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CRM Analytics Offers Challenges and Opportunities

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Posted August 5, 2003 By Ian Jacobs     Feedback

Where should an IT executive turn for reliable, integrated analytics? Four vendor segments are competing to dominate the CRM analytics market, but they all face some clear obstacles and opportunities, according to a report published by analysis firm the451

For many CIOs, the benefits of CRM analytics are still unproven, leaving many IT executives to wonder, do fancy models really produce ROI? Often, where analytics have been deployed, a significant number of statisticians are still being employed, going completely against the widely propagated notion that analytics should be usable by any marketer. Yet, the future for analytics is bright, as the451 found in a recent 451 Special Report, CRM Analytics: Have the BI vendors missed the boat?

Defining the Challenge and the Opportunity
Collecting information about customers and using that data to drive marketing campaigns is an idea that clearly predates the dawn of the computer age; however, as the role of technology in marketing has increased, building comprehensive, robust, real-time analysis into marketing applications and CRM suites has remained a significant challenge.

While marketing was one of the early uses for computer-based analytics, it was often used to see how well campaigns performed - the so-called "rearview mirror" approach to analysis. Companies have been demanding that analytics look ahead and help them identify future opportunities. This is currently one of the largest technological challenges facing analytics vendors.

The majority of customers make do with the analytics provided by their marketing automation application vendor - be that E.piphany, DoubleClick (which is based on its acquisition of Protagona) or larger players such as Siebel, SAP or PeopleSoft. These vendors offer packaged reports, canned analytics (determining customer lifetime value, for example) and an increasing focus on enhanced customer segmentation, but they lack insightful, real-time analysis that rises to the order of strategic tool for managing the relationship between marketing programs and sales returns.

The analytics included in these marketing products are always improving, but in the meantime customers have turned to external vendors to help them get better information on their marketing efforts. These pure-play analytics companies can offer much-enhanced analytic capabilities, and they all claim that their software can be used by any marketer. The prospective customer, however, has to weigh the risk of going to a smaller vendor, with the increased cost of integration.

CRM analytics have significant enterprise value and can improve specific customer-focused processes. Those processes could be customer segmentation, profitability analysis, personalization, "what-if" scenarios or predictive modeling. This is why the spotlight has begun to shine on marketing analytics. For heads of IT organizations, applying appropriate analytics to existing CRM software suites can show rapid ROI - in some cases, within four months or less — which is a bottom-line imperative that increasingly is not optional. Perhaps more importantly, though, some CIOs are finding that in the future CRM analytics may not be optional for larger enterprises, either. They may be a necessity due to recent privacy and accountability legislation, such as the Sarbanes-Oxley Act, which mandates higher-order scrutiny of spending, particularly marketing and sales activities that might be considered "off-books" transactions.

Emerging IT Market
The451 believes a strong market opportunity is emerging for CRM analytics software — a market that will see rapid technology development, acquisition and consolidation over the next 18-24 months.

There is significant, unmet enterprise demand for marketing analytics software. Enterprises need software that is robust but user-friendly, that doesn't require a PhD in statistics to operate and that can derive both ROI and higher-level business value from existing investments in CRM software suites. CRM analytics software uniquely fits the bill.

Page 2: Converging Vendor Approaches

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