If you are involved in the selection of a CRM suite, or in the decision whether to purchase CRM at all, our primary advice is not to get caught up examining the technological bells and whistles. It is tempting to concentrate on feature sets rather than on your business needs. But, as Dave Batt, general manager for Microsoft CRM (Redmond, WA), told us, "Success isn't so dependant on richness of feature sets, but on how your business processes are executed."

If you think first about your strategy for dealing with your customers, and the business processes that will support the customer relationships that you desire, you will already be well on the road toward identifying the technological capabilities that will yield the most value.

In this article, we first survey the marketplace for CRM application suites, introducing the offerings of the largest players. We then use those products to illustrate four trends that we have observed in the CRM marketplace: increasing flexibility, increasing ease of integration, continued vertical specialization, and improving sales analytics features. We've tried to show how these four trends relate to business needs, and to suggest questions about these four trends that you will want to ask any prospective CRM vendor.

The CRM Application Suite Spectrum

The ideas behind "Customer Relationship Management" existed long before anyone thought to automate the concept into software. Bottom line, CRM is an embodiment of your approach to serving your customers. CRM software assists you in realizing the benefits of your CRM approach by:

Serving as a front end for customer-facing business processes such as order entry, order tracking, billing, and service call generation;

Tracking your interactions with customers, on both the sales and service sides;

Presenting the customer knowledge that you have gained from your prior interactions to salespersons, call center agents, and other persons who deal directly with your customers (and, increasingly, building this knowledge into self-service applications);

Analyzing your customer data to identify value enhancing opportunities (most notably, cross-selling and upselling prospects);

Providing information needed to evaluate the performance of customer service agents and sales staff;

Designing marketing campaigns, and implementing those campaigns within your call centers and other touchpoints with your customers; and

Formalizing your customer-facing businesses processes by building them into the computer applications that your personnel use to complete transactions.

Any full-blown CRM suite that you purchase will give you some capabilities in all of these areas, though packages from different vendors exhibit very different levels of emphasis among these capabilities.

Software-Free Solutions. Since the CRM concept pre-exists CRM software, the simplest choice you can make is not to implement any CRM software at all. If your call center is small, if your product or service offerings are simple, if you don't manage complex processes, if your agents can provide first-class service using a three-ring binder system, and if you don't serve enough customers to make statistical analysis pay, then you probably don't want to incur the expense of installing and integrating a CRM system.

Switchmakers' CRM Features. The next step up the CRM ladder is the CRM functionality that switch makers are building into their call center systems. For example, you can use Avaya's (Basking Ridge, NJ) Customer Interaction Suite to track customer interactions across multiple channels; route calls to the best agents based on customer data; present self-service opportunities through speech applications, automated e-mail response, and Web self-service; and track agent performance against your benchmarks. A switchmaker's platform is not going to provide seamless, out-of-the-box integration with your back office systems or let you mine the last bit of value from your customer data, but it can go a long way toward improving the quality of agent interactions with customers.

Back Office Systems Vendors. At the other end of the CRM software suite spectrum we find the CRM offerings from the enterprise resource planning (ERP) giants, Oracle (Redwood Shores, CA) and SAP (Newtown Square, PA). Though the CRM packages from these vendors are full-featured and can stand alone, a primary appeal of those products is to be found in the tight integration of CRM functions with the back office. For an enterprise whose core business practices are encapsulated in an ERP system, such as a large manufacturer, this out-of-the box integration is a compelling advantage that standalone CRM vendors cannot match without significant integration efforts.

Tight integration with the back office, however, comes at a price - because the ERP workflow and data model is at the core of the CRM application, these packages are often not as easy to integrate with other systems as are some of the standalone packages. Build-in support for custom businesses processes that are not anticipated in the ERP system's workflow model can require significant effort. The ERP giants are moving away from the "my way or the highway" model, but they do not provide the most nimble offerings available in the marketplace. These systems are, in general, economical only for high volume enterprises that can amortize the cost of large-scale integration efforts over many transactions.

PeopleSoft (Pleasanton, CA) has taken a different approach, largely driven by the thin-client architecture upon which PeopleSoft's ERP and human resources offerings are based. Though PeopleSoft CRM does offer out-of-the box integration with PeopleSoft's back-office systems, its offerings are a bit more modular than are the CRM packages from SAP and Oracle, which has given them more traction in the standalone CRM market. People- Soft also offers integration with its market-leading HR systems, which makes it an attractive choice for companies with large-scale employee help desks.

Amdocs (Boston, MA), which has a strong presence in billing for large telecommunications service providers, and Epicor (Irvine, CA), which provides ERP and supply chain management software to small and mid-size businesses, also fit into this group. Like PeopleSoft CRM, the CRM packages from these two vendors are less back-office oriented than are the Oracle and SAP offerings.

Standalone Enterprise CRM Vendors. The clear market leader in CRM is Siebel Systems (San Mateo, CA). Like the offerings from the large ERP vendors, Siebel offers a wide range of features to meet the needs of large enterprises, including a wide range of customer analytics. Siebel is like the ERP giants in another respect, however - its software is renowned for the complexity of integration efforts. Siebel Systems recognizes this issue, and has just unveiled a "customer success blueprint" to systematize the integration process. Earlier this year, the company brought in a new CEO, Mike Lawrie, to replace founder and CRM visionary Tom Siebel (who remains as chairman). Lawrie has said he plans to focus more energy on "driving business outcomes," than on technological development. Siebel is also unique among the largest vendors for backing its "CRM for everyone" vision by devoting significant resources to a hosted version of its software, Siebel OnDemand.

E.piphany (San Mateo, CA) serves largely medium to large enterprises with high transaction volume consumer business. Its offerings are particularly strong in marketing capabilities and customer analytics. As with the CRM systems from the larger ERP vendors, E.piphany's model generally requires a company to complete a significant integration project to get full use from the system.

FrontRange (Pleasanton, CA), which serves the middle market (firms with $100 million to $2 billion in sales annually) with its GoldMine marketing and salesforce automation package and its Heat customer service and IT management offerings, also anticipates that its purchasers will engage in large-scale integration efforts.

Kana's (Irvine, CA) iCare customer service package is an intriguing niche entry. Unlike the other vendors that we discuss, Kana is not trying to provide fullscale CRM functionality, but rather is focused entirely on the customer service aspects of CRM. Kana's strength is in the automation of service resolutions across multiple channels for high-volume call centers. Firms using Kana's applications often run another CRM package simultaneously to provide salesforce automation and marketing capabilities.

Small and Medium Market Vendors. The other standalone vendors with whom we have spoken for this piece target their CRM products more toward small to mid-size businesses and toward divisions of larger enterprises. Although all of their offerings require integration programs, the economics of the small to medium enterprise (SME) market cannot justify the massive consulting projects that typically accompany a large enterprise's CRM purchase. The remaining vendors in our survey therefore provide offerings that are easier to install, but at the cost generally of not having as wide a range of built-in features.

Pivotal (Vancouver, BC, Canada) and Onyx (Bellevue, WA) both serve primarily the middle market. Pivotal's history is in salesforce automation; with the firm's recent acquisition by CDC Software (Chinadotcom), it will likely have a growing presence in the Asia- Pacific market. Onyx began with a complete marketing/sales/service model in mind. Neither firm is widely known for the analytical capabilities of its CRM packages.

Microsoft CRM, which boasts tight integration with Office and Outlook, targets firms with sales of $50 to $100 million. This offering is very much aimed at solving the most basic level of CRM issues, getting a handle on client information. Microsoft CRM users who want to add on higher levels of service, such as the most sophisticated marketing tools and advanced analytics, must look to Microsoft's expansive network of partners for add-on applications.

Salesforce.com (San Francisco, CA) has recently bolstered its customer service functionality with the launch of its Supportforce.com product. The firm has taken the unique approach of offering its software solely as a hosted offering. Although (despite Salesforce.com's earnest entreaties to the contrary) we continue to believe that a hosted CRM package cannot match the customizability and ease of integration boasted by an on-premise solution, the ASP model lets users avoid upfront infrastructure investments while easily supporting remote agents. According to Salesforce.com's Brett Queener, "if you have a switch, a VoIP phone, and Supportforce.com, you have a call center."

Although the last four years have seen considerable consolidation, there are still hundreds of vendors who produce products that can be considered CRM software. Our goal here is to discuss trends that can - and should - influence the purchasing decisions that your company makes. We have selected the packages from the largest CRM vendors to illustrate these trends, but particularly if you are with a small firm the best solution for your business might come from ACT!, Talisma, or another vendor altogether.