks Are More Difficult to Master?

A recent survey conducted by Gartner highlighted the fact that although all eight of the building blocks arefairly difficult to master, organizational restructuring, customer-centric metrics and process re-engineeringwere by far the most challenging. Although organizations should address all eight building blocks,particular emphasis needs to be allocated to these building blocks due to their inherent complexity andthe time and effort required to master them (see Figure 3).

NotConsidered Easy Difficult Very Difficult

ExtremelyDifficult

0% 20% 40% 60% 80% 100%

Customer-centric vision

Customer-centric metrics

Customer experience

Customer relationship management strategy

Organizational restructuring

Customer process re-engineering

Customer-centric data management

Technology infrastructure


Figure 3. Difficulty in Mastering CRM's Building Blocks



2.3 What Is Hot in CRM?

As functionality becomes less of a differentiator, other aspects should dominate CRM investment trends.Three tightly linked and overlapping hot areas that organizations need to consider are customer-centricprocesses, verticalization and integration.

• Processes — The identification and optimization of key processes that influence a customer'sexperience is a key development area. Most CRM vendors are currently identifying the most importantprocesses within each vertical industry and aligning their solutions to them.

• Verticals — The ability to provide a solution tailored to meet the majority of an organization's industry-specific needs "out of the box" is an important delivery requirement for all CRM vendors. Thesesolutions should include industry specific functionality, data models, workflow or best practiceprocesses, and integration kits for associated legacy systems.

• Integration — As organizations begin to appreciate that most processes that touch the customerdelve right into the core of their enterprise, tight integration of their CRM initiatives with associatedback-office systems is essential for the overall optimization of the experience delivered to thecustomer. The maturation of Web services is an important influencer of this.

However, from numerous interviews with the leading CRM vendors and external service providers (ESPs)in Italy, it is apparent that investment is very much still undertaken at the departmental level and is a farcry away from the strategic implementation that would benefit an enterprise as a whole. Three keyreasons for this "backward step" have been identified:

• The economic slowdown that affected Italy in 2002 and 2003 reduced budgets for IT spendingdramatically. Enterprises have, therefore, reduced their spending on CRM. Where CRM projects havebeen developed, they have been devoted to solving specific problems of business units rather thanexpensive projects targeted at the entire enterprise

• Several large CRM projects failed and did not deliver the predicted results. This has had a negativeimpact on the market, where CRM is not perceived as an appealing term anymore; and many projectshave been reduced in scale or cancelled all together.

• From 1998 to 2001, the focus was strategic; but now it is more departmental, because enterprisesseem reluctant to change internal processes to accommodate a full-scale CRM strategy. Now, theyhave narrowed the breadth of CRM implementations to solve tactical problems at a departmentallevel.

3.0 Alignment and Readiness

3.1 Is the Enterprise Aligned and Ready for CRM?

Before an enterprise can decide which direction to go, it must know where it is. Italian organizations needto assess their readiness to evolve to a CRM-oriented business model before embarking on any initiative.It is clear from Gartner's definition that CRM is not just about technology. There are several dimensions.Some are internal issues, such as creating organizational collaboration, while others are external issues,such as ensuring a consistent, valuable customer experience. To run a successful CRM program,enterprises need to understand the interplay between the eight building blocks and manage change inthese areas in a balanced manner.



Alignment between enterprise strategies, business processes and applications of technology is oftenmissing in CRM initiatives. Through 2005, it is likely that fewer than 15 percent of business executives willclearly articulate how selected CRM applications will help them attain specific enterprise goals (such asrevenue growth, profit growth, market share or earnings per share) (see Figure 4). Although seniorexecutives can espouse enterprise strategies, the executives making process-transforming technologydecisions are often unable to articulate which software applications will best support the enterprise’sgoals.

Customerretention

Cash flow(liquidity)

Profit(margin)

Revenue(growth)

Financialmetrics

Market share(volume)

Customerlife cycle

Customergrowth

Customeracquisition

Customerselection

Domainmetrics

• Market segmentation• Campaign planning• Brand and accountplanning

• New product launch

• Lead management• Needs assessment• Proposal generation• Closing the deal

• Ordermanagement

• Installation• Inquiry handling• Problemresolution

• Customer businessanalysis

• Needs reassessment• Up-sell or cross-sell• Campaign management

Enterpriseprocesses

• Number of newcustomers

• Revenue per newcustomer

• Average acquisitioncost

• Response rates

• Cost per lead• Quote to closecycle times

• Pipeline/forecastvolumes

• Calls per day• Revenue persalesperson

• Average order size• Number of deals• Cost per sales call• Cost per interaction

• Involuntaryattrition rateand cost

• Voluntarydefection rate

• Customerlifetime value

• Transactionerrors peragent

• Customer satisfactionmeasures

• Average increase inorder size

• Cross-selling rate percustomer

• Up-sell or cross-sell• Up-selling rate percustomer


Figure 4. Aligning CRM Application Focus With Goals and Strategies

Another reason why enterprises end up with less than optimal results is that the technologies support adepartmentally focused view. Winning enterprises know which strategies support enterprise goals, andthey understand which business processes must be optimized to support the strategy. The winners inCRM are business architects who understand the important role that technology plays in transformingbusiness processes, and they are not mistaken for “e-business wizards” whose sole objective is only toleverage the Internet. CRM program executive champions must prioritize application functionalityinvestments based on their ability to support the enterprise strategy.

The enterprise’s capability to foster more profitable customer relationships lies squarely with the seniormanagement team. A customer-centric culture starts when senior management provides a vision, as wellas a state of empowerment, within which customer-centric behavior, processes and value measurementcan thrive. CRM initiatives and, thus, an ability to achieve greater profits, will fail when a gap exists



between the well-meaning, customer-centric-talking senior executive and the actions taken by thosecharged with managing customer relationships.

Described as the “leadership gap,” this disconnection is the sole reason why organizations fail to realizethe necessary behavior and process changes needed for CRM. Additionally, without the proper executivesteering, well-intentioned CRM initiatives will get sidetracked when senior management approves rogueCRM initiatives because the vision and operational objectives do not align. Funding for CRM initiativesthat are performed in an ad hoc, departmentally focused way will cause enterprises to squander financialand human resources in the long term because budgeting fails to coexist at the proper levels. Many CRMinitiatives, therefore, are doomed from the start when executive vision is lacking, support is incompleteand empowerment fails to materialize. Through 2005, Gartner estimates that 65 percent of executiveswho say they are implementing a CRM initiative will lack alignment among customers, associates and theexecutive leadership team on goals, strategies and action plans. As part of project governance, CRMproject champions should set up the "sales and marketing” and communication campaign to align CRMgoals and objectives.

4.0 Technology and Application Selection

4.1 Who Are the Active CRM Vendors in Italy?

The Italian CRM software market is a fairly concentrated market with more than 50 percent of newlicenses sold by only two vendors: Siebel Systems and SAP. Siebel is currently the leading CRM softwarevendor, with the three enterprise suite vendors SAP, Oracle and PeopleSoft occupying second to fourthpositions based on 2002 CRM license revenue. The ability for these other vendors to sell CRM to theirlocal ERP installed bases is an important factor and may affect the ranking in future years. This is provingto be a key advantage for SAP, which owns more than 44 percent of the Italian ERP market. However,there are numerous other vendors active in the Italian market, including local companies, albeit with smallmarket shares. These vendors, listed alphabetically, include:

• Amdocs ClarifyCRM

• Applix/Platinum Equity

• ATG (Art Technology Group)

• BroadVision

• Business Objects

• Cegedim

• Coheris

• E.piphany

• Exact Software

• ESA Software

• FDV Concept

• Gruppo Formula S.p.A.

• i2 Technologies



• IFM Infomaster

• Industrial & Financial Systems (IFS)

• Intershop Communications

• Invensys (Baan)

• JDA Software Group

• KANA

• Onyx Software

• Oracle

• Pat S.r.l.

• PeopleSoft

• Pivotal

• Remedy (a BMC Software company)

• salesforce.com

• SalesManager Software

• SAP

• SAS Institute

• SCP Group S.r.l.

• Selligent

• Siebel Systems

• SuperOffice

• Vignette

• XTEL S.r.l.

The majority of these vendors appear in one or more of Gartner's European CRM magic quadrants:

• "EMEA Sales Applications Magic Quadrant 1H03," M-19-3368

• "EMEA CRO Magic Quadrant -- 3Q02," M-17-2063

• "EMEA CSS Magic Quadrant 4Q02," M-18-6859

• "EMEA CRM Analytics Suite Magic Quadrant -- 3Q02," M-17-7296

In addition, Gartner's Strategic Analysis Report, "The Gartner CRM Software Vendor Guide: 2003," R-20-4194, provides lists of the active vendors in each CRM application category worldwide.



4.2 How Big an Impact Do the Local CRM Vendors Have?

CRM software is sold primarily by U.S.-based vendors and by U.K. or Scandinavian vendors, with somefew exceptions (for example, German SAP or French Cegedim). Nevertheless, despite not been amongthe largest players, there are some Italian CRM vendors. The main ones are XTEL, Pat and GruppoFormula. The first two are focused on specific vertical markets: XTEL in consumer goods and Pat intravel, IT services and manufacturing; and they both target primarily companies between 100 and 2,500employees. Gruppo Formula is the largest Italian ERP vendor and also sells CRM modules, but it derivesonly a minor part of its revenue from CRM. Other active local vendors include ESA Software, IFMInfomaster and SCP Group.

4.3 What Vertical Solutions Are Available in Italy?

Industry-specific CRM solutions are available for most traditional vertical markets. However, Italianorganizations undertaking significant investments from vendors such as SAP, Siebel, PeopleSoft, Oracleand Amdocs should carefully determine the appropriateness of their vertical solutions. In addition toexamining the depth of the solution by assessing its vertical-specific processes and functions and itsprebuilt ability to integrate with appropriate legacy systems, organizations should also obtain anunderstanding of their in-house experience. This can then be used as an indicator of their long-termcommitment to a specific industry. It is likely that these vendors will reduce their currently bloated verticalportfolios during the next few years to concentrate on the ones in which they are most competent.

As an alternative to these heavyweight vendors, there are local vertical specialists (such as XTEL S.r.l.and Pat) as well as international specialists, such as Cegedim for the pharmaceutical industry and FDVConcept for the consumer packaged goods (CPG) industry, which should not be overlooked as theirviability is enhanced due to their specialization. Of the smaller vendors that are currently doing well inEurope, the vertical specialists lead the way and are most likely to survive the ongoing consolidation.

4.4 What Will Be the Impact of Microsoft CRM?

Microsoft CRM v1.0 was released in the United States in January 2003. The company plans to release aninternational version in the fourth quarter of 2003, which will support multiple languages but initially notlocal currency and taxation requirements. It will take time for Microsoft to become established, and severalSMB vendors currently view their partner relationships as a key differentiator over Microsoft, but thissituation will not last. It is likely that Microsoft, although stimulating the market, will also pull market shareaway from these established SMB CRM vendors forcing them to adjust their strategies. The vast majorityof these vendors' solutions are already Microsoft .NET focused, and Gartner estimates that by the end of2003 more than half will become Microsoft partners, providing templated, vertical-specific versions ofMicrosoft CRM by 2007.

Italian SMBs have been reluctant to invest to date, as previously documented, but the provision of a low-cost solution with a familiar look and feel from a company with unparalleled viability should help driveadoption in what is fundamentally a virgin market for CRM. The current biased availability of expensive,complex solutions from the large enterprise vendors has prohibited investment; but the entrance ofMicrosoft and the associated increase in awareness and benefits should help stimulate the marketsomewhat. Most traditional SMB CRM vendors have struggled to gain a foothold in the Italian market, andmost are only able to reference a few isolated implementations.

Italian SMBs should ensure they are fully aware of what CRM is (that is, a business strategy enabled bytechnology) and what they are trying to achieve (for example, the optimization of values such asprofitability, revenue and customer satisfaction) before making any investment. They should carefully



examine a vendor's commitment to Italy and the vendor's ability to implement and support its CRMsolution. In difficult times, struggling vendors often withdraw from countries they are less committed to,generating significant problems for their customer base. SMBs should learn from the mistakes of others,create a CRM vision and strategy, and be wary of any vendor not reacting to the imminent entrance ofMicrosoft. Gartner's "Microsoft CRM: The Options for Competitors," DF-18-9399, highlights the keystrategies Gartner advises for SMB CRM vendors and can be used as a guide to their future viability.

4.5 What Selection Criteria Should Enterprises Use?

Enterprises often conduct evaluations that focus on just tactical considerations, such as productfunctionality, the technical architecture of an application and cost. Typically, a combination of these threeperspectives dominates 90 percent of the attention of the due diligence process. However, manydecision-makers are discovering that selecting a functional or architectural market leader does notguarantee project success. Because of consolidation of the CRM market and the demanding nature ofmany CRM initiatives, project teams and stakeholders have been compelled to investigate and take intoaccount strategic issues, such as a vendor’s service capabilities, viability and vision, before makingsignificant investments. Italian enterprises should select products using six high-level criteria that addressfunctionality, technical architecture, cost, services, vendor viability and vision (see Figure 5). A baseline-weighting scheme is highlighted in Figure 5.

Functionality23.6%

Technicalarchitecture

16.0%

Cost15.0%

Services20.4%

Viability17.9%

Vision7.1%


Figure 5. High-Level, Baseline Weighting Criteria

4.6 How Do Enterprises Buy?

Gartner Measurement has segmented the decision-making process for procuring software applicationsinto three key phases.

• Internal needs assessment: This represents the starting point of the requirement evaluation andshould be closely coupled to the enterprise’s overall CRM business strategy. The objective of this stepis to review an enterprise's operation and ascertain the processes that need to be supported by thepurchase.

• Research and analysis: The results from phase 1 should be used to generate "vehicles" for collectingdata, such as request for information surveys for vendors, user evaluation forms for product



demonstrations, reference interview questionnaires and vendor performance scorecards. Gartner'sStrategic Analysis Report, "CRM Software Requests for Information and Requests for Proposals," R-13-4956, defines a CRM software evaluation framework and focuses on how to evaluate and selectCRM vendors using a request for proposal (RFP) specific for CRM initiatives. Once the data has beengathered, the capabilities of the competing vendors and their products should then be mapped toorganizational requirements.

• Negotiation and selection: The analysis of the data should result in enterprises entering intonegotiations with a selection of finalists that offer the greatest potential in meeting expectations.

4.7 What Functional Areas Should Enterprises Prioritize?

The focus of CRM is shifting continuously (see Figure 6).

Sales functionality Customer service functionality Marketing functionality

Multichannel personalization

Opportunity management

Guided selling forelectronic commerce

Web collaboration

Case/problem management

Workforce management

ERMS

Knowledge management

CTI: self-serve or escalation to call

Universal queue management

Speech recognition

Field service automation

Web chat; mostly process work

Order management

Sales analysis

Sales configuration

Sell-side e-commerce Web personalization

Customer profitability

Event-driven marketing

Predictive modeling

Campaign management

Marketing resourcemanagement

Affinity marketing

Loyalty Management

Service analytics

Web self-service; NLPintelligent problem resolution

ICM

Sales contentmanagement

Partner relationshipmanagement

Proposal generation

Wireless device support

Measurement or reporting

E-mail marketing

Advertising management

Trade promotions

Forecasting or pipeline

Customer feedback systems

Privacy management

Increased investment Decreased investment Level investment

CTI: computer-telephony integrationERMS: e-mail response management system

ICM: incentive compensation managementNLP: natural-language processing


Figure 6. CRM Functionality: 2001 Through 2003

The chart in Figure 6 illustrates the shifts in spending and focus in 2001 through 2003, which Gartnerexpects to continue through 2005. The shifts reflect a movement from revenue and loyalty generatingapplication investments to areas of CRM that can help reduce costs or provide a rapid ROI.

• Decreased investment: Spending has shifted away from high-ticket CRM applications, such asproduct configurators or sell-side e-commerce. Likewise, spending is being delayed on applications



that might require substantial process redesign or disrupt the smooth workings of a sales force, suchas an opportunity management system. Applications with poor customer demand are also beingavoided, such as Web chat and Web personalization.

• Increased investment: Spending has instead shifted toward applications that deliver a quick ROI, suchas incentive and compensation management, e-service, e-mail marketing and marketing resourcemanagement. Typically, ROI expectations have dropped from a range of 12 months to two years downto a range of six months to 18 months. Investment has also returned to traditional, well-proven, "must-have" applications like proposal generation and order management. However, there are some more-strategic investments being made in applications for measuring customer profitability or customerservice and support (CSS) with customer analytics. This is often the result of previous CRM projectsthat failed to meet expectations.

4.7.1 Sales Maturity and Investment Direction

As functionality evolves across the sales technology value framework, its value increases leveragingtechnology’s power to accelerate the rate and access of information exchange across and beyond theenterprise (see Figure 7). Gartner’s sales technology generations are highlighted in Figure 7.

• Paper-based

Reduce theadministrative

burden

Type C Type B Type A2003

2007

Technology

Strategy

Vision

On yourown!

Individualproductivity

Function/channeleffectiveness

Intraenterpriseintegration

Value networkenabled

None

• Individualizedadministrativeapplications

• Officeproductivitytools

• Organizationalsalesapplications

• Advancedmobileinfrastructure

• Shared customerdata model andprocesses acrossthe enterprise

• Evolution toanalytical-basedselling

Improveorganization

consistency andproductivity

Optimize revenueopportunities

across multiplecustomer

touch-points

Multilevelcollaboration with

customers,business partners

and suppliers

•Shared customerdata model andprocesses amongcustomers,business partners,and supplier

•Analyticalframework spanscustomers,business partners,and suppliers

Type C Type B Type A

First Second Third Fourth Fifth


Figure 7. Sales Technology Value Framework

Functionality also becomes more complex and, consequently, more process-dependent. First- andsecond-state systems are exclusively focused on individual productivity. Many large Italian enterprisesand the overwhelming majority of midsize organizations are at this stage of maturity. In the third state,organizational collaboration deepens the process dependency demanded for success, as sales teams arerequired to work within a defined structure using common terminology. Evolving a sales culture from



individual to organizational behaviors is the biggest obstacle to third-state success. Italian organizationswill find this to be one of the biggest hurdles to overcome and need to invest sufficient resources toensure its progress. Only after that transition is the movement to the fourth state possible as the salesteam is now able to fluidly access and share knowledge within sales, but also with its counterparts incustomer service and marketing, creating enterprise CRM. The inclusion of customers, suppliers andpartners in the fifth state fulfills CRM destiny. The challenge is not in implementing a technology, but inselecting a CRM strategy that is aligned with the skills and culture of the organization, then selectingapplications that power the CRM strategy.

4.7.2 CSS Maturity and Investment Direction

Not surprisingly, investment in CSS technologies mirrors that in sales, with large enterprises (Type A,which are aggressive adopters of technology) in dominant vertical markets much more mature than theirSMB counterparts. Overall, enterprises must consider how customer interaction initiatives — both plannedand under way in one part of the enterprise (for example, building a customer self-service knowledgedatabase) — have an impact on customers interacting with another department or division (see Figure 8).

Technology

Strategy

Vision


Responsive Personalized Proactive CollaborativeAble toanswer

Siloedchannels,

answer callsand basiccustomer

serviceDanger: nocall center

Efficiency andsystemized routing

of calls to bestagent

Danger: siloed

Effectiveness.Multichannel

inquiries,coordinated

customer serviceand customer input

Danger: siloed

Customer memoryCreate repeatable

experiences,Strengthen

intimacy andcommunities

Danger:inadequate

decision support

CEMdynamically

anticipate andprovide customer

service in real time,internal/external

collaboration

POTS:PBX/ACD,

call queuingand fax

Skills-basedrouting, interactive

voice response,common database,customer service

and supportapplications“log and flog”

QM, WFM, CTI,workflow

management,scripting and voicetools. Back/front-office integration,

reporting andfeedback

KM, blendedcenters, analytics,

collaboration,BPM, e-learning,

Consolidatedreporting, alerts or

triggers

Decision support,advanced KM,IM, advancedcollaboration,

businessperformance

management andpredictiveanalytics

2003

2007 Type B Type AType C

Type B Type AType C

Call handling Call center Contact center Interaction hub

ACD: automatic call distributorBPM: business process managementCEM: customer experience managementCTI: computer-telephony integrationIM: instant messaging

KM: knowledge managementPOTS: plain old telephone serviceQM: quality managementWFM: workforce management


Figure 8. Customer Service and Support Technology Value Framework



The enterprise must map the specific touchpoints that customers have with the business (such as sales orservice) and examine whether those touchpoints are equipped to deliver a consistent customerexperience. To gain competitive differentiation during the next five years, enterprises need to invest inbuilding a customer interaction hub that enables the business to learn and meet or exceed customerexpectations across all communication channels. To prevent conflicting silos from developing (orcontinuing), enterprises must define a customer service road map that clearly shows the interrelation ofcross-business processes (such as sales, marketing, logistics or billing) and technologies that affect thecustomer, and how these processes and technologies advance enterprise customer loyalty objectives.

Figure 8 highlights the five generational states of CSS and the position of various organizational types,such as Type A, Type B (that is, moderate adopters of technology) and Type C (that is, lagging adoptersof technology) along it.

4.7.3 Marketing Automation Maturity and Investment Direction

The immaturity of CRM within Italy as a whole is reflected in the typical generational state of mostmarketing initiatives (see Figure 9). Figure 9 highlights the five generational states of technology-enabledmarketing and the position of various organizational types (that is Types A, B and C) along it.

Technology

Strategy

Vision

None —productmarketing


Value-enablednetwork —

customer value-based collaborativenetwork marketing

Centralizedcustomer needs/value strategy;decentralized

execution

• CoordinatedMRM throughCRM/PRM fordistribution/TrackingResourceoptimization

•

Initial productivityand visibility —

product-to-customermarketing

Functionaleffectiveness —

customer segment-driven marketing

Intraenterpriseintegration —

strategic customervalue-basedmarketing

Mass marketbased on

socio/demo/

psychographicattributes

Target marketbased on past

product purchasehistory

Target customersegments basedon customer value

EnhanceCustomer

Experiencethrough value

network

• OfficeproductivitysoftwareLooselyrelatedintranet(s) orextranet(s)

•

• Analytic BI orworkbenchCampaignManagementOperational e-marketing

•

•

• PredictiveanalyticsMultichannelCROMRM for plan,budget anddevelop

•

•

• Architecture forInteractionmanagement withevent detectionand triggersDeeper MRM•

2007 Type C Type B Type A

2003 Type C Type B Type A

BI: business intelligenceCRM: customer relationship managementCRO: customer relationship optimization

MRM: marketing resource managementPRM: partner relationship management


Figure 9. Marketing Automation Technology Value Framework

In more advanced regions, such as the United Kingdom and Scandinavia, marketing automation isgrowing because of the need for more CRM sophistication as part of second and third wave investments;whereas, in Italy, most organizations are still investing in specific departmentally-focused sales and call



center initiatives. The majority of implementations are basic “product marketing” types where productgroups control campaign budgets. Marketing efforts are limited to mass marketing, and there is little — ifany — automation beyond the use of office productivity software (such as Microsoft Excel or e-mail).Some more advanced organizations can recognize customer opportunities based on relative lower cost ofretention vs. acquisition. The emphasis being on “low-hanging fruit” in terms of products to sell, cross-sellor up-sell and a focus on marketing processes around customer data analysis, direct and e-mailmarketing. More advanced generational states yet to be aspired to include:

• Functional effectiveness: Developing a more customer-centric focus with segmentation based oncustomer value. Specific initiatives around customer life cycle, along with leveraging marketingknowledge to support the consistency of customer experiences.

• Intraenterprise integration: Centralized marketing strategy around customer needs and customervalue. Alignment of targeted marketing, product development and brand management, with increasedcross-functional coordination (such as marketing, sales, service and back-office systems).

• Value network collaboration: Focus on enhanced customer experience through coordinatedmarketing, sales and service capabilities across the value network. Strong emphasis on collaborativemarketing with partners, resellers and others (that is, supply and demand).

4.8 How Appropriate Are the Active CRM Vendors?

To assess the appropriateness of a CRM vendor at a high level in Italy, several aspects should beconsidered ranging from their functional CRM sweet spot (such as a CRM suite or departmentalspecialist) and scalability (that is, the ability for the company and its product to scale to meet various sizesor organizations) to their vertical expertise and local viability (that is, the strength of their local customerbase and revenue). Vendor selection for large and midsize businesses alike is a difficult and time-consuming task, fraught with dangers. The table below identifies the active vendors within the Italian CRMmarket (that is, covered by this report) to provide a starting point for the vendor selection process. Each ofthese vendors is covered in more detail via profile tables in Appendix B. The key appropriateness criteriaassessed are:

• Functional core competence: Highlights the strongest functional area (that is, sales, marketing orcustomer service and support) provided by the vendor. Vendors with balanced CRM suites spanningall three areas are represented by the entry "sls/mkt/css." However, vendors with a single entry, suchas "css" (that is, customer service and support), may provide sales and marketing components; andthese may meet an enterprise's specific organizational needs. However, they would not berecommended as stand-alone components and lack various advanced features associated with thatfunctional area.

• Organizational suitability: Indicates the typical size of an organization suited to that vendor's solutionbased on scalability, experience and functional fit. Solutions suitable for large organizations willsupport pan-European, multi-site implementations, among other things.

• Italian customers: Segments the vendors based on the number of customers they have in Italy.Vendors with fewer than 15 customers are classified as "Low," those with between 15 and 50customers are classified as "Medium" and those with more than 50 are "High."

• Italian revenue: Segments the vendors based on 2002 Italian CRM license revenue data fromDataquest. Vendors with less than $1 million in revenue are classified as "Low," those with between$1 million and $5 million are classified as "Medium" and those with more than $5 million are "High."



• Vertical prowess: Indicates the top three vertical markets each vendor targets. However, somevendors currently target numerous industries and sub industries and are active in each. There will beinstances where markets not in the vendor's "top three" will be appropriate, but an assessment of theirexperience and commitment to this industry will need to be performed.

Table 1. Active Vendor Profile Summaries

Vendor Functionalcompetence

Organizationalsuitability

Italiancustomers

Italianrevenue

Top three verticals(worldwide)

Oracle sls/mkt/css Large

Medium

Small

Medium Medium Public sector

Manufacturing

Telecommunication

SAP sls/mkt/css Large

Medium

Small

Medium High Engineering

CPG

Utilities

PeopleSoft sls/mkt/css Large

Medium

Small

Medium Medium Financial services

Services

Telecommunication

Siebel sls/mkt/css Large

Medium

Medium High Financial services

Telecommunication

Insurance

Onyx sls/mkt/css Large

Medium

Low Low Institutional finance

Healthcare

High technology

E.piphany sls/mkt/css Large

Medium

Low Low Financial services

Telecommunication

Travel and hospitality

Amdocs sls/mkt/css Large Medium Low Telecommunication

High technology

Pivotal sls/mkt/css Medium Low Low Financial services

Manufacturing

High technology



Vendor Functionalcompetence

Organizationalsuitability

Italiancustomers

Italianrevenue

Top three verticals(worldwide)

salesforce.com sls/mkt/css Medium

Small

Medium Low Small and midsizeenterprises

Cegedim sls Large

Medium

Low Low Pharmaceutical

XTEL S.r.l. sls Medium Medium Medium Consumer goods

This report focuses on the main vendors within the Italian CRM market. There are other vendors that arenot profiled due to three main reasons.

• Specialist vendors that compete in other markets that overlap with the CRM market such as SAS andBusiness Objects (that is, CRM analytics), Vignette (that is, Web content management) andBroadVision and Intershop (that is, e-commerce and portals).

• Active vendors with less than $100,000 Italian CRM license revenue in 2002, as estimated by GartnerDataquest: JDA, SuperOffice, Selligent, i2, Coheris, Applix/Platinum Equity, Kana, IFS,SalesManager, Invensys (Baan), Access Commerce, AIMS Software, CAS Systems of America,Chordiant Software, FDV Concept, FrontRange Solutions, HAHT Commerce, Kaidara Software, MEIGroup, Pegasystems, Remedy (BMC), Point (Edify), Saratoga Systems, Talisma, Unica/Marketic,ESA Software, IFM Infomaster, SCP Group and Update.

• Vendors that either could not be contacted or did not respond within the allocated time frame: Exact,ATG, Pat and Gruppo Formula.

4.9 Which Service Providers Can Help With CRM Initiatives?

A large number of active system integrators (SIs) are in Italy. However, the projects they typically areinvolved in focus around departmental implementations rather than advanced aspects such as strategyderivation and organizational change management. Key SIs include:

• Accenture

• Alcatel

• Atlantic Technologies

• Atos Origin

• Booz Allen & Hamilton

• Cap Gemini Ernst & Young

• Deloitte Consulting

• Delos (Getronics)

• Elsag SpA

• Etnoteam



• Hewlett-Packard (formerly Compaq Computer)

• IBM

• IFM Infomaster

• Italdata-SBS (Siemens Business Services)

• KPMG Consulting

• PricewaterhouseCoopers (IBM)

• SchlumbergerSema

• TeleAP

• Telecom Italia/Finsiel

• Unisys

5.0 Implementation and Ongoing Improvement

5.1 What is ROI, and How Can It Be Measured?

Before any measurement can be undertaken, CRM managers must understand the difference betweenbenefits and ROI. A recent Gartner survey highlighted the fact that although most respondents claim ROI,only a few were actually able to cite the ROI they claim; whereas, the rest could only anecdotally claimbenefits but not ROI. ROI is a financial analysis of how a project affects an enterprise's financialstatement. The critical differences between ROI and benefit realization are twofold. First, ROIencompasses TCO, as well as benefits. Second, ROI discounts future costs and benefits to enable themto be expressed in present-day currency terms. Enterprises can undertake many types of ROI analysis,including balanced scorecard, economic value added, internal rate of return, net present value, paybackperiod, real options analysis and total value of opportunity.

In general, an ROI calculation will produce a range or series of potential results, based on scenarios andchanges in assumptions. To fully appreciate the numbers in that range, a full business-case analysis mustbe completed prior to undertaking any CRM initiative. This analysis should focus on understanding thetotal costs and benefits of pursuing a CRM strategy. It should also take into account the factors andassumptions that may affect the attainment of the expected ROI.

Calculating ROI requires ongoing recalculation and measurement. ROI is not a "one-time" calculationmade to support a capital funds request or a justification before a project begins. Rather, it must berecalculated continually — after approval, and during and after implementation and rollout as well.Enterprises must continue counting the costs of operation after the initial rollout, as projected in the TCOand business-case analysis to prove that the investment is meeting or has exceeded the projectednumbers presented in the ROI calculation at the time of fund justification.

Gartner provides various research associated with this complex and challenging topic:

• "Don't Confuse CRM Benefits With ROI," TU-19-5813

• "Financial Metrics for Measuring CRM ROI," SPA-13-0854

• "Ten Steps to Forecasting and Achieving CRM ROI," TG-14-7338



• "Unused CRM Software Increases TCO and Decreases ROI," SPA-19-4655

5.2 What Can Be Learned From Others?

During the past few years, Gartner has gathered a broad range of case studies through its CRMExcellence Award competitions. These provide insight into how organizations have embraced CRM andovercome various industry-specific issues. The list below highlights a small selection of the case studiesavailable from Gartner.

• "Schlumberger: Aligning People, Processes and Technology," CS-17-6977

• "Telecom Italia Mobile Cuts Churn and Increases Value," CS-17-6919

• "UPMC Health Plan Extends CRM Through Brokers," CS-18-5078

• "Dow Chemical Provides a Consistent Face to the Customer," CS-13-6992

• "An SMB Focuses on Customers: The Tipper Tie Strategy," CS-17-1108

• "CRM at Hard Rock Cafe: Improving Customers' Experiences," CS-16-6115

• "Wells Fargo: Driving Customer Information to Local Level," CS-13-5978

• "CRM Drives BCAA to New Customer-Centric Destinations," CS-16-1721



Appendix A: Description of Associated Departments Within Gartner

Gartner CRM Membership Program: Gartner provides a membership program that brings togetherexpertise from across Gartner in an integrated package designed to provide organizations with the ideas,tools and advice to aid transition around the CRM life cycle (see Figure 10). The graphic in Figure 10highlights how Gartner aligns to the CRM life cycle through the membership program. As members,organizations get access to the full power of Gartner in a single program that combines applicableresearch, analyst support, targeted consulting and valuable decision-support tools. The green-arrowedcycle on the outside is the CRM life cycle. The medium blue circle toward the middle is the researchGartner provides in the member portal to help clients with specific tasks. The light blue segments are theassociated tools and workshops that can be provided. In the middle is Gartner's core research, which isstill available.

Vision and strategy

Alignmentand

readiness

Technology andapplication selection

Implementationand

ongoingimprovement

CoreResearch

Cost ofownership

andreturn

oninvestment

Education

CRMplan

healthcheck

Vendor selectionor negotiation

CRM in governmentBuilding blocksValue of CRM

OrganizationalalignmentPlanning

for qualityProcessdesign

CapabilitiesMagic Quadrants

Adoption and utilization

Bestpractices

IntegrationAnalytics


Figure 10. Integrated CRM



To learn more about Gartner's integrated offering for CRM managers, visit the CRM Membership Programat www.gartner.com/crmmanagers.

Appendix B:



Profile Tables

Amdocs

Product name Amdocs ClarifyCRM

Version and releasedate

Version 12; released in July 2003

Price (US$) Average license fees are between $3,000 and $5,000 per concurrent user.

Target market Amdocs targets large organizations, primarily within the telecommunicationvertical market, where its complementary billing and order managementsystems can be deployed, as well as high technology and manufacturing andretail financial services.

Solution

Architecture Amdocs Clarify CRM is built on a C++ code base. The company is migrating toa pure Java environment and currently uses Java wrappers. All newapplications are Java-based.

Sales capability The solution provides a rounded sales capability with functionality spanningopportunity management, forecasting and quote/order management to productconfiguration. However, adoption of the thin client sales solution remains lowwithin Europe.

Marketing capability In the first quarter of 2003, Amdocs acquired campaign managementspecialist Xchange to enhance its own telecommunication-focused marketingcapability. Amdocs plans to integrate the complementary solution before theend of 2003. Xchange's strength in financial services will help expand Amdocs'viability within this market.

The integrated solution will provide a strong marketing automation solutionwith a real time capability (that is, added to Xchange 8).

CSS capability Amdocs Clarify CRM provides a rounded CSS capability providing call center,complex case management, helpdesk, e-service and field servicecomponents. It provides a strong proposition for telecommunication, hightechnology and financial services companies but lacks advanced capabilitiesin areas such as e-service (for example, the self-service knowledge base doesnot support guided problem resolution) and field service.

Analytical capability In addition to standard operational reporting, Amdocs provides a strongpredictive capability. The solution supports churn analysis and customerlifetime value calculation, missing from some CRM suite provider's portfolios.

Vertical capability Although primarily successful within the telecommunication market, Amdocs isactive in various other verticals including high technology, manufacturing,financial services and retail.

Customers



Worldwide Amdocs has approximately 1,300 CRM implementations worldwide.

Europe Approximately 35 percent of these are based in Europe.

Italy Amdocs could not provide details for Italy. Customers include Roche and Enel.

Distribution, supportand professionalservices

Direct presence Amdocs has a focused sales team in Italy. However, multi-lingual support inEurope, Middle East and Africa (EMEA) is driven from the United Kingdom.

Resellers, SIs or ESPs Amdocs has various partners in Italy, including Accenture, Cap Gemini Ernst &Young (CGEY), BearingPoint (KPMG), eLoyalty and Softlab.

Strengths

Telecommunicationsolution

Amdocs is an established provider for the telecommunication industry with astrongly tailored CRM solution benefiting from prebuilt integration with its ownbilling system.

Customer service andsupport

Amdocs is well known as a leading vendor in the call center-customer supportarena, with many large support organizations worldwide. Particular strengthsinclude high volume, multi-channel contact centers and complex problemresolution capabilities.

Analytics Amdocs has a strong predictive analytics capability, which provides support forchurn analysis and customer lifetime value.

Challenges

Multiple industry viability Despite the acquisition of Xchange, concerns remain over Amdocs viabilityoutside of its core telecommunication market.

Functionality gaps The CRM solution has various gaps such as advanced e-service.

Cegedim

Product name Atlas CRM; Teams SFA


CRM: ATLAS version 2.18, released in March 2003

SFA: TEAMS V6.5 released in January 2003

Price (US$) Cegedim is a services company selling healthcare professional data togetherwith a solution rather than just licenses. Organizations pay a fixed monthly feeper user.

Target market Cegedim targets organizations linked to the pharmaceutical industry

Solution

Architecture TEAMS TM (Territory Management): Microsoft Windows-based

TEAMS CR (Call Report) (for example, PDA): both Palm and Pocket PC-



based

TEAMS Web: Web-based

ATLAS One Key Database: ORACLE 9I-based

Application: Web-based; Java

Sales capability Cegedim TEAMS provides a SFA solution designed for pharmaceuticalcompanies. The solution is available through a variety of client formats (suchas, Microsoft Windows, Web and mobile) with appropriate levels offunctionality (such as, profiling, list creation, queries, targeting and territorymanagement).

Marketing capability Cegedim Atlas provides a marketing automation capability designed for thepharmaceutical industry. It integrates with the company's healthcareprofessionals database (that is, One Key) for access to doctor and healthauthority information across Europe. Due to the tailored nature of the solution,it does not provide advanced customer relationship optimization (CRO)functionality to support things like event triggers and the workflow to controlcomplex, nested, multi-wave campaigns. However, in the fourth quarter of2003, Atlas plans to provide a tool to manage marketing campaigns (forexample, congresses, epidemiological and clinical studies, symposia andquestionnaires). The tool will be integrated within the Teams PR module.

CSS capability Atlas provides a call center or customer service capability for customers andpatients through the integration of CONSO/COHERIS.

Analytical capability ATLAS Integration Platform provides a range of operation analyticalcapabilities through a partnership with Business Objects. This alliance aroundthe “Application Foundation” solution is focused on helping marketing andbusiness intelligence services improve their targeting and marketsegmentation. TEAMS is able to interface with Cognos.

Vertical capability Cegedim focuses exclusively on the pharmaceutical industry.

Customers

Worldwide Cegedim has more than 230 customers worldwide.

Europe The majority of these customers are based in Europe.

Italy Specific customer data could not be obtained; but, interestingly, Cegedim hasaccess to 25 percent of Italian pharmaceutical data.


Direct presence Cegedim has a small direct presence.

Resellers, SIs or ESPs Cegedim does not use resellers and ESPs in Italy.

Strengths



Pharmaceutical focus Cegedim is an established vendor in the pharmaceutical industry with a strongportfolio of applications specifically tailored for this vertical.

Challenges

Competition As the CRM market consolidates around verticals, Cegedim will experienceincreasing competition from large horizontal CRM vendors (such as Siebel)looking to dominate key verticals.

E.piphany

Product name E.piphany E.6


E.6, Released in 2002

Price (US$) License costs vary by application and generally start at approximately$250,000.

Target market E.piphany targets the Global 5,000

Solution

Architecture The E.piphany E.6 platform is built on a Web-based Java 2 Enterprise Edition(J2EE) architecture.

Sales capability E.piphany Sales combines operational sales functionality with ActivePathnavigation — to intelligently guide users to the right information,recommendations or the next step in the sales process — and analytics.Standard capabilities include account, contact and opportunity management,and multi-stage sales processes, pipeline visibility and forecasting. Thesolution also supports mobile and wireless sales clients. However, the solutionlacks advanced sales features such as incentive compensation and salesconfiguration.

Marketing capability The strongest part of the solution, E.piphany Marketing, is an integratedsolution for analyzing customers, planning, deploying and measuringmarketing activities, and executing coordinated outbound and inboundcampaigns in real-time across multiple touchpoints. E.piphany is anestablished marketing automation vendor and provides a strong proposition inthis area.

CSS capability E.piphany Service provides a multi-channel, workflow-driven, contact centersolution for call handling and case management. It supports computer-telephony integration (CTI) and universal queuing. The solution suite alsoincludes e-mail response and Web self-service modules, which add basicfunctionality to the overall CSS capability. The solution does not provide fieldservice and dispatch functionality, and it lacks advanced e-service features.

Analytical capability E.piphany Insight provides packaged reports and ad-hoc reporting withintegrated online analytical processing and data mining capabilities. Thesolution supports intuitive predictive modeling tools for segmentation,forecasting and analysis. In addition, E.piphany Interaction Advisor uses



predictive models for optimized decision making (for example, offerrecommendations) in real-time within a variety of operational interactionenvironments.

Vertical capability E.piphany focuses on financial services, insurance, communication, retail,travel, and leisure and consumer goods.

Customers

Worldwide E.piphany has 450 CRM customers worldwide.

Europe E.piphany has 60 customers in Europe.

Italy E.piphany has only a handful of Italian customers. Examples includeHutchinson 3G for outbound marketing, BPV (banking) for marketing and CFFirenze (banking) for marketing and sales (1,300 seats).


Direct presence E.piphany has just created a direct presence in Italy, but specific staffinginformation could not be obtained.

Resellers, SIs or ESPs Partners in Italy include IBM BCS, Sidi, InfoGroup and Accenture.

Strengths

Architecture E.piphany E.6 is built on a highly viable J2EE platform.

Marketing automation E.piphany is an established marketing automation vendor and offers a strongsolution in this area.

Analytics E.piphany's analytical portfolio combines operational insight with predictivemodeling and real-time intelligent decision making. This combination ismissing from several traditional CRM suite vendors.

Challenges

Unbalanced portfolio Although strong in marketing automation, the sales and service componentslack advanced features.

Onyx

Product name Onyx Enterprise CRM


Version 4.0, released in June 2002

Price (US$) The cost ranges from $100,000 to several million, with an average deal size of$300,000 in the United States and $150,000 to $200,000 in Europe. However,the deal size is rising in Europe due to the use of large SI partners. It is likelyto be $250,000 to $300,000 in 2003.

Target market The company defines its target market as enterprises with revenue between



$100 million and $2 billion.

Solution

Architecture The solution is .NET-based with support for SQL or Oracle at the databasetier. It is Web services architected for component integration in an embeddedCRM solution or can be deployed as a complete enterprise application. Thesolution is accessible through portals configured for employees, customersand partners.

Sales capability The employee portal's opportunity management system provides faircapabilities for online sales users. It provides good features for team sellingand sales forecasting, including the capability to drill down to multiple levels ofdetails. Onyx relies on partners for more advanced sales components (such assales configuration — via Firepond) and incentive compensation software —via Incentive Systems — which are typically not required by the majority ofSMBs. However, it does have some functionality gaps (such as its territorymanagement capabilities, complex call scripting and offline support) that arebeing addressed and will be available in follow-on releases.

Marketing capability Onyx Enterprise CRM Marketing provides a traditional, multichannel campaignmanagement capability suitable for most mid-market organizations, but it lacksadvanced relationship optimization functionality.

CSS capability Onyx Service provides viable, but not leading, multichannel contact center, e-service and field service — via Metrix partnership — components. The solutionsupports multiple CTI vendors. Missing functionality includes advanced callscripting, which will be available in the next release due at the end of 2003,problem resolution and e-service capabilities. The e-service capability can beenhanced via a partnership with Firepond.

Analytical capability Onyx bundles Cognos for an additional cost to provide standard operationalreports and analytics. The solution does not support predictive analytics.

Vertical capability In the United States, Onyx has three primary industry interests:

Financial services (for example, investment or asset management, retailbanking and insurance)

Healthcare, for example, insurance (that is, payers) and managed care

High technology (for example, software manufactures and discretemanufacturing)

The company provides pre-defined templates for these industries; processmaps provide best practices from previous installations and aid futurebusiness-process rule definition.

In North America, Onyx also targets some niche markets, including sportsfranchises.

In Europe, Onyx also targets various niche markets (for example, localgovernment in the United Kingdom) with the help of key partners, although



none are in Italy.

Customers

Worldwide Onyx has 950 customers, of which 700 are SMBs.

Europe Onyx claims to have 215 active customers in Europe.

Italy Onyx has 22 active customers in Italy, including Costa Crociere, CRIF, Elitel,Europe Assistance, Fiera Milano, Italtel, Noicom, Qualidata, Sony Italy, TCSistema, Ticketone and Würst Italy.


Direct presence Onyx does not have a direct presence in Italy. All marketing and support isperformed from the United Kingdom. The company has three employees in itsEMEA Channel Sales Group that focus on Italy.

Resellers, SIs or ESPs Onyx sells indirectly in Italy, via Certified value-added reseller (VAR) partnersand SIs, including Bizmatica, Offnet and Deloitte & Touche.

Strengths

Rounded CRM suite Onyx CRM provides a rounded capability supporting key functions acrosssales, marketing and service. In addition, the Partner Portal promotescollaboration and drives sales efficiencies with key partners; and the CustomerPortal integrates Web sites with the rest of a company’s customer-facingoperations.

Architecture Onyx Enterprise CRM is built on a strong Web-services compliant Internetarchitecture that is optimized for .NET. It can be deployed as a traditionalcompany-hosted system or in a hosted multi-tenant environment.

Challenges

Target market Onyx targets the high end of the SMB market. The company is under pressurefrom the large CRM suite vendors moving downstream as well as the smallerSMB companies moving upstream.

No direct presence Onyx's reliance on third parties for representation within Italy limits its appealto Italian organizations.

Advanced functionality Although not needed by most SMBs, Onyx CRM lacks various advancedfeatures across sales, marketing and customer service.

Microsoft CRM The future release of Microsoft CRM in Europe will bring an additionalcompetitor to the low end of the SMB market.

Oracle

Product name Oracle E-Business Suite



Oracle E-Business Suite Special Edition

Oracle Small Business Suite (not available in Europe)


Oracle E-Business Suite: v11.5.9, released in June 2003

Price (US$) Pricing starts from $100 per seat/per month (that is, terms and conditionsapply).

Target market Oracle targets large (more than 1,000 employees), upper mid (500 to 1,000employees) and mid (100 to 500 employees) size organizations in Europe.

Solution

Architecture The Web-based solution is built to run exclusively on Oracle's own Oracle9iApplication Server and databases.

Sales capability Oracle's sales capability provides a rounded solution with functionality acrossmost areas, including incentive compensation, with a particular strength insales configuration. Its primary weakness is its mobile sales product, which isdue for enhancement in the next release.

Marketing capability Oracle Marketing automates the marketing process from campaign planning,budget management and list creation to execution and analysis. Theapplication has been enhanced significantly in recent releases to providesupport for real-time personalization and an event-driven capability.

CSS capability Oracle service is the strongest part of the company's CRM solution. It providesa rounded modular solution with multichannel contact center, extensive fieldservice and e-service capabilities.

Analytical capability The solution provides strong business intelligence (BI) tools for operationalreporting. In addition, Oracle 9i Data Mining allows organizations to buildpredictive models like campaign response probability and customer retentionrisk. This direct capability is often missing from traditional CRM vendor'sportfolios. However, the capability is not industry leading and lacks, forexample, a customer lifetime value module.

Vertical capability Oracle’s E-Business Suite is adapted to support business processes in 84industry sub-sectors across 23 industries.

Customers

Worldwide Oracle claims to have 10,000 11i customers worldwide. Of these, Gartnerestimates less than a quarter are using CRM-related modules.

Europe Gartner estimates that Oracle has approximately 400 live, true CRMcustomers in Europe. Oracle claims this number is higher due to the largenumber of 11i customers deploying at least one CRM module.

Italy Gartner estimates that Oracle has less than 50 live customers in Italy.Examples include Telecom Italia Mobile, BTicino (Legrand Group) and Fiditalia



(Societe' Generalle Group).


Direct presence Oracle has an extremely strong presence in Italy. The company claims to havemore than 800 employees based there. The company directly sells, supportsand implements its solution in Italy and has a strong internal professionalservices capability.

Resellers, SIs or ESPs Although not as extensive as its closest competitors, Oracle has a broadnetwork of VARs and SIs.

Strengths

Business processesautomation

Oracle E-Business suite supports the automation of end-to-end businessprocesses, across front-office and back-office operations through a soletechnology provider.

Analytics Oracle provides BI and predictive or data mining capabilities missing frommany mainstream CRM vendors' portfolios.

Challenges

Platform inflexibility The CRM applications run only on the Oracle application technology stack(that is, Oracle databases and the 9iAS application server).

Third-party integration Integration with competing vendors' products, whether CRM or back-end, isdriven solely through Oracle’s 9iAS, which some organizations may findrestrictive. Organizations that have standardized on alternative middlewaresolutions from the likes of WebSphere, Biztalk, TIBCO Software,Webmethods, and BEA Systems would still need to deploy 9iAS and could notrely on their established middleware investments.

PeopleSoft

Product name PeopleSoft Enterprise CRM, and PeopleSoft EnterpriseOne CRM


PeopleSoft Enterprise CRM: v8.8, released in the fourth quarter of 2002.

PeopleSoft EnterpriseOne CRM: v8.9, released in the fourth quarter of 2003and is suitable for the SMB market.

Accelerated Solution — for SMBs — is a pre-packaged version of PeopleSoftEnterprise CRM that is a combined CRM application-and-services offeringdesigned for rapid implementation.

Price (US$) PeopleSoft prices its software under its Value Based Pricing model.

Target market PeopleSoft targets all sizes of organizations with both its Enterprise andEnterpriseOne products. The company also has a services offering thatprovides fixed time, cost and scope implementations for SMBs calledAccelerated Solutions. This is targeted at organizations with revenue between



$100 million and $380 million and between 500 and 2,300 employees.

Solution

Architecture PeopleSoft Enterprise and Accelerated Solutions run on the company'sestablished Internet-based (that is, PeopleTools) architecture. This platformsupports PeopleSoft's large and SMB CRM customers, as well as thecompany's complementary supply chain management, financial, and humanresources (HR) solutions. PeopleSoft EnterpriseOne CRM is based on aseparate platform acquired from J.D. Edwards.

Sales capability The sales module includes opportunity and lead management, team selling,forecasting, quotations, order capture, B2B and B2C, fulfillment and reporting.Mobile sales, sales configuration and multichannel sales are also available.The Accelerated Solution provides a subset of the core sales modules.

Marketing capability PeopleSoft Marketing provides organizations with the tools to develop,execute and track marketing programs. Features include triggers thatautomatically generate fulfillment, automatic lead hand-off to a salesdepartment, the ability to create parent-child relationships in campaigns, andanalytic tools for measuring results and developing new strategies.Additionally, traditional and online marketing are supported.

CSS capability PeopleSoft provides a rounded CSS capability. The solution automates callrouting and tracking, entitlement processing, knowledge management,workflow and problem resolution; and provides various interactionmanagement capabilities. Self-service capabilities are offered and areindependent of the CRM Portal module. Field service, internal help desk,quality and CTI integration capabilities are also available.

Analytical capability The CRM solution has an embedded analytical capability to provideoperational insight across sales, marketing and service as part of theoperational CRM solution and a CRM warehouse capability for moresophisticated multidimensional analysis of data, predictive analytics,profitability and customer behavior modeling.

Vertical capability PeopleSoft offers vertical templates for communication, consumer products,energy, federal government, financial services, healthcare, high technology,higher education, industrial products, professional services organizations,public sector, staffing, utilities and wholesale distribution. Several, but not all,of these are available with the accelerated solution. Supported SMB verticalsinclude financial services, communication, insurance, government, hightechnology, energy, manufacturing and distribution, construction, real estateand other asset intensive industries.

Customers

Worldwide PeopleSoft has 1,200 CRM customers worldwide, of which 380 are SMBs.Version 8 of the CRM software has been bought by approximately 500customers worldwide, although less than 50 percent are currently live.



Europe PeopleSoft has 210 PS 8 CRM customers in Europe, of which 50 are SMBs.

Italy PeopleSoft has more than 20 CRM customers in Italy. Examples include PosteItaliane, Carta SI, Fiat, AON Insurance Brokers and Hilti.


Direct presence PeopleSoft has approximately 300 employees based in Italy, although not allare CRM-focused.

Resellers, SIs or ESPs PeopleSoft does not use resellers. However, the company engages withseveral ESPs to aid implementation of the solution. The company's primarypartners in Italy are IBM, Hewlett-Packard, Deloitte Consulting, CGEY, butalso smaller companies like Reply and The Technology Partners.

Strengths

Enterprise applicationsportfolio

PeopleSoft 's broad software portfolio enables companies to also deploy itsHR, finance, supply chain and other application needs from a sole vendor onthe same underlying architecture.

SMB solution PeopleSoft's EnterpriseOne CRM and Accelerated Solutions provide SMBswith a fixed time, cost and scope agreement for their implementations, givingpeace of mind.

Challenges

Live references Although PeopleSoft has a strong customer base worldwide, the company haslimited live references for version 8 of its CRM solution in Europe.

Oracle’s proposedacquisition

Oracle’s bid for PeopleSoft is in limbo until the U.S. Department of Justicerules on its antitrust inquiry into the deal. Although PeopleSoft is adamant theacquisition will not go ahead, some uncertainty remains until the situation isresolved.

Pivotal

Product name Pivotal 5


V5.0, released in April 2003

Price (US$) Average deal size $158,000 in the first half of 2003 (that is, excluding dealsunder $50,000)

Target market Midsize enterprises and divisions of large enterprises with revenue between$50 million and $3 billion.

Solution

Architecture Pivotal 5 is built on a Web-based .NET architecture with support for SQLserver and Oracle at the database tier. It is accessible to employees through arange of client options (for example, Windows, rich, thin and wireless) and



through portals to provide access to partner- and customer-focusedfunctionality.

Sales capability Pivotal Sales is a strong component of the company's CRM solution. Itincludes opportunity management, mobile and assisted selling capabilities thateasily meets the needs of SMBs.

Marketing capability In the fourth quarter of 2002, Pivotal acquired MarketFirst Software toaugment its previously weak marketing automation solution. The companylaunched the integrated product with the release of Pivotal 5 in April 2003,providing a strong marketing automation solution with comprehensivecampaign management and lead management capabilities for the company'sintended midmarket audience. Pivotal MarketFirst is also offered as a stand-alone product.

CSS capability Pivotal Service provides CSS functionality for a SMB organization's contactcenter, e-service, service analytics, partner relationship management and fieldservice (that is, through a partnership with Metrix) needs. Pivotal made variousenhancements with the release of Pivotal 5 (such as the release of anenhanced tiered contact center solution with support for CT Connect, plus anew eService product). However, the solution lacks features in most areas,such as advanced enterprise resource management system and naturallanguage or intuitive problem resolution. The planned merger with Talisma willenhance the e-service offering significantly.

Analytical capability Pivotal is an original equipment manufacturer for E.piphany's data miningengine for operational data analysis. The acquisition of MarketFirst enablesPivotal to integrate to several other leading BI vendor's solutions.

The solution does not support predictive analytics.

Vertical capability Pivotal provides sub-vertical offerings for investment banks, commercialbanks, private banks, asset management firms, healthcare insurance firms,real estate or construction companies, and medical device/diagnostic testmanufacturers.

Customers

Worldwide Pivotal has more than 1,600 customers worldwide.

Europe In Europe, Pivotal claims to have more than 450 customers.

Italy Italy is a strong market for Pivotal. Customers include Alcatel/Nextira One,Credem, iGuzzini Illuminazione, Class Editori, Domustech/ABB, Berchi Group,Salvagnini and Syngenta Italy.


Direct presence Italy is an important market for the company and is primarily served by PivotalItalia. The company intends to continue to focus on its growth in this region



through 2003 and beyond.

Resellers, SIs or ESPs Pivotal's primary go-to-market partner in Italy is CDM TechnoConsulting S.p.A.The company retains Master Distributor status and operates as Pivotal’s directpresence in Italy.

Strengths

Direct presence Pivotal is committed to Italy and plans to grow its direct presence in the region.With a growing customer base, Pivotal is becoming an experienced player inthe Italian market.

Sales solution Pivotal's CRM suite provides opportunity management, mobile and assistedselling capabilities, which adequately addresses most SMBs' top CRM priority:sales automation.

Challenges

Unified portfolio The acquisition of MarketFirst strengthens Pivotal's marketing automationcapability. However, midsize organizations requiring a complete CRM solutionfrom Pivotal would currently require two separate — but integrated — solutionstacks. In addition, the merger with Talisma adds another platform (albeitMicrosoft-focused) and company to unify.

Future The acquisition by Oak Investment Partners removes the imminent financialconcerns that were threatening the company’s survival. The ambitious goal isto create a $250m revenue company, at which point Oak would look at aliquidity event (such as a new initial public offering or a sale), raising concernsover its future again, especially if the aggressive growth required to achieve itsfinancial goals is not achieved.

Market segment Although Pivotal has successfully sold into smaller organizations, Pivotal’ssolution can be considered too complex and expensive for the low end of theCRM market, where companies like Microsoft will dominate. Pivotal’s solutionis also lacking advanced functionality (such as global territory management),which makes it difficult to compete at the large enterprise level where Siebeland SAP rule. Pivotal’s intended market is squeezed into the high end of themid-market, which suits its portfolio; but this market is poised for increasedcompetition from companies like Siebel and Microsoft. However, with Oak’sbacking, significantly enhanced marketing, sales and service capabilities andflexible pricing alternatives, Pivotal is now better positioned to increase itsmarket share for midsize businesses.

salesforce.com

Product name salesforce.com


Team Edition: v1.0, released in September 2002

Professional Edition: v1.0, released in March 2001

Enterprise Edition: v1.0, released in February 2002



Offline Edition: v1.0, released in July 2002

Wireless Edition: v1.0, released in November 2002

Personal Edition: v1.0, released in June 2003

Price (US$) Personal Edition: free application for a single user

Team Edition: $995 for up to five users

Professional Edition: $780 per user, per year

Enterprise Edition: $1,500 per user, per year

Offline Edition: $300 per user, per year (optional with Professional; includedwith Enterprise)

Wireless Edition: $195 per user, per year (optional with Professional; includedwith Enterprise)

Target market salesforce.com targets all sizes of enterprises through its application portfolio,from small to medium to large, and has had some degree of success in allthree.

Solution

Architecture salesforce.com is an online CRM application developed for the Internet. Usersconnect to salesforce.com through the Internet via a Web browser runningMicrosoft Internet Explorer (version 5.0 or higher) or Netscape Navigator(version 6.0 or higher). Because there is no hardware, software or networkequipment to purchase, there is no requirement for an IS department toimplement or maintain the application.

Sales capability Sales automation is salesforce.com's strongest CRM function. The solutionsupports account management, opportunity management, real-timeforecasting, proposals and quotes, and sales methodologies. Miller-Heimansales methodology is the default, but other sales processes can be user-configured. However, the solution does not support sales configuration,quoting, sales analytics, incentive compensation and proposal generation.

Marketing capability salesforce.com's marketing functionality includes support for campaignmanagement, campaign ROI analysis, lead capture and routing, e-mailmarketing and a marketing encyclopedia. However, it lacks advanced CROcapabilities such as personalization.

CSS capability salesforce.com's customer service functionality includes support for casemanagement, case routing, escalation and notification, account management,a solution knowledge base, service agreements and basic CTI via an XMLconnector to Alcatel Genesys Conferencing. However, the solution is weak inthis contact center area and lacks a field service component.

Analytical capability salesforce.com uses Crystal Reports for operational analysis and reporting.

Vertical capability salesforce.com does not provide prebuilt vertical solutions, although the vast



majority of its customers are software Internet companies.

Customers

Worldwide salesforce.com has more than 7,000 customers worldwide.

Europe salesforce.com has approximately 800 customers in Europe.

Italy salesforce.com has 42 customers in Italy.


Direct presence salesforce.com targets Italy from it headquarters in Ireland, with the support ofits local sales and support team in Italy. The company was officially launchedin Italy in the Autumn of 2002 and currently has five staff members operatingin this market.

Resellers, SIs or ESPs salesforce.com also claims that its partners play an important role ingenerating business in Italy. However, the sales model is still predominantlythe direct approach as the partner network is developed in Europe.

Strengths

Ease of use The solution is easy to learn and use, requiring just one or two days oftraining; and the intuitive interfaces are easily configured by users. Usage canbe monitored by salesforce.com to highlight functional areas that need futuredevelopment.

Cost The solution requires little or no capital expense except the cost of a PC andbroadband Internet access. The low monthly subscription costs often result ina low TCO relative to purchased software applications.

Hosted model salesforce.com's hosted business applications require no actual software to beinstalled, upgraded or maintained except for the Internet browser itself.Organizations require fewer — but not none — IT resources to support thesolution, and implementation and deployment is significantly faster than typicalin-house implementation.

Challenges

Hosted offering salesforce.com's applications operate online and hosted (that is, they cannotbe purchased and operated by customers); and, consequently, they are relianton the Internet for connectivity and network performance. In addition, someorganizations like to have direct control over their customer data.

Customization The applications can be configured, but they cannot be highly customized orextended beyond configuration bounds set by salesforce.com, thus limiting theability to meet an organization's unique business requirements.

Verticalization salesforce.com does not provide prebuilt vertical solutions.

Microsoft CRM The future release of Microsoft CRM in Europe will bring a serious competitor



to the market and undermine salesforce.com's future viability.

SAP

Product name mySAP CRM

SAP Business One

mySAP All-in-One


mySAP CRM version 4.0, released in June 2003

SAP Business One: Italian version 6.5 became available in October 2003.

mySAP All-in-One: version 3.1 (version 4.0 has an estimated generalavailability in January of 2004)

Price (US$) Gartner estimates typical license costs are $1,500 per seat for SAP BusinessOne, a complete business software solution.

Target market SAP targets all segments of the market. mySAP CRM is designed for small,medium and large organizations.

In Italy, mySAP All-in-One is aimed at organizations with revenue between $7million and $130 million for all sectors except retail, which is $15 million to$260 million. (This equates to organizations with between 50 and 2,000employees), and Business One is aimed at organizations with up to 100employees.

Solution

Architecture The Web-based mySAP CRM and mySAP All-in-One solution are built onSAP's NetWeaver proprietary technology. SAP Business One is built ontechnology acquired from TopManage.

Sales capability The sales solution provides strong but not leading functionality across all themain functional components from sales configuration and interactive selling toopportunity management and incentive compensation. In addition, the solutionsupports a disconnected or mobile platform, albeit with a different userinterface. Version 4.0 enhances the sales capability, although it has only justbeen released.

Marketing capability SAP offers a suite of Marketing capabilities that span e-marketing to marketingplanning to campaign management. SAP targets multiple levels includingcustomers, organizations and groups including B2B, B2C and B2B2C.

A higher percentage of SAP customers run B2B environments than B2C. Itprovides a viable campaign management capability with strong segmentationand improving event-driven and real-time interaction management capabilities.

CSS capability SAP provides functionality across all the main components of a CSS solutionfrom call management and CTI integration to field service and e-service.

Analytical capability mySAP CRM leverages Business Information Warehouse 3.0B. It includesclustering and decision tree predictive-modeling capabilities and extensive



customer behavior modeling applications.

Vertical capability In Italy, SAP currently has 34 vertical solutions for this mySAP All-in-Onesolution.

mySAP CRM provides industry specific functionality for 23 verticals. mySAPAll-in-One provides a complete out-of-the-box industry solution (that is, not justCRM) for SMBs.

Worldwide, SAP has 280 vertical solutions developed and delivered by 280partners worldwide.

Customers

Worldwide SAP has more than 2,300 CRM customers worldwide, the vast majority ofwhich are R/3 users with most of the CRM customers coming from within theinstalled base of more than 19,000 enterprises globally

Europe Approximately 60 percent of these customers are based in Europe.

Italy SAP claims to have more than 900 customers in Italy, of which more than 50percent are SMBs. More than 100 of these companies are using SAP’s ownCRM software. Customers include Electrone, Macchingraf, Netscalibur ItaliaSpa, Ipsoa Editore, De Agostini, Florim Ceramiche Spa, Campari, TelecomLearning Services, Poste Italiane, AMAV-ASPIV (Vesta) Consorzio ATR,Distrel srl, Fabio Perini, GIESSE Gruppo Industriale SpA, Kavo, Liquigas,Roland, Technogym, Schneider, Merloni Elettrodomestici and Nicoletti


Direct presence SAP has a strong presence in Italy with more than 400 employees basedthere.

Resellers, SIs or ESPs SAP has a large number of partners in Italy, including the main Tier 1 ESPs.

SAP has more than 40 business partners (that is, channels) for mySAP All-in-One and 20 dedicated to SAP Business One to coincide with its launch inOctober 2003.

Strengths

Enterprise-wide portfolio The ability to provide a prepackaged, end-to-end solution spanning financials,HR, supply chain and CRM allows organizations to benefit from a singlearchitectural platform, reduced integration concerns and a sole vendor withwhich to deal.

Viability SAP is a large, established vendor, whose long-term viability is significantlymore stable than numerous other CRM vendors.

Challenges

Stand alone viability SAP has yet to demonstrate that mySAP CRM is a viable solution outside of



its R/3 installed base. In Europe, fewer than 20 customers are non-R/3 users.However, SAP claims mySAP CRM is architected as a stand-alone solution toenable customers a choice to run in stand-alone mode. Several customersthat have ERP and mySAP CRM installed have not yet integrated CRM withERP — essentially operating in a stand-alone fashion at this stage. Customerschoose to integrate with ERP and other mySAP Business Suite solutions suchas mySAP SCM, product life cycle management and HR because of thebusiness value; not because they have to for technical reasons.

Licensing Model Customers are often mystified by the complexity of mySAP product bundlesand license models, and are disconcerted about SAP pricing practices.

Siebel

Product name Siebel eBusiness Applications

Siebel MidMarket Edition (MME)

Siebel OnDemand (due by year end 2003)


Siebel eBusiness Applications v7.5

Siebel MME v7.5 released in November of 2002.

Price (US$) Pricing is not available.

Target market Siebel targets all segments of the market from large global organizations toSMBs through its complementary MME product. The proposed acquisition ofhosted CRM provider, Upshot, in October 2003 (deal still to be closed) and theplanned year-end 2003 availability of Siebel OnDemand will significantlyenhance Siebel’s mid-market proposition.

Solution

Architecture The strong Web-based solution is built on Siebel's proprietary technologies.The company plans to migrate to standard .NET and IBM J2EE platforms.Siebel OnDemand will be the first product based on the J2EE architecture.

Sales capability Siebel has the strongest sales portfolio of any CRM vendor. The companyprovides advanced functionality in most areas, including direct sales, partnersales, telesales and sales effectiveness.

Marketing capability Historically the weaker part of the portfolio, Siebel has improved its CROsolution significantly during the past few years. Although not yet an industry-leading product, it provides a viable solution for most organizations.Weaknesses surround its event-driven and real-time capabilities.

CSS capability Siebel is the leading CSS vendor. The solution provides strong contact-center,e-service and field-service capabilities.

Analytical capability The solution provides strong operational insight, but Siebel is still dependenton partners, such as DataDistilleries and SPSS, for advanced predictiveanalytics. The next release of Siebel Analytics (v7.7) will include predictive



capabilities.

Vertical capability Siebel's expansive vertical portfolio includes 20 segment-specific applicationsthat are based around eight key industries. Each application provides industry-specific data-model extensions, segment-specific functionality and businessprocess, and industry-specific integration kits.

Customers

Worldwide Siebel has approximately 4,000 customers worldwide, of which the companyclaims 1,500 are SMBs. The proposed acquisition of Upshot will add 1,000customers to this total.

Europe Gartner estimates that Siebel has approximately 900 customers in Europe.

Italy Gartner estimates that Siebel has approximately 80 customers in Italy, ofwhich less than thirty percent are SMBs. Examples include Telecom Italia,Tim, Italgas, Fastweb, Sky, Enel Gas, Ericcson Digital Enterprise, Ducati,Messaggero di Sant’Antonio, Clarima – Gruppo Unicredito, Banca Primavera,Roche Italia, Aventis Pharma Italia, Radici, Arca Vita and Reale Mutua.


Direct presence Siebel has a strong direct presence in Italy, although the company would notprovide staffing details. The company directly sells, supports and implementssolutions from Italy.

Resellers, SIs or ESPs Siebel has the most advanced relationships of any CRM vendor with the Tier 1ESPs. In addition, the company as numerous midmarket SI partners.

Active ESPs in Italy include IBM, Accenture, TeleAp, Atlantic Technologiesand Deloitte Consulting.

Strengths

Functionality No other CRM vendor can compete with the depth and breadth of Siebel'sfunctionality across sales, marketing and service.

Viability Siebel is a large, strongly managed, financially stable organization.

Vertical solutions Siebel has one of the most comprehensive vertical portfolios in the CRMmarket. Although the offerings are not all equal in their abilities, the majorityprovide highly tailored, viable solutions.

Challenges

Architecture complexityand migration

Siebel's proprietary architecture is often perceived as over-complex for someorganizations. The planned migration to .NET and J2EE platforms will helpalleviate this (that is, Siebel OnDemand being the first announcement), but itwill take time to achieve across the entire portfolio and will prove to be asignificant drain on resources.



Integration Siebel competes with SAP, PeopleSoft and Oracle, which provide enterprise-wide solutions and does so through the Universal Application Network solutionwith Siebel Business Integration Applications. This approach packageshorizontal as well as industry-specific integration processes on a non-proprietary integration server.

Cost Despite aggressive discounting, Siebel is still perceived as having some of thehighest license and implementation costs. Siebel claims, however, thatinitiatives like the Universal Application Network are lowering these costssubstantially. In addition, the future availability of Siebel OnDemand willprovide a low-cost hosted CRM solution for $70 per user per month, albeit witha smaller product footprint.

XTEL S.r.l.

Product name Sales Master One


3.10.539 July 2003

Price (US$) Prices for a complete suite start at $300,000 for a midsize company (that is,100 to 150 users).

Target market XTEL targets mid- and large-size packaged goods companies.

Solution

Architecture SM1 suite is built on Microsoft Windows Distributed interNet Architecture. Thesolution is accessible through a browser, Windows fat client or stand-aloneworkstation (that is, SM1 provides a module for data synchronization).

To provide greater scalability, multiple application servers and Web serverscan be added to load balance. SM1 can be deployed using both CitrixMetaframe served via Citrix server farms and Microsoft Windows 2000Terminal Services

Sales capability The Sales Master One Suite provides applications for sales agreementmanagement, trade promotion management, sales force automation and salescanvass.

The Sales Agreement module provides features for managing agreementswith large-scale trade retailers. It enables monitoring and measuring theeffectiveness of the dealing process, keeping track of changes in retailer’shierarchy and providing the required capabilities to project, calculate, pay,settle and reconcile off-invoice and rebates amounts for any type ofagreement.

The Trade Promotion module provides functionalities required to manage thepromotional life cycle: analyses, planning, negotiation, executing at retail,monitoring and measurement of promotional performance (that is, ROI). Itallows for headquarter and account planning with different levels ofcentralization and field sales autonomy according to each enterprise's



organization and structure.

The Sales Canvass module provides features to manage canvass actions forthe Normal Trade channel, allowing for pricing.

The Sales Force Automation module provides standard features to supportorder management, including contact planning, in-store and merchandisingactivities, client payment and budget quota management.

All Sales Master One modules provide reporting capabilities.

Marketing capability XTEL does not provide pure marketing planning and automation capabilities.However, Sales Master One provides the analytical and reporting capabilitiesof importance to marketing and trade marketing departments, mostly related tothe trade promotion management.

CSS capability Sales Master One provides specific CSS capabilities through its SalesServices application platform for electronic customer management. Customersare provided with integrated and customized views of all information regardingbusinesses conducted with manufacturers.

Analytical capability XTEL provides basic analytical and reporting capabilities.

Vertical capability Sales Master One is specifically designed to meet the needs of consumergoods companies. The solution integrates with ERP and supply chainapplications from main enterprise application providers such as SAP, J.D.Edwards and SSA.

Customers

Worldwide XTEL has one large worldwide customer.

Europe XTEL has one midsize customer in Europe.

Italy XTEL has 20 midsize and large customers in Italy


Direct presence XTEL is an Italian-based company with more than 40 employees. Direct salesaccount for 100 percent of the company's revenue.

Resellers, SIs or ESPs XTEL has European partnerships with KPMG and Deloitte Consulting.

Strengths

CPG solution XTEL provides a modular solution specifically tailored for the consumer goodsindustry.

Challenges

CRM suite Although strong on sales, XTEL is still lacking important marketing and CSScapabilities (such as campaign management, call management and e-service).



Advanced AnalyticalCapabilities

XTEL currently does not offer advanced analytical capabilities. However, thecompany is engaged building a partnership with MIS AG to enhance theoffering.

Appendix C:



Acronym Key

B2B business to business

B2B2C business to business to consumer

B2C business to consumer

BI business intelligence

CGEY Cap Gemini Ernst & Young

CPG consumer packaged goods

CRM customer relationship management

CRO customer relationship optimization

CSS customer service and support

CTI computer-telephony integration

EMEA Europe, Middle East and Africa

ERP enterprise resource planning

ESP external services provider

HR human resources

J2EE Java 2 Enterprise Edition

MME MidMarket Edition (Siebel)

RFP request for proposal

ROI return on investment

SFA sales force automation

SI system integrator

SMB small and midsize business

TCO total cost of ownership

VAR value-added reseller

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