There is a strong link between Web customer service and the contact center. Whenever a customer needs the assistance of a human customer service representative, there is a shift from strictly Web customer service to the CRM customer service contact center. In increasing order of complexity, the requirements for the CRM customer service contact center may include one of these four major areas:

• Information access: These contact centers focus on low interaction complexity and low process complexity. They can support order placement, complaint management, password assistance or consumer information, service activation, balance look-up, timetables, or ticket purchasing. Basic CRM capabilities are needed for account information, order information and contract details, but there is less emphasis on real-time analytics or offer management. The process supported may not be particularly complex; however, the information must be reliable, readily available and delivered in an easy-to-use graphical user interface (GUI). Contact centers in this space often do not show much business value and will eventually be replaced with Web customer service technologies.

• Service process optimization: This is a customer service center or advisory center (for example, investing and insurance) with low interaction complexity, but high process complexity. It focuses on the efficiency and repeatability of the process. There may be little value in complex analytics or offer management. The goal of the customer experience is focused on process efficiency, rather than profitability.

• End-to-end industry process experts: The contact centers in this context are complex and industry-specific, and often demand that the customer service representative not be forced into following a specific process for some parts of the interaction, but be forced to follow compliance in others. This is where high interaction complexity meets a range of process complexity. For example, the steps in a loan process must be followed consistently, but the offer, rate and conditions may vary based on the customer type, profitability and potential.

• Intelligent dialogue/real-time decisioning: The conversations in this contact center require access to richer information about the customer and product or service, as well as sales and marketing goals. These conversations also become more process-intensive and can be driven by business process management (BPM) software, guided by workflow, analytics and predictive features that can be customized based on personalization rules.

Each of these four areas will be impacted by the need to accommodate social media engagement and interactions, such as Twitter and Facebook, and the need for the interface to be flexible enough to be extended to mobile devices and work-at-home agents.

The Magic Quadrant for CRM Customer Service Contact Centers focuses on the business software used by the customer service agent when engaging the customer (see Note 1 for a list of contact center priorities for customer service). This research is complementary to our research on the communications infrastructure, and to our research on Web customer service. There is obvious synergy with the self-service activity that customers execute, as they may need to escalate to a human customer service representative. Both the Web customer service and the customer service contact center Magic Quadrants share these "agent-enabling" communications technologies.

The customer service software market in the core contact center will compete for budget money with social media projects, replatforming initiatives, Web customer service and analytics projects. Vendors that can demonstrate a strategy for providing support for all four areas (contact center, Web, analytics and social CRM) will be best-positioned to lead the market.

Like all Gartner Magic Quadrants, the 2011 Magic Quadrant for CRM Customer Service Contact Centers is not intended to be the sole tool for creating a vendor shortlist. Use it as part of your due diligence and in conjunction with discussions with Gartner analysts.

The market for customer service and support (CSS) applications for the contact center is split roughly into four major areas that correspond to the complexity of the information required to support the customer and the complexity of the business rules that form the steps in an interaction.

Vendors Not on the Magic Quadrant

We cover dozens of software providers that have valuable products yet do not meet our minimum criteria for coverage. "The Gartner CRM Vendor Guide, 2010" offers a complete list of vendors and products. Some of the more frequently mentioned software vendors are Consona (formerly Onyx), Kana, Jacada, Neocase Software and Vertical Solutions.

Gartner analysts are available for assistance with evaluations and comparisons of these companies and products, and others.

The Role of Social CRM, SaaS and Cloud Computing

By 2013, many industries (for example, telecommunications, travel, financial services and high-tech consumer products) implicitly will include in their definitions of a CRM customer service contact center access to mobile users and community participation in knowledge creation. By 2012, agent real-time access to a view into the customer's activity — including Facebook, on the organization's website and beyond — will be attempted by 10% of customer service centers.

SaaS, as a delivery model for customer service contact centers, is becoming more accepted for many organizations. Gartner has observed some resistance to SaaS in several areas, including:

• Geographies where there is greater caution due to fears regarding data privacy, latency and application availability (for example, Central and Eastern Europe, many parts of Asia, and South America)

• National/federal governments and healthcare organizations where regulations inhibit penetration

• More-complex environments with high call volumes, high transaction volumes and real-time integration with legacy systems, which can slow performance

In our evaluations, we point out when we foresee a potential challenge for a product based on these limitations. Through 2012, complete customer service solutions delivered in the SaaS model will be most prominent in the B2B, low-volume call/contact center.

As the market matures, the rating scales from one year to another can shift. The result is that a product that has not improved or declined may still show a shift in position on the Magic Quadrant that has resulted from a change in the weighting of a criterion between 2010 and 2011.

By 2014, as more applications are built in a cloud-based model, SaaS will emerge as a critical selection factor at all levels of the customer service contact center. By 2013, at least 75% of customer service centers will use some form of SaaS application as part of the contact center solution. This could be for knowledge management, desktop CRM functionality, feedback management or chat. Through 2012, fewer than 15% of organizations will select SaaS for complex business process support.

The customer service contact center is built in five logical groupings (the first of which is the focus of this Magic Quadrant):

• CRM business applications for customer interactions (customer service, knowledgebase solutions, advanced desktop search, real-time analytics/decision support, CRM databases for account/contact/offer information, desktop integration, online community management and surveys)

• Contact infrastructures, such as telepresence, interactive voice response, computer telephony integration (CTI), automatic call distribution, chat, e-mail response, IM and alerts, community support, mobile support, and social CRM capabilities

• Workforce optimization tools (call recording and quality management solutions, workforce management, e-learning, and performance management solutions)

• Enterprise feedback management

• Offline and real-time analytical tools

The first layer, CRM business applications for customer interactions, handles a wide range of tasks, such as case management. Other functions include advisory services, problem diagnostics and resolution, account management, and returns management. Applications may also be industry-tuned for government, nonprofit agencies and higher education. They may include knowledge-enabled service resolution (such as advanced search tools), community management, offer management and service analytics dashboards. They are designed to enable employees or agents of a company to support clients directly, usually within a call or contact center, whether the product is a consumer good, a durable good or a business service, such as financial services, customer services (for example, retail banking, wealth management or insurance), hospitality, telecommunications, government, utilities or travel. Some of the capabilities include:

• The agent needs to be able to support the customer, regardless of whether the customer is on a website, on a mobile device, at a kiosk or in a vehicle. This means that (a) the agent sees what the customer sees, (b) the agent knows the path that the customer has taken before the voice conversation takes place (that is, knows the communication context of the interaction), and (c) the agent has the tools to solve the customer's problem or address his or her issue from a remote location.

• The customer service contact center needs to send out proactive, automated alerts. For example, when the status in a back-end system changes to one of which the customer needs to be aware (such as a bank balance, credit card fraud, flight delays, available upgrades, price range reached, a special offer on cars and insurance policy exceptions), an alert is sent to one or several devices until the customer responds that he or she has received the notification.

• The application contains business rules for complex entities, such as contact, enterprise, subsidiary or partner, and the workflow processes to route a case, opportunity or order based on the rule set for the specific relationship.

• A case may be routed from one department to another, depending on type.

• An application supports multiple languages simultaneously.

• In some situations, real-time decision support is important.

• Multiple back-end systems synchronize using their own rules (for example, credit card fraud; telecommunications-specific functions, such as telecommunication billing, service and resource management; product life cycle management; digital content; and advertising bundling) and integrated order management.

Market traction and momentum:

• Has 15 customer references for CSS functionality in the contact center

• Has at least five new customers for CSS in the past four quarters in at least two geographic regions (for example, the Asia/Pacific region, Latin America, South America, North America and Europe)

• Generated at least $7 million in software revenue for core CSS from new clients during the past four quarters (exceptions can be made for open-source software applications)

• Appears regularly on client shortlists

• Has built a practice with sufficient third-party consulting and integration firms to grow at a double-digit pace for five years

Short-term viability:

• Has sufficient professional services to fulfill current and future customer demands during the next six months, and at least enough cash to fund a year of operations at the current burn rate

• Has technology to support an extension to cross-channel customer service without the need to code in a new development environment

Trendsetter or market mover:

• Is moving markets based on its software and strategy

No vendors have been added in 2011.

Chordiant Software has been dropped because it is now a part of Pegasystems. Jacada and Neocase Software were dropped because we have not seen a sufficient number of new deals for Jacada, and we believe that Neocase Software is better-positioned as a provider of human capital management (or HR) systems, with a shared-service solution for HR, the help desk and customer service. We had insufficient data on management and resources to arrive at a fact-based analysis in time for the publication of this Magic Quadrant as to whether Neocase Software meets our minimum criteria for inclusion.

• Product/Service: Advances in software architectures — particularly advances in Web orientation, support of mobile devices, video and Web communities — are all Web 2.0 requirements that complicate the user's choice. The vendor needs to have a scalable SaaS (or on-demand) delivery model for some part of its platform as an option to be a Leader.

  • We weight the extent to which the company offers a componentized offering, as well as complete functionality across several service models.

  • We continue to see a much greater need for strong mashup capabilities that allow organizations to embed existing applications in the customer service representative's desktop. We also see a strong demand for declarative systems that enable flexible logic flows. User organizations prefer the capability to design their own business objects, workflows and business processes, without resorting to vendor support. We expect this demand for composite applications (through in-house development and application extension to the Internet/website) to accelerate.

  • We see a great need for advanced (real-time) decision support and complex knowledge solution capabilities, business rule engines and customer feedback management.

  • The CSS application should have out-of-the-box functionality, which means a strong set of industry- and process-specific business logic and data. Through process design or functionality breadth, the system must support end-to-end customer service processes (from customer need to resolution) for the chosen market. Published application programming interfaces are critical to connect (or expose) an application's customer service functionality with another system or process. Vendors will be measured on the capabilities of their product releases to support customer service, and on the technical support of their multichannel and cross-channel environments. The functionality portion of the vendor rating is developed by weighting:

    • Case management/problem/service resolution (15%)

    • Visibility into the social graph, and monitoring of the community (5%)

    • Real-time decision support (10%)

    • Offer management/sales capability (5%)

    • Adaptive business rule engine (5%)

    • Knowledge solution (15%)

    • Support of video libraries and video chat with customers (5%)

    • Support of collaborative online communities (5%)

    • Integrated e-mail/chat, collaboration tools and mobile (15%)

    • Enterprise feedback management (5%)

    • Multisource search optimization and authoring (10%)

    • Predictive customer analytics (5%)

  • The vendor must have a stable product development team for each product module it sells, or a demonstrated successful strategic partnership.

• Overall Viability: We evaluate the vendor's capability to ensure the continued vitality of a product, including a strong product development team to support current and future releases, as well as a clear road map regarding the direction the product will take until 2013. The vendor must have the cash on hand and consistent revenue growth during four quarters to fund current and future employee burn rates, and to generate profits. The vendor is also measured on its capability to generate business results in the CSS market. We examine the deployment partners, software partners and the consultancies that are trained and experienced with the product.

• Sales Execution/Pricing: This is about the vendor's capability to provide global sales and distribution coverage that aligns with marketing messages. The vendor must also have specific experience selling its CSS to the appropriate buying center. The strength of the management team and the partner strategy are key. We evaluate the ability to prove revenue stream from CSS, and the observable deal flow from clients, vendors and external service providers.

• Market Responsiveness and Track Record: We consider the vendor's capability to perceive evolving customer requirements and articulate that insight back to the market, as well as create the products for readiness as demand comes online.

• Marketing Execution: This refers to the vendor's capability to consistently generate market demand and awareness of its CSS solution through marketing programs and media visibility. In an ideal world, marketing execution should be less critical than some other factors; however, the business reality is that marketing success can fuel growth and improvements.

• Customer Experience: The vendor must produce a sufficient number (the recommended number is five) of quality clients and references with varying levels of sophistication to prove the viability of its product in the marketplace. References are used as part of the evaluation criteria for the ability to execute and create a vision for how organizations can improve customer service. Included in this criterion are implementation and support. The vendor must be able to provide internal professional services resources or must partner with system integrators with vertical-industry expertise, CSS domain knowledge, global and localized country coverage, and a broad skill set (such as project management or system configuration) to support a complete project life cycle. The critical point on customer experience is to ascertain the degree of change management that accompanied the implementation. Often, the end user experiences discomfort from the change processes that were introduced with the new system, not from the new software. The vendor's customer support organization must also provide satisfactory, prompt service to its customers in all regions of the world.

• Operations: The vendor needs to offer consistent and comprehensible pricing models and structures, including for such contingencies as failure to perform as contracted and mergers and acquisitions. The vendor is measured on its flexibility to support multiple pricing scenarios, such as on-premises licensing, as well as application on-demand offerings, such as hosted and multitenant. The vendor must have sufficient professional services — in-house or through third-party business consultants and system integrators — to meet evolving customer requirements (see Table 1).

• Market Understanding: The market for customer service is highly diverse because of the multichannel nature of customer interactions and the wide range of industry processes that needs to be supported. To succeed, a vendor must demonstrate a strategic understanding of CSS opportunities that are unique to its target market. This may be new application functionality, evolving service models or in-line analytical capabilities for unique customer segments.

• Market Strategy: The vendor can describe its go-to-market strategy as something other than "growing until we are acquired by a larger company." Even with this as the endgame, it must be clear how prospects will be protected or benefit from such a strategy. We look for a well-articulated strategy for revenue growth and sustained profitability. Key elements of the strategy include a sales and distribution plan, internal investment priority and timing, and partner alliances.

• Sales Strategy: This refers to the strength of the sales force and channel, as these make the difference between floundering and steady/rapid growth. We are looking for highly trained sales leaders who can quickly differentiate the value proposition of products and services, as compared with the competition.

• Offering (Product) Strategy: We look for a componentized offering and complete functionality across several service models. Specific vision criteria include:

  • Supporting a threaded service task across functional areas (including midoffice, back-office and partner), regardless of the channel.

  • Providing for the creation of content about the most likely customer intentions and how to address them, based on continuously variable business scenarios. Continuously variable means that, depending on the business context of the interaction, the steps and decisions in a service procedure may vary.

  • Selling successful tools to allow for customer participation in the service process via Web communities.

  • Communicating openly with customers, and to Gartner, a statement of direction for the next two product releases that keeps pace with or surpasses Gartner's vision and our clients' expectations of the CSS market.

  • Offering a sufficiently broad set of products to ensure the success of the product.

  • Providing a SaaS product; without this, a vendor cannot be considered as visionary.

• Business Model: To be a Leader through the first half of 2012, an on-premises application provider needs to have a deployed SaaS option that is appropriate for its customer base. Application modules are tightly integrated, and have business process modeling capabilities and advanced workflows. The company has a strategy to appeal to its key vertical industries — that is, it integrates with systems unique to an industry, delivers packaged functionality and workflows for an industry (such as those for the telecommunications, automotive and consumer goods industries), and delivers B2B and business-to-consumer (B2C) interactions. Gartner should observe deployment partners, software partners and consultancies that are trained and experienced.

• Vertical/Industry Strategy: Unless a product is deployed as a strong add-on to an existing technology stack, a deep understanding of one or more vertical industries will be crucial to offer differentiation.

• Innovation: Innovative vendors incorporate concepts that extend to consumer technologies, virtual service agents and customer service functions embedded in virtual communities (for example, Facebook and Get Satisfaction). The vendor understands major technology/architecture shifts in the market and communicates a plan to use them, including potential migration issues for customers on current releases. For most vendors (any founded before 2000), the architecture is built to operate in a SaaS delivery model and on-premises. We examine how well the vendor articulates its vision to support service-oriented business applications.

  The customer service application should provide a catalog of Web services that enable interoperability with disparate business applications, without requiring extensive point-to-point custom integration. It should have a smart client, and be decomposable as widgets or as part of a larger mashup. Applications must help optimize a predictive customer analytics system — directly or through tightly integrated partners. These predictive analytics alert management, agents or customers when service patterns are detected that might signal the need to adjust a business strategy or direction, or indicate that the likelihood of a particular business scenario has changed (for example, customers responding to a notice on defective parts, an accident or financial news). The vendor will be measured on the capability of its architecture to support global rollouts and localized international installations. The vendor must have the tools for IT and business users to extend and administer the CSS application. The customer is the final arbiter of whether a company is visionary.

• Geographic Strategy: The vendor understands the needs of the three largest markets — the EU, North America and the Asia/Pacific region — and knows how to build a strategy to focus on aspects of the overall market (see Table 2).

Leaders demonstrate market-defining vision and the ability to execute against that vision through products, services, demonstrable sales figures, and solid new references for multiple geographies and vertical industries. Clients report that the vendors deliver a high level of value and return on their commitment. The development team has a clear vision of the implications of business rules, and the impact of social networking on customer service requirements. A characteristic of a leader is that clients look to the vendor for clues as to how to innovate in customer service. The vendor does not necessarily drive a customer toward vendor lock-in, but rather provides openness to an ecosystem. When asked, their clients reply that this product has affected the organizations' competitive position in their markets and helped lower costs. Leaders can demonstrate $50 million in sales to new customers during the past year.

The vendors in the Challengers quadrant demonstrate a high volume of sales in their chosen markets (i.e., more than 30% of new business by percentage comes from more than one industry). They understand their clients' evolving needs, yet may not lead customers into new functional areas with their strong vision and technology leadership. They often have a strong market presence in other application areas, but they have not demonstrated a clear understanding of the CSS market direction or are not well-positioned to capitalize on emerging trends. They may not have strong worldwide presence or deployment partners. Vendors in the Challengers quadrant can demonstrate $50 million in sales to customers during the past year.

Visionaries are ahead of potential competitors in delivering innovative products and delivery models. They anticipate emerging/changing customer service needs, and move into the new market space. They have a strong potential to influence the direction of the CSS market, but they are limited in execution or demonstrated track record. Typically, their products and market presence are not yet complete or established enough to challenge the leading vendors.

Niche Players offer important products that are unique CSS functionality components or offerings for vertical segments. They may offer complete portfolios, but demonstrate weaknesses in one or more important areas. They could also be regional experts, with little ability to extend globally. They usually are focused on supporting large enterprises, rather than small and midsize businesses.

Amdocs is a nearly $3 billion company selling a comprehensive set of software and services to communications service providers (telecommunications, media, satellite), with a portion of its business directed at the customer service contact center and customer experience.

• In the telecommunications industry, Amdocs has the advantage of a comprehensive set of products, from an order management and billing platform, customer service functionality and an agent desktop, and catalog and service configuration, together with libraries of interaction flows.

• Amdocs is a strong and profitable company, with customers and professional services resources in every major geography.

• For prospects with deployed Amdocs assets, the company offers strong insight on the future of the telecommunications customer. It understands retail operations and the contact center in telecommunications and mobile, and has good e-billing capabilities.

• Amdocs' consulting has very strong experience in project management, best practices and key performance indicator mapping.

• Amdocs is a thought leader for parts of the telecommunications sector. It is not recommended for customer service contact center shortlists across other industries, although it may be appropriate for consideration on longer lists.

• Despite articulating leading ideas for customer experience, we find that Amdocs is not best of breed in areas such as chat, knowledge management, virtual assistants, social CRM and real-time agent analytics (see Note 1).

• Amdocs has limited traction in growing third-party external service providers for consulting and implementation services.

Astute Solutions is a small (Gartner estimates that the vendor had revenue of less than $12 million in 2010) niche provider of customer service functionality to the consumer market, primarily in the U.S. and the U.K.

• Astute Solutions has continued to evolve its products to meet changing customer demand, most recently with its Social Relationship Management (SRM) product.

• The vendor's ePowerCenter has been successfully deployed across the U.S. and the U.K., and has extended to more than 25 countries, primarily in small and midsize customer service centers (15 to 100 agents).

• The vendor has strong knowledge of customer service processes in industries such as restaurants, hospitality, consumer goods and retail (nonbanking or other financial services).

• Its RealDialog Agent Assist product for knowledge management is easy to use and manage. It has easy-to-modify basic screen features, and the GUI is flexible and easy to navigate.

• Astute Solutions is a small company (fewer than 75 employees, and Gartner estimates that year-end 2011 revenue will be less than $15 million), and it has not added a significant number of new clients during the past two years. The vendor is mentioned less frequently than better-financed and better-positioned competitors, such as salesforce.com, Microsoft and RightNow.

• Lack of a software partner ecosystem or functional breadth will make it difficult to scale the company.

• Astute Solutions has a limited presence outside the U.S. and the U.K.

• It is rarely seen as a multichannel solution for large, distributed international service environments.

Microsoft Dynamics CRM 2011 and CRM 4.0 are primarily used in nontraditional customer service contact center environments, where the real value may be in supporting a customer request for information, or the need of a student, citizen or government official to interact with another person. There are many scenarios across industries such as government, healthcare, higher education, real estate, and retailing where the flexibility of the system to support a range of interactions makes it a good shortlist product.

• The Microsoft Outlook look and feel, together with the integration with SharePoint and Microsoft Office, are commonly mentioned pluses of the system for customers.

• In 1Q11, Microsoft released Microsoft Dynamics CRM 2011 worldwide, which contains better visual guides and workflow support, together with improved dashboards and analytical features.

• The system is very flexible, and users are able to extend the product creating their own objects and workflows. It allows for a unified view into multiple systems in a single interface, and is a standard part of the CRM package.

• The company offers both an on-premises and a cloud version of the product, both of which are low cost, compared with competitive offerings.

• Microsoft does not have strong industry expertise for complex customer service contact center environments, such as payer healthcare organizations, retail banking, telecommunications and utilities.

• We do not view the new Microsoft Dynamics CRM Online (SaaS) version of the product as mature enough for a complex contact center environment.

• The product is not best in class in support of real-time decisions, knowledge management, proactive service, virtual assistants, online Web communities, social CRM for customer service or mobile customer service.

Nice Systems purchased eglue (and the InterAct Suite) in June 2010 for approximately $30 million. Gartner cautioned prospects in the 2010 Magic Quadrant for CRM Customer Service Contact Centers of the likelihood of an acquisition, and clients who purchased the product have found consistency in the support for the product. We have subsequently updated the product and company names. Nice Systems has a number of other complementary contact center assets, such as speech analytics and risk management, that could be helpful in building more-complete offerings.

• Nice Systems' Real Time Impact (RTI) product helps with decisioning and, as such, is useful for customer service organizations tasked with upselling/cross-selling during an inbound interaction.

• References speak to the ease with which information and data from multiple systems can be assembled, and workflows created to drive the customer dialogue.

• The integration of RTI with the rest of the vendor's assets for recording, agent training, governance, analytics and back-office workflow support creates good synergies for prospects owning other Nice Systems' products.

• The vendor only began integrating RTI (formerly eglue's InterAct Suite) into the Nice System product family in 3Q10, and the vendor's global sales team is not yet fully conversant in the capabilities of the product.

• The company does not own the customer database, does not have a full suite of CSS functionality and does not have a SaaS model.

• The major system integrators do not have RTI practices, thus limiting the products reach and deployability.

We estimate that Oracle E-Business Suite (EBS) continues to be maintained and improved for Oracle customers, although it is not a large percentage of the overall CRM investment. It is not sold as a stand-alone product, as it relies on the rest of the EBS suite for its strength, such as parts and order management, logistics, and return material authorization (RMA). We recommend it for shortlists in this area. For businesses not interested in a tightly integrated Oracle stack, the product would not be considered as a shortlist for most organizations.

• For Oracle customers with a deep knowledge of Oracle EBS, in a technical support environment, with little need for upsell/cross-sell activity, Oracle EBS serves as a good choice for shortlists.

• Oracle r.12.1 has released new enhancements for Email, TeleService, iSupport, and connections with field logistics and support, CTI, and mobile solutions.

• Oracle understands business processes in B2B capital/high-tech equipment vertical industries, and has global deployment capabilities.

• Professional services resources, as well as customer support for customer technical problems, are mentioned by Oracle customers as areas in need of improvement.

• Oracle does not have a strong focus on B2C (customer-facing) environments for this product (such as telecommunications, insurance and banking) or other high-volume retail contact centers where CTI options are necessary. The Oracle (Siebel) family would likely be the lead product from Oracle in these instances.

• Oracle EBS has limited support from large integrators and business consultancies, and few strategic partnerships with third-party software providers in the CRM space.

The Siebel product line has strong near-term viability, broad functional coverage, the largest partner ecosystem and areas of deep industry expertise. It is the standard for large-scale call/contact centers looking for scalability and access to a global pool of third-party professional services, and with an inclination for the Oracle product line. The product line now includes a capability for real-time decision support that became generally available in 2010, appropriate to customer service agents or customers in a self-service mode.

• Siebel remains the CRM application most in use globally by large enterprises in 2011. It is the second-largest CRM vendor by revenue, and the largest in the CRM CSS contact center space.

• Oracle continues to acquire or partner to close gaps in functionality. Most recently (November 2010) was the addition of ATG, adding e-commerce, knowledge management and other Web customer service capabilities that are not a strong part of the core offering.

• The combination of an on-premises solution, a SaaS solution and integrated communications offers Oracle customers and others a broad range of options. The Siebel role-based, on-premises platform is best in industries where fulfillment requirements are high (and where introducing change is difficult, and custom workflows are expensive), whereas simpler needs can be addressed by the on-demand product (which has more-limited functionality capabilities).

• The product lines have global software support and distribution, and a global presence of professional services for multiple industries.

• Balancing multiple product lines (such as Oracle Siebel CRM, Oracle CRM On Demand, Oracle Fusion CRM, Oracle PeopleSoft CRM and Oracle EBS CRM) poses a challenge for the Oracle Sales organization and for the market, in regard to isolating which system is the best of breed for specific needs.

• For users with a low level of complexity in the customer service area, and a small contact center (for example, fewer than 250 seats), the complexity of the Siebel product may be more than is necessary.

• We are observing that many Siebel customers and prospects are evaluating non-Oracle complementary products for knowledge management, real-time decisioning, social CRM and collaboration, Web customer service, and BPM (for specific industries), rather than selecting Siebel for shortlists for these functions.

• Prospects who are not interested in a deeper commitment to the Oracle technology and application stack (for example, if your organization is moderately to heavily oriented toward Microsoft and .NET, or builds its own open-source CRM applications) should look to other products first, although not to the exclusion of Oracle.

Pegasystems reached more than $336 million in revenue in 2010, and it has shifted its messaging and emphasis to customer-facing business processes. The company has been very focused on competitive differentiation around case management, business process design and a declarative approach to process execution.

• The company delivers industry-specific best practices, and good customer experiences, templates and advice, thus accelerating adoption.

• The newly released user interface is a significant improvement over prior versions.

• Pegasystems has an innovative PaaS. It is an Internet-based development area where teams or partners can collaborate on building solutions and designing best practices.

• It offers a highly scalable solution (1,000 or more concurrent users in an integrated environment with 99.95% uptime) and provides good support. Specialties are healthcare, insurance and financial services. New functionality is more broadly applicable to other industries requiring business process optimization.

• With the rapid growth of Pegasystems, clients have experienced a lack of availability of highly knowledgeable implementation resources, although there has been a large increase in trained resources (more than 1,000).

• Outside of areas such as insurance, healthcare, financial services and some areas of telecommunications (where a rule engine may be required for consistency), the product may not be the ideal choice for a shortlist. Pegasystems has a highly flexible BPM tool that can be applied to any sector; however, in those where the company has much experience, it has prebuilt processes that speed deployment and require less work to meet the requirements.

• Clients indicate that the older user interface is not best in class in regard to the look and feel.

• Pegasystems has only recently launched its cloud (SaaS) subscription model of a shared application code and single-tenant database.

• The vendor has limited cross-industry experience outside of North America and the U.K., where country-specific and industry-specific EU operations and EU-specific business rules are most important.

• The company has not rushed to embrace social CRM functionality, choosing a conservative approach and partnering as clients demand a solution.

In 2010, we evaluated Portrait Software, which was then a publicly traded company with revenue of approximately $35 million. Since then, it has been acquired by Pitney Bowes, a company with more than $5.4 billion in revenue and 33,000 employees. There are synergies for the new entity, as well as challenges, operating as an arm of a large, global business.

• The company sells several related products for the contact center, including the Portrait Interaction Optimizer, Portrait Customer Analytics, Portrait Dialogue and Portrait Foundation. Portrait Foundation is geared toward financial services organizations, and is delivered through a partnership with Fiserv. Portrait Foundation is a business process platform.

• Customer service organizations that are tasked with performing marketing and sales functions will benefit from the ability to create scoring models and suggestions on the next action to take to help with the sale, because it marries analytics to process.

• There is a SaaS (cloud) option for some of the applications.

• Pitney Bowes brings stability and access to prospects, as well as development and marketing resources.

• Pitney Bowes is unknown in the CSS software market.

• Pitney Bowes' businesses run software solutions for sales, customer service and field service from its major competitors.

• Clients will need to monitor the transition of the relatively small, but specialized, Portrait Software product lines into a $5 billion-plus company, because there is always the risk that the parent company could lack an understanding of the core value of the products, and hence fail to support marketing and development.

In 2010, RightNow revenue was approximately $185 million, derived from sales of its SaaS-based products across most geographies and a broad range of industries.

• RightNow continues to improve its capabilities in the customer service contact center, deepening its search capabilities with the recent acquisition of Q-go.

• RightNow has made many strategic hires during the past four quarters, freeing its dynamic CEO to focus attention on customer needs and competitive differentiation.

• Consumer-oriented customer service contact centers that have a need for searchable content, integrated chat and e-mail, and solid scripting capabilities using a modern GUI will be attracted to the product.

• The system, delivered as a subscription service in a SaaS model, is straightforward to set up and configure, without the need to resort to heavy IT involvement.

• RightNow has strong industry representation in high tech, government agencies, retailers, education, travel, consumer electronics and branches of telecommunications, while not focusing deeply on industry-specific processes (for example, billing, price catalogs, order execution and underwriting).

• RightNow has yet to find the right message to gain the commitment of the largest system integrators and global consultancies, such as IBM, Accenture, Deloitte and Capgemini.

• Organizations leaning heavily in the direction of an all-Oracle or all-Microsoft environment often face resistance from their IT organizations in regard to deepening the commitment to RightNow.

• RightNow has begun to offer end users strong platform-as-a-service (PaaS) capabilities, and the coming year will be pivotal for this initiative.

• The product lacks an on-premises software model. This could potentially complicate decisions for some EU prospects concerned with the risk of outages and nonconformance to internal security requirements in industries such as banking, healthcare and government.

Salesforce.com continues its investment in its Service Cloud offerings, through in-house development, integrations with other products, and acquisitions (such as the recent acquisition of Radian6).

• Since acquiring InStranet in 2008, salesforce.com began a strong move to add not only what is now Salesforce Knowledge, but also Chatter (via the GroupSwim acquisition) for collaboration and Activa Live Chat in 2010. These are all a part of the Service Cloud 3 release. The new Chatter offering is gaining adoption, especially in the B2B customer service area.

• Key customers have shown enough faith in the customer service contact center product to retire homegrown systems and systems from competitors that were at an end-of-life stage. These references have successfully implemented the solution.

• With its revenue possibly reaching $2 billion, salesforce.com will soon be the largest and fastest-growing software solution provider solely focused on customer engagement in the history of software.

• The salesforce.com product for customer service has an excellent GUI, simple design tools, intuitive navigation and a good understanding of the importance of Web communities. There is very good integration with back-end systems, such as Oracle ERP.

• The vendor has a growing, global set of regional professional services partners and divisions of global integration companies.

• The vendor is largely unproved in large, complex, retail, B2C contact centers — that is, large-scale, high-volume call centers where processes must be continually synchronized and monitored, such as retail banking, loan origination, insurance policy administration, bill processing and fraud management.

• The customer service product lacks a real-time analytics capability for agent decision support. It requires more of a unified BI layer to look at ad hoc data analysis.

• The product lacks an on-premises software model. This could potentially complicate decisions for some EU prospects concerned with the risk of outages and nonconformance to internal security requirements in industries such as banking, healthcare and government.

• Clients who are scaling the product for multihundred seat customer service centers with complex, industry-specific needs are voicing concern about the long-term total cost of ownership, as well as questioning the specifics of salesforce.com's disaster recovery policy and practice, and the inclusion of standard SLAs in the contracts.

SAP continues to expand and improve the product for its customer, and has made some inroads in the non-SAP prospect base.

• The SAP CRM 7.0 product has had good uptake with businesses in every major geography and many industries. The strongest industry offerings have been in consumer electronics, utilities and B2B equipment support within the SAP installed base.

• SAP is a strong and profitable company, mitigating the financial risk of a large and ongoing investment in the product.

• The SAP CRM Interaction Center product set has a complement of customer service offerings, reducing the number of vendors required to build an end-to-end contact center solution.

• SAP has good integration with non-CRM assets, such as contracts, bills of material, parts masters, and account and service tickets. These help in the support of end-to-end processes.

• The large (500-plus users) B2C contact center requiring support of complex business processes (for example, financial services, retail banking, retail mobile operators and healthcare) is not a core strength of the SAP CRM Interaction Center.

• There is limited, but improving, traction with non-SAP customers, but our recommendation is for non-SAP customers to continue to favor other products on shortlists.

• SAP's multitenant SaaS delivery model, although improving, is not on par with competitive offerings.

• There is a growing, but still limited, pool of trained external service providers with consulting practices that offer help with SAP technologies and customer process design and configuration.

Sword Ciboodle is one of the best overall products for the customer service contact center that is not already a part of a megavendor (Oracle, SAP, Microsoft, salesforce.com) suite.

• The product is well-positioned for organizations wanting to support a process-centric approach to customer service. Areas covered include complex case management with multichannel needs (telephone, e-mail, chat and legacy systems).

• The product can be configured for multiple user roles, which speeds the average handling time for a task and streamlines/shortens the training period, and makes for the easier introduction of new processes.

• The vendor has a responsive professional services team with a solid understanding of business processes, and has expanded into the U.S. to support growth in that geography.

• The underlying platform has good modeling capabilities and a strong set of customer service functionality. The recent introduction of Ciboodle Crowd gives prospects a way of connecting the customer service process to social media and collaboration.

• Limited sales and marketing resources have held back the Ciboodle product. Risk-averse buyers may mistake the lack of broad deployments and adoption as a sign of product weakness, rather than a lack of visibility.

• The geographic scope of the product's availability seems limited primarily to English-speaking geographies. Prospects should perform the standard due diligence before purchasing the product.

• Sword Ciboodle is not known as a best-of-breed knowledge management tool or a social CRM platform to extend a business's reach to the end customer. The product is not architected and deployed as a multitenant SaaS platform.

• The product line would benefit from deeper strategic CRM application partnerships to round out product offerings, while mobile service is becoming a key delivery channel.