The fight over CRM: on-demand services are providing a renaissance for a once-struggling technology

Chief Executive, The, Jan-Feb, 2006 by Cindy Waxer

Without a clear CRM winner in sight, it's no wonder the battle for industry dominance has taken on a decidedly personal tone. These days, CRM's industry list of who's who reads just like a dog-eared Oracle yearbook featuring Benioff of Salesforce.com, Tom Siebel of Siebel Systems and Evan Goldberg of NetSuite, a San Mateo, Calif.-based CRM software provider in which Larry Ellison is a majority owner.

All the Silicon Valley bravado and the pairing of industry titans Oracle and Siebel hasn't unnerved Salesforce.com. In response to Phillips' promise to "crush" its smaller competitor, Robinson responds: "It's a huge compliment that the president of the world's second-largest software company feels the need to go on record saying he's going to crush us. It says to me that we represent some sort of threat." Salesforce.com even sought to poach Siebel's talent by offering a $5,000 signing bonus for any current Siebel employee hired before year end.

As for Gianforte of RightNow, he counts himself fortunate to be among Oracle's outsiders. "I'm happy to not be a member of that dysfunctional family," he says. "There's been so much chest-beating and arrogance. At the end of the day, customers are sick and tired of it."

While rhetoric may grab headlines, product innovation is most likely to attract new customers. It's for this reason that Salesforce.com recently unveiled the details of AppExchange, a new platform for the third-party development of applications around its software platform. Serving as an online community, AppExchange allows users to shop for, test and install on-demand applications using only a browser and Internet connection. "In its simplest form, AppExchange is an eBay or a Downloads.com for hosted software," says Bois of AMR Research.

In the meantime, Oracle is hard at work on Project Fusion, a roadmap for integrating the technology the company has inherited by acquiring Siebel, Oracle and PeopleSoft. By designing a fully integrated product suite culled from a variety of vendors, Oracle hopes to entice users to eventually migrate over to Oracle technology.

All of which is good news to today's companies. Enticed by technology that promises to strengthen customer relationships yet skeptical of the hype that has long surrounded the industry, they're poised to benefit from the dawning of a new CRM era.

RELATED ARTICLE: Where is the CRM Market Headed and Who is Ahead?

Projected Revenues

(in billions)

2004  10.9
2005  11.5
2006  12.3
2007  13.2
2008  14.4
2009  15.7

Source: AMR Research, 2005

Note: Table made from bar graph.

Companies by Rank

2004                             Revenue       Revenue*   Revenue*
Rank  Company                    2004 ($M)     2005 ($M)  Share 2005

1     SAP                         1,664         1,727      15%
2     Siebel                      1,339         1,340      12%
3     PeopleSoft**                  472             0       0%
4     Amdocs                        369           424       4%
5     Dendrite                      311           337       3%
6     Oracle                        286           387       3%
Total (incl. other CRM vendors)  10,902        11,443     100%

*Forecast
**Acquired by Oracle on December 28, 2004