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Nucleus Research Inc.NucleusResearch.comCorporate HeadquartersNucleus Research Inc.100 State Street

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Phone: +1 617.720.2000

T HE B O T T OM L I N E

Organizations have continued to invest in customer relationship

management (CRM), as acquiring and retaining customers while managing

service costs are key to maintaining profits. The Technology Value Matrix

evaluates products that have a global presence and provide functionality

for the three core CRM areas: sales, marketing, and service.

The 1H2011 Value Matrix for customer relationship management (CRM) software

addresses both on-premise and software-as-a-service (SaaS) vendors.

MA RKET O V ERV I EW

Customer relationship management software includes the software applications

deployed to support sales force automation, customer support and service, and

marketing activities for both business-to-business and business-to-consumer

companies.

CRM continues to be a hotly contested market and recent Nucleus case studies

have shown a number of vendors deliver significant value to both new CRM

customers and those replacing existing CRM applications. Nucleus continues to see

ongoing investments in CRM by both small and large organizations for a number of

reasons: existing on-premise CRM deployments (often highly customized) are

reaching the end of their useful life, the increased capabilities of SaaS CRM has

RESEARCH NOTE

TECHNOLOGY VALUE MATRIX:CRM

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made it more attractive to a broader market, and price competition has made SaaS

CRM a cost-effective option for more users.

Nucleus expects competition in the CRM marketplace to continue as SaaS CRM

vendors aggressively compete to lock customers in for more than a 1-year

subscription. We found that two vendors qualify as Leaders in the Value Matrix at

this time: Microsoft Dynamics CRM and Salesforce.com: Microsoft Dynamics CRM, always strong in usability because of its Microsoft

Outlook and Office integration, role-based views, and personalizable interfaces,

gained ground in functionality with the release of Dynamics CRM 2011 in

January, both in terms of CRM functionality and the ability to support a global

customer base. Microsofts aggressive pricing strategy, which Nucleus has

found in many cases is less than half the average per-user price of

Salesforce.com, is clearly a penetration strategy on the part of Microsoft.

Microsofts recent investment in an online application marketplace still needs

refinement but shows Microsofts recognition that a partner ecosystem and

readily-accessible add-ons to CRM are particularly important in the SaaS space

where stickiness is critical for ongoing subscription renewals (and the revenues

for reinvestment in product innovation and customer service).

Salesforce.com has continued to expand on its core CRM functionality whilealso expanding its ecosystem of value-added CRM add-ons through the

AppExchange marketplace (which is a further investment on its part to

increase stickiness in its subscriber base). It has also made investments in

social CRM, cloud functionality such as Jigsaw, and collaboration tools that

drive greater productivity for individual users while encouraging its user

community to collaborate and share solutions and best practices. Nucleus also

sees Salesforce.com having notable success in moving beyond one point or

departmental CRM deployment (sales force automation, for example) to

deploying to a broader user base within and even outside the organization.

This enables additional productivity benefits for end users, as they can access

more information and collaborate in context with more peers, customers, and

partners.

There are 10 other offerings in the Matrix. Some of these have superior

functionality or usability in specific application areas, so should not be ignored in

the evaluation process; however, they do not have a compelling proposition as

value leaders in terms of both functionality and usability. Sage, for example, is

often overlooked, but its existing integration with Microsoft Outlook and

investments in improving usability are likely to strengthen its usability position over

time. Because Sage delivers its application through partners, the degree of

functionality and complexity supported by the application is more related to partner

investment in industry-specific or other functionality (or customization) than the

application itself. Although NetSuite doesnt provide the breadth of CRM

functionality that others in the Matrix do, Nucleus has found out-of-the-boxintegration with ERP and a single data source for sales and service staff delivers

real productivity gains for end users, particularly in midsized businesses (we note

that the functionality measured in this Matrix is CRM only, not the other ERP

capabilities NetSuite provides). Nucleus has interviewed more than 100 NetSuite

customers in the past 6 months and found high levels of customer satisfaction.

Without dispute, Oracle Siebel CRM continues to provide the most CRM

functionality and support for the most complexity across sales, marketing, and

TOPICS

Customer RelationshipManagement

Software as a Service

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service. Although longer deployment times and training requirements still present

some adoption challenges for Oracle Siebel CRM users, Oracles investments in

integration and usability as well as further integration of Oracles User Productivity

Kit technology will likely drive that barrier down over time. RightNow continues to

be an application focused on customer service and, specifically, customer self

service as opposed to being adopted as a full CRM solution thus its lower ranking

on functionality.

MET HO DO L O G Y

The Value Matrix is based on functionality and usability, the two core measures

that Nucleus has found indicate an applications ability to deliver initial ROI and,

ultimately, maximum value over time.

Usability composite scores are based on a number of factors including intuitiveness

of the application, availability of role-based interfaces, training requirements, and

productivity impact on users. Functionality composite scores are based on the

breadth and depth of functionality in the core application, the availability and ease

of integration of add-on functionality that delivers additional benefit, and the

vendors investment in innovative functionality outside the core that will deliver

additional benefit.

Companies can use this Matrix to assess their investment short list as well as to

evaluate the case for maintaining an existing product that may lag behind the

value offered by other options. Nucleus expects the center point of the Matrix,

which represents the composite average point in the market, will move up and to

the right over time as vendors make more investments in functionality and

usability effectively increasing the average value delivered across all products.