Given how customer relationship management (CRM) has evolved into a major enterprise application over the last several years, it’s not much of a surprise that competition across the category has been fierce. But as sharp as that contest has been, all previous battles for market share between the dominant providers of CRM applications are about to pale in comparison to what’s to come.
Salesforce today is the leading provider of CRM application software with a market share of 26 percent, according to the market research firm Apps Run the World. Oracle and SAP were a distant second and third, respectively, followed closely by a host of other providers. Overall, the CRM category generated $24.3 billion in sales in 2017, according to the firm’s latest CRM report.
CRM and Digital Transformation
The CRM category was not invented by Salesforce. But over the past 17 years, Salesforce has been relentless in an almost singular focus on delivering CRM software employing a software-as-a-service (SaaS) model. But as CRM becomes a component of larger digital business transformation initiatives in the enterprise, the question now will be the degree to which Salesforce can maintain that dominance, while also extending its reach.
Salesforce has been trying to counter larger enterprise software rivals such as Oracle and SAP by partnering with enterprise application software vendors such as FinancialForce.com to create a set of financial and CRM applications that share a common record. Regardless of the other backend applications deployed, however, Salesforce contends that digital business transformation revolves around the customer record.
At the same time, Salesforce has been investing heavily in deep and machine learning algorithms to drive an Einstein AI initiative that makes use of all the data Salesforce can gain access to in order to enable organizations to make better informed decisions about how to interact with customers across a unified sales, marketing and customer support motion.
The goal is to eliminate the whole idea of ever having a salesperson make a cold call, says Lynne Zaledonis, vice president of product marketing at Salesforce.
“Salespeople won’t be dialing for dollars anymore,” says Zaledonis.
Both Oracle and SAP have indicated they are making similar investments, but neither is as far down the AI path as Salesforce.
Broader Application Portfolios Give Vendors Deeper Data Access
The one advantage that both Oracle and SAP have over Salesforce is that they both have much broader application portfolios that give them access to more data. Machine and deep learning algorithms require access to massive amounts of data to make recommendations and automate tasks. In theory, at least, Oracle and SAP have access to more data than other application providers because in addition to CRM applications, they both sell suites of ERP applications that have been widely embraced. The challenge they now face is convincing customers to adopt their applications as a cloud service, which would then provide both companies with access to a critical mass of data.
Oracle is furthest along that path, having rewritten its applications in a cloud native format based on the same Oracle database to make it simpler to provide a consistent customer experience (CX) across both an on-premises environment and cloud computing environment, says Steve Fioretti, vice president for CX engagement solutions at Oracle. That approach, adds Fioretti, also makes it much simpler for individual organizations to transition to the cloud at a pace that best suits them.
Long term, it’s not clear to what degree the lines between CRM and ERP applications will continue to blur. In many ways, CRM applications from a digital business perspective are already the front-end applications that provide insights into the supply chain. Vendors such as Oracle are simply removing the friction that exists between enterprise applications.
“We’re providing a more holistic view of the business,” says Fioretti.
That base level of integration will also provide the core capability so organizations will then be able to layer augmented and virtual reality experiences on top to create enhanced customer experiences, adds Fioretti.
SAP, meanwhile, is pursuing a similar strategy in that it is recrafting all of it applications to run on top of the SAP HANA database. But while it has accomplished that goal with its ERP applications, many of the software-as-service (SaaS) applications it has acquired recently still don’t run on HANA yet. In the case of CRM specifically, SAP is shoring up its efforts by moving to acquire Callidus, a provider of sales performance management and cash-to-quote applications delivered as a service.
As CRM software becomes a more strategic part of the enterprise application portfolio, more individuals are playing a bigger role in the selection process. What used to be a decision that was confined to the head of sales and finance working in tandem with IT now includes the leaders of the rest of the business, including the CEO, chief marketing officer (CMO) and various line of business (LOB) segments. That requirement tends to play to the strengths of vendors that can offer the broadest application portfolio delivered by a single vendor under the simplest contract terms possible.
In addition, each vendor is making a case for reducing overall integration costs by standardizing on suites of applications that are already to varying degrees pre-integrated with one another within the context of cloud service where the applications share access to a common database. That in and of itself is not necessarily a new idea. But because the vendor now exercises direct control over the application as a cloud service, the vendor takes responsibility for everything from providing data integration to a consistent set of user interfaces. In theory, at least, the days when IT organization spent more money on integrating various applications than they do paying for the application licenses themselves could be coming to an end if they choose to standardize on one suite of cloud applications.
Obviously, there will still be plenty of instances where CRM applications continue to be acquired as part of an exercise that is mainly focused on sales management. But when it comes to where Salesforce, Oracle and SAP as the three category leaders are focusing their future efforts, much of the focus is now on providing a unified application experience that, not so coincidentally, also happens to increase their share of all the dollars being allocated to enterprise software. Naturally, each organization will need to determine to what degree those efforts dovetail with their own individual IT strategies. But on the plus side, it’s probably never been easier to implement a CRM application, or for that matter, any other enterprise application, in the age of the cloud.
