CRM Consulting Services

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12 May 2003 METAspectrum 21.1

Professional Services Strategies Michael Doane

CRM Consulting Services

METAspectrum

SM

_Evaluation

12 May 2003

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Presence

LEADER

FOLLOWER

Accenture Accenture

CHALLENGER

Deloitte

Deloitte IBM BCS_{IBM BCS}

BearingPoint BearingPoint CGE&Y CGE&Y EDS EDS Inforte Inforte Headstrong Headstrong Extraprise Extraprise

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Overview

Market Definition

The customer relationship management (CRM) consulting services market comprises both commercial businesses and non-profit organizations seeking to improve client or constituent relations (loyalty/retention) and/or gain new clients or

constituents. CRM services usually include strategy formulation, software selection, software implementation, business process improvement, team/end-user training, and deployment. Increasingly, CRM services are combined with enterprise resource planning (ERP) and supply chain management (SCM) services where operational CRM overlaps with these domains. Market Forecast

A major market shift occurred from mid-2001 to late 2002, wherein fewer clients invested in enterprisewide CRM endeavors. Instead, they proceeded with smaller, shorter, and more tactical projects, chaining these projects across time — echoing the consulting industry message that CRM is a journey, not a project. Market studies indicate that clients have a low level of confidence with regard to CRM service providers, based largely on early CRM stumbles usually associated with enterprisewide projects. Nearly all the firms covered in this METAspectrum have refined their message and methods to leverage field

experience and directly address client concerns. We expect more success in CRM projects through 2004 and a parallel maturation of clients’ understanding of CRM. Thus, clients that deferred CRM evolution in 2001 and 2002 will be more inclined to move ahead, resulting in CRM services growth of 10%-12% in 2003 and 20% in 2004. In the near term, it is up to CRM consulting firms to capture and demonstrate business value through CRM — not only for the duration of their engagements, but also over time.

Key Findings

All service providers included in this study have refined their CRM messages from an enterprisewide scale to a more tactical, value-based approach, taking into consideration individual clients’ maturity levels, short-term needs, and long-term visions. As the CRM consulting services firms mature, the greatest challenge they face is client immaturity, which leads to a higher relative importance of presence criteria (versus performance) as clients seek “known quality.” The CRM service providers have evolved beyond the notion that CRM excellence can be achieved through software implementation and have focused on value creation through CRM that speaks to client needs and leads to more tactical CRM endeavors.

Results show several firms closely clustered, since each has made strides in some areas while lagging in others; therefore, strengths are often canceled out by weaknesses. Although Accenture, Deloitte Consulting, and IBM Business Consulting Services are fairly even overall (and almost identical in terms of performance scores), IBM BCS has a slight edge over Accenture in presence, which in turn enjoys somewhat greater presence than Deloitte Consulting. It is important to note, however, that even firms that are in close proximity in the METAspectrum graphic demonstrate varying strengths and weaknesses, most notably within the industry focus and business drivers criteria areas.

Criteria weightings used in this study were derived from a survey of 903 client respondents and refined by META Group. Overall, clients are demanding that vision/strategy and business drivers make up half of the presence weighting, while services and execution account for nearly half of the performance weighting (our evaluation reflects this).

Leaders

CRM leadership requires an ability to move beyond value measurement and into long-term value capture for clients, while still adhering to time and cost limitations. CRM leaders can identify, define, and articulate tactical CRM strategies that lead to measurable value over time (not limited to their engagements). Deloitte Consulting, Accenture, and IBM BCS combine deep industry focus with sound methodologies and value capture to arrive at CRM success. We expect all these firms to advance along the leadership path as their refined methods and focus play out further in the market and they achieve more visible success. BearingPoint’s strengths include its enterprise value creation abilities, gain-sharing focus, and positive field experiences, but the firm needs to address its messaging and continue its evolution around value creation.

Challengers

Cap Gemini Ernst & Young (CGE&Y) has recently revamped its CRM vision and delivery to meet the more tactical needs of clients. CGE&Y displays a strong accent on value capture that must become more market proven. All challengers are strong at software implementation and are gaining in organizational viewpoint. Inforte has a focus on the CRM/supply chain relationship, Extraprise has immense skills at value measurement, and Headstrong (like these other two) has strong CRM core skills. However, these latter three firms all lack size (geographic reach, point reach) and a full service spectrum. EDS shows great strength in leveraging existing clients toward CRM service extensions, but needs both growth and maturity in its

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Overview

Bottom Line

Clients that have deferred CRM projects due to a lack of confidence in CRM consulting firms can exploit the rising maturity of CRM consulting. Best-in-class IT organizations understand that CRM excellence is not predicated on software implementations alone. Strategy, integration, deployment, and value measurement are key issues, and our research indicates that clients can have greater success when they tap outside consulting services for these areas.

Business Impact: In all business application markets, a first phase of vendor/project maturity is software-based and a second one is business-based. The CRM services market is now in a second phase, in which value capture

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CRM Consulting Services

Presence

Evaluation

Our market presence evaluation includes a review of each vendor’s product and service attributes — representing vendors’ ability to deliver value to customers. The following eight criteria areas provide a summary of our presence analysis. For complete details on how vendors fared with each criterion in our evaluation, visit metagroup.com.

Vision/Strategy

IBM BCS Good/Very Good

Accenture Good/Very Good

Deloitte Good/Very Good

EDS Good CGE&Y Good BearingPoint Fair/Good Inforte Fair/Good Extraprise Fair Headstrong Fair What We Evaluated

Message/Positioning — External, visible communication

to the market about vision, views, expectations, priorities, and value of CRM and its position in the IT ecosystem.

Customer Life-Cycle Management — Demonstrated,

tangible ability to explain and execute CRM plans that define technical and/or solution direction, emphasis, and development that best meet customer requirements.

Innovation and Articulation — Perceived and actual

position within the market as a CRM trendsetter, definer of direction, and catalyst of market direction and change. Analyst Commentary

A firm’s ability to grasp the CRM customer life cycle, combined with innovation and vision (and the ability to articulate it), is highly valued by clients. Indeed, companies often are confused about the value of CRM and the cost of obtaining it, and have difficulty linking CRM efforts to the rest of their IT and business processes. High marks for innovation and articulation were awarded to IBM BCS and Deloitte Consulting, while EDS, Accenture, IBM BCS, and CGE&Y excel in customer life-cycle management.

Channels/Partners

Accenture Good Deloitte Good BearingPoint Good CGE&Y Good Extraprise Good Inforte Fair/Good EDS Fair/Good Headstrong Fair What We Evaluated

Applications, Technology, and Staff Alliances — Active

and complementary relationships with third-party vendors, consultants, systems integrators, and channel partners.

Training and Shared Knowledge — Articulated partner

evaluation criteria, training/retraining programs, and certification enforcement.

Quality Assessment Methods — Defined methods to

ensure the quality, consistency, and value delivered by individual partners.

Analyst Commentary

Because most CRM endeavors require application and technology partners, we examined the breadth and depth of those partnerships as well as the underlying shared knowledge and quality assessment methods. Accenture and IBM BCS had the strongest array and deployment of such partners, and there were few significant distinctions among the firms covered in the other areas.

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CRM Consulting Services

Presence

Evaluation

Awareness/Reputation

BearingPoint Good IBM BCS Good Accenture Good Inforte Fair/Good CGE&Y Fair/Good Extraprise Fair/Good Headstrong Fair/Good EDS Fair What We Evaluated

Mind Share — Publicity, sales, marketing, service, and

development activities that build positive perception in the market and extend visibility above and beyond the

organization’s size and/or share. Both overall and CRM-specific mind share are considered.

Reputation — The measured achievement of visibility as

demonstrated by direct and indirect activities, including publications, press engagement/coverage, and analyst/key influencer visibility (CRM only).

Customer Perception — Measured, relative awareness on

the part of existing and potential customers about capabilities, offerings, vision, and focus.

In this criteria area, we assessed mind share (thought leadership, brand awareness), reputation, and customer perception. For the first subcriterion, the three second-tier firms (Extraprise, Inforte, and Headstrong) understandably did not keep pace, but they held their own in the other two. Customer perception (gleaned from direct feedback to META Group) varied for Accenture from exceptional to fair and was strongest for BearingPoint and Deloitte Consulting, for which clients provided more consistently positive feedback. CRM mind share for EDS is somewhat stifled by its overall branding, which leads clients to associate it with myriad other services. Our research has revealed that peer references are increasingly important to prospects, and we expect reputation to increase in importance during 2003/04.

Geographic Coverage

Accenture Very Good/Excellent

IBM BCS Very Good

CGE&Y Good BearingPoint Good EDS Good Extraprise Fair/Good Headstrong Fair Inforte Poor/Fair What We Evaluated

Point Reach — Extension of viable fulfillment reach,

availability, and delivery via directly controlled entities or partnerships.

Global/International Fulfillment — Number of regional

and geographically dispersed resources to support clients. Analyst Commentary

All but the second-tier firms show strength in geographic coverage, though all three (Headstrong, Extraprise, and Inforte) have adequate point reach in North America. We define point reach as the ability to deploy consultants across a geography with agility and without excessive travel costs. Global fulfillment combines geographic presence and support. IBM BCS and Accenture are the clear leaders in geographic coverage, with Deloitte Consulting on the next shelf. BearingPoint will join these three once its new organization (Europe, Asia Pacific, and Latin America) matures, while CGE&Y is projecting consulting force growth that, if realized, would advance its position.

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CRM Consulting Services

Presence

Evaluation

Business Drivers

Extraprise Good/Very Good

Inforte Good/Very Good

BearingPoint Good/Very Good

Headstrong Good Accenture Good EDS Good CGE&Y Fair/Good

What We Evaluated

CRM Core Competencies — Core CRM business process

and technology competencies.

Intellectual Property — Owned and protected patents,

trademarks, copyrights, licenses, or trade secrets that reflect unique ideas, methods, technologies, and processes, and that offer tangible competitive advantage.

Culture — Internal processes, communication methods,

leader-sponsored philosophies, or other dynamics that enable better client centricity, speed, responsiveness, efficiency, or market effectiveness.

Value Drivers — Ability of the vendor to demonstrate and

measure the value (e.g., ROI, time to market) of its offering to customers. A key to this criterion is a service provider’s ability to embed continual (not just project-related) value measurement.

We rate value drivers as the most important of the four subcriteria. In this area, only Extraprise provides full value capture (identification, targeting, and measurement of CRM-driven business performance) over time for all engagements. Inforte’s value driver is a unique mix of CRM and supply chain capabilities. Deloitte Consulting,

BearingPoint, and IBM BCS all possess value drivers, though many projects are measured only through the life of an engagement; Accenture lags only in value driver methods and value measurement/capture over time. In terms of culture, Accenture varies from excellent to fair depending on client fit, while BearingPoint, Deloitte Consulting, and IBM BCS demonstrate greater consistency in this regard.

Industry Focus

BearingPoint Good CGE&Y Good Inforte Fair/Good EDS Fair/Good Headstrong Fair/Good Extraprise Fair What We Evaluated

Vertical Expertise/Span — Breadth of vendor’s vertical

domain expertise and understanding of related CRM processes.

Business Model Support — Ability to support multiple

business models (direct, indirect, network, B2B).

Depth of Expertise — Measured, demonstrable tools,

techniques, methods, certifications, primary research, tailored approaches, or other analysis and delivery attributes that highlight the relevant skills and expertise brought to a particular market.

The merger of IBM Global Services and PwC gives the new IBM BCS an equal footing with Accenture. Both excel in the high-end market: IBM BCS through its global channels and Accenture by virtue of its deep organizationwide industry focus and breadth. These two are followed by Deloitte Consulting. BearingPoint has excellent depth of expertise, but in a more limited number of industries, while CGE&Y shows industry breadth but not depth of expertise versus the leaders in this criteria area. EDS lags in this regard primarily due to its later arrival on the CRM consulting scene; we expect it to improve in this regard through 2003.

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CRM Consulting Services

Presence

Evaluation

Investments

Accenture Very Good

BearingPoint Good IBM BCS Good Deloitte Good CGE&Y Good Headstrong Good EDS Good Inforte Poor/Fair Extraprise Poor/Fair What We Evaluated

Research and Development — Investments (external or

internal spend) that increase a service provider’s ability to add value to a CRM client.

Ecosystem Investment Strategy — Investments/initiatives

that advance the maturation of CRM understanding across the marketplace.

Degree of Control — Ownership level of investments that

determine direction, priorities, and integration with core business activities.

Investment is weighted low as a criterion, because clients are more concerned about the fruits of investment (methods/tools, training, industry solutions) than the investment itself. Only very high or low levels of investment over a two- or three-year time period will reflect positively or negatively on a vendor. Because CRM market evolution depends on significant investments for research and development, it is the larger providers that significantly promote this evolution.

Share

Accenture Excellent

IBM BCS Very Good

CGE&Y Good/Very Good

Deloitte Good BearingPoint Fair/Good Inforte Fair Extraprise Fair Headstrong Fair EDS Fair What We Evaluated

Market Share — Share of market relative to competitors.

Market share is a reflection not only of a firm’s market success, but also of its size and range. The larger players such as IBM BCS and Accenture thus predominate (EDS would appear in the list as well if CRM-related outsourcing were included in the scope of this study).

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CRM Consulting Services

Performance

Evaluation

Our market performance evaluation includes a review of each vendor’s product and service attributes — representing vendors’ ability to provide value to customers. The following seven criteria areas provide a summary of our performance analysis. For complete details on how vendors fared with each criterion in our evaluation, visit metagroup.com.

Services

Accenture Good CGE&Y Good Inforte Good BearingPoint Good EDS Good Headstrong Fair/Good Extraprise Fair/Good What We Evaluated

Methods and Tools — Vendor’s array of methods and

tools to support CRM services delivery (accelerators, benefits drivers, and delivery mechanisms).

CRM Services Scope — Collaborative, analytical, and

operational scope of CRM services across sales, service, and marketing.

Differentiation — Distinguishing features of CRM

services that bring tangible value to clients. Analyst Commentary

The second-tier firms (Headstrong, Inforte, and

Extraprise) lose marks relative to the other organizations in this study for overall CRM services scope, though all provide solid services from strategy through

implementation. Accenture, IBM BCS, and CGE&Y provide the greatest services scope, due to their superior abilities in post-implementation support. EDS trails here only in depth/scope of services in strategic and systems integration areas, while BearingPoint and Deloitte Consulting have both made strides in post-implementation support. All vendors’ methods and tools have been improved, with Deloitte Consulting (by virtue of its Value Mapping) and IBM BCS (given its best-practice repositories) holding a slight edge over the others. A special mention goes to Inforte for its unique blend of CRM and supply chain project process. Accenture, BearingPoint, and CGE&Y have proven methods and tools, but lag in the integration of these to value drivers. Deloitte Consulting shows superior differentiation through its clarity of purpose and

direction linked to value creation, while IBM BCS displays agility and creativity in its services scope. The other major players are somewhat similar to one another in these areas.

Technology

IBM BCS Good CGE&Y Good BearingPoint Good EDS Good Deloitte Fair/Good Headstrong Fair Inforte Fair Extraprise Poor/Fair What We Evaluated

Vendor Mix and Scope — Range and depth of CRM

vendor knowledge.

Enterprise Integration Capacity — Vendor’s ability to

plan or implement enterprise integration of CRM functionality and business flow across various application configurations.

Architecture Support and Services — Vendor’s

capacity to provide architectural consistency, scalability, performance, openness, standards adherence,

platform/DBMS support, distributed processing, data model, and client deployment options.

Nearly all firms have moved from a focus on Siebel implementations to a more diverse portfolio. BearingPoint and Accenture are the most diversified, while IBM BCS, Accenture, EDS, and CGE&Y provide greater integration and architectural support. Most firms covered have a much greater share of revenues

unrelated to software vendors, most notably Deloitte Consulting, as the market moves to more strategic and tactical endeavors.

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CRM Consulting Services

Performance

Evaluation

Pricing Extraprise Good EDS Fair/Good CGE&Y Fair/Good Deloitte Fair/Good BearingPoint Fair/Good Inforte Fair/Good IBM BCS Fair/Good Headstrong Fair/Good Accenture Fair/Good What We Evaluated

Strategies and Models — Alternative price models

provided to CRM customers that enable flexibility in the purchase and/or use of products and services.

Relative Cost — The relative cost of a vendor’s services

within the context of the CRM market. Analyst Commentary

Services from the second-tier firms are less expensive than from the major players, whose costs are generally aligned. More important to a client for overall services costs are the pricing models. All firms will offer fixed price, time/expenses, or a mix of both. The second-tier firms are the most flexible, while BearingPoint stresses gain-sharing and EDS provides related operating

economies within its overall package (for existing clients). As value creation and capture methods evolve, we expect more firms to offer gain-sharing on a more frequent basis.

Execution

Extraprise Good/Very Good

Deloitte Good BearingPoint Good Inforte Good IBM BCS Good Headstrong Good CGE&Y Good Accenture Good EDS Fair/Good What We Evaluated

Knowledge Transfer — Vendor’s methods, practices,

and demonstrated ability to foster client independence.

Time/Budget Management — Vendor’s ability to

adhere to time and budget constraints and provide visible evidence of same.

Adherence to Vision/Benefits — Balance between

time/budget and vision fulfillment.

Customer Referenceability — Ability of vendor to

provide meaningful references for in-production (e.g., live) and past clients.

Although clients reported a great need for time and budget management, we put a premium on adherence to vision and benefits. Extraprise and BearingPoint (both with a high accent on value capture) shine in this regard. Time/budget management remains a sticking point for most providers where clients do not take sufficient ownership of projects. In similar fashion, knowledge transfer remains fair to good, with all players generally on equal footing except EDS, which lags in this regard due a services focus as opposed to an emphasis on consulting.

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CRM Consulting Services

Performance

Evaluation

Agility

CGE&Y Good IBM BCS Fair/Good Accenture Fair/Good Inforte Fair/Good EDS Fair/Good Extraprise Fair/Good Headstrong Fair/Good What We Evaluated

Reaction to Scope Change — Vendor’s ability to

rescale an endeavor according to strategic, functional, or economic exigencies.

Reaction to Market Change — Vendor’s ability to

predict and react to competitive, economic, cultural, technical, and political change.

Partnering/Collaboration — Vendor’s history,

framework, and capacity to work in partnership with like firms at common clients.

Deloitte Consulting, BearingPoint, and IBM BCS took early leads in recasting their CRM practices to meet market needs (consequently scoring high in the reaction to market subcriteria), while all players demonstrate nearly equal agility for client scope changes. BearingPoint excels at partnering, followed in strength by Deloitte Consulting and CGE&Y. The second-tier players lose points here due only to practice size limitations.

Personnel

Inforte Good/Very Good

CGE&Y Good Headstrong Good Extraprise Good EDS Fair/Good

What We Evaluated

Project Leadership — Quality and background of

vendor’s project leaders, including client perceptions of same.

Consultant Skills/Depth — CRM training, certification,

and knowledge about specific technologies, verticals, services, processes, and methods that are transferred into higher-value technologies and solutions, with improved results for the customer.

Due in part to the economy, all firms covered have demonstrated consulting force stability. Of the second-tier firms, Inforte is distinguished by its project leaders, while among the large players, EDS trails an otherwise excellent and near-equal pack. All provide solid consultant skills and depth of expertise, but clients should balance this (where applicable) with industry focus and industry depth of expertise.

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CRM Consulting Services

Performance

Evaluation

Financials

Accenture Very Good/Excellent

EDS Good/Very Good

BearingPoint Good Deloitte Good Extraprise Fair/Good Headstrong Fair/Good CGE&Y Fair Inforte Fair What We Evaluated

Viability — Viable operational business model, financial

situation, sources of operational funding, and long-term standalone viability.

Growth Rate — Revenue growth relative to the market

and competition, revenue per employee (trending), and future growth prospects.

As with share and investments, this criteria area holds little import for clients, and company ratings had little effect on the final METAspectrum. The leaders here display strength in both viability and growth rate in a currently volatile industry. CGE&Y lags in this regard primarily due to concerns over viability, while the three niche players are clearly less well positioned in this regard due to their size. Clients should view financials criteria according to the anticipated duration of the services to be provided, because long-term engagements should be supported by a firm with strong viability.

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