Magic Quadrant for CRM Service Providers, Worldwide

This Magic Quadrant focuses on the CRM consulting and solution implementation service market worldwide. To provide market context, the following are Gartner's definitions for both solution implementation services and customer relationship management:

• Solution implementation services: Solution implementation services are offerings to design, develop, integrate and deploy specific processes, functions, applications or initiatives in user organizations. These services aim to optimize a company's processes and integrate related technology applications and platforms (see "Forecast: Application Solution Services, Worldwide, 2010-2015").
• Customer relationship management: Gartner defines CRM as a business strategy in which the outcomes optimize profitability, revenue and customer satisfaction by organizing around customer segments, fostering customer-satisfying behavior and implementing customer-centered processes. This marketplace, competitor categories and characteristics are described in "Competitive Landscape: CRM Service Providers, North America and Western Europe." This research address all three CRM domains:
  • Sales — Solutions that support field sales, telesales, retail sales, Web sales and technology-enabled buying
  • Marketing — Solutions that support marketing analysis, campaign management, marketing process automation and other marketing functions including analytics
  • Customer service and support (CSS) — Solutions that support customer service and support processes, including consulting, technology implementation and solution deployment but excluding the outsourcing of call center and customer service centers.

Source: Gartner (September 2012)

Vendor Strengths and Cautions

Accenture

Accenture is a Leader in this Magic Quadrant. Accenture is a good fit for large, complex CRM initiatives with well-defined business benefits. Gartner estimates that Accenture is the largest CRM service provider worldwide in terms of both revenue and staff.

Strengths

• CRM focus, scale and scope — Accenture has a corporate focus on CRM services and has steadily invested in solutions, skills, practitioners and practices. Accenture has one of the two largest global CRM practices that encompasses business, technical and domain skills across all major CRM platforms, with CRM revenue estimated to be between US$1.8 billion and US$2 billion and CRM staff estimated to be about 15,000 dedicated full-time equivalents globally. Accenture has the ability to support global and multinational accounts due to extensive scale and global breadth.
• Vision — Accenture sets a long-term strategy for its CRM practice and commissions extensive primary research in CRM, which enables Accenture to be quicker than most of its competitors to identify new patterns of demand, set out a vision for CRM and then to innovate its services to match.
• Visibility — For the seventh year running, Accenture remains the vendor that is most included and evaluated on shortlists by reference customers, reflecting both brand and market presence. Accenture was also rated well above average on the reference customers' prior experiences of the company that also reflects continued successful execution.
• Microsoft and salesforce.com practices — Accenture was quicker than most large competitors to move significant resources into the fastest-growing CRM technology platforms; specifically, Accenture has the largest salesforce.com implementation practice and also addresses Microsoft Dynamics CRM via Avanade.

Cautions

• Price — According to Gartner reference checks, the most common reason Accenture lost competitive bids (for the seventh year running) is because of the premium price of its services. Almost 40% of references from other providers that evaluated but did not select Accenture said the reason for not selecting Accenture was the price was too high. References also rated Accenture below average for the total cost for the contracted services.
• Working practices — Accenture scored below average with reference customers on its contracting practices as well as information architecture and data migration skills. Accenture scored above average on almost all other CRM skills.
• Value — If pricing is a top criterion for selection, then evaluate Accenture with care. Gartner references rated Accenture relatively low in overall value, and we believe that this reflects a high price point for services relative to average ratings for overall satisfaction, as well as an average rating related to providing references to peers. Accenture is a safe choice for CRM solutions when complex business-driven solutions and risk management are more critical than price.

BearingPoint

BearingPoint is a Visionary in this Magic Quadrant. BearingPoint, which approaches CRM from a consulting and applied analytics perspective, is a good fit for enterprises seeking business-driven CRM strategy and/or complex customer service solutions in Europe. North American clients seeking the same solutions are supported by BearingPoint's partner, West Monroe Partners, while clients in Asia/Pacific are supported via ABeam Consulting. Gartner estimates that BearingPoint is the 11th largest CRM service provider worldwide, with CRM revenue of about US$155 million.

Strengths

• Vision — BearingPoint's vision for CRM and customer experience is differentiated by its business issue research and publications that are then applied in projects for clients.
• Business consulting — BearingPoint's understanding of business needs and its investment in research have translated into a business-driven CRM practice with innovative solutions. References cited business acumen and industry expertise, which are much higher than average, as reasons for selection. Fifty percent of references said that the project mix was more than 50% business strategy or process redesign compared with technology or software implementation. This was the highest ratio across all the vendors.
• Peer recommendation and customer satisfaction — In our reference checks, BearingPoint was among the highest in customer satisfaction score and the highest in overall value. This results in an above-average likelihood of a client recommending the firm to a friend or colleague.
• Industries — The largest proportion of BearingPoint's CRM resource skills and project experience is from a few industries that have high CRM adoption: telecommunications, business services and utilities, followed by retail and consumer goods (especially luxury goods).

Cautions

• Price — According to Gartner's reference checks, the most common reasons BearingPoint loses competitive bids are partly because of the price of its services and also because it was not viewed as a strategic partner by the buyer.
• Software understanding — According to references from other providers that evaluated but did not select BearingPoint, the most frequently cited reasons why they did not select BearingPoint were limited understanding of software platforms and technical expertise. These, when coupled with BearingPoint's business consulting orientation, point to potential poor alignment when the customer's focus is primarily on detailed CRM package technical expertise.
• Geographical coverage — BearingPoint operates almost exclusively in Europe and has a limited presence outside its strongholds in France, Germany, the U.K., the Netherlands, Switzerland, Austria, Belgium and the Nordics. That said, BearingPoint has put together partnerships with other regional CRM consultancies in Italy, Spain, Argentina and Brazil but, most notably, with West Monroe in the U.S. and ABeam in Asia/Pacific, to enable global or panregional delivery of projects and the ability to serve large global enterprises seamlessly.
• Global delivery — Reference customers said 51% of the work was done on-site; a further 43% of work was done off-site but in the same country, 2% was done offshore, and 3% was done nearshore. BearingPoint's ability to scale system integration services, compared with its peer set, is also a concern; however, its partnership agreement with Tata Consultancy Services (TCS) to enable global delivery helps mitigate this limitation.

Business & Decision

Business & Decision (B&D) remains a Niche Player in this Magic Quadrant due to limited scale and geographic footprint. B&D is a good fit for European enterprises seeking CRM solutions that are business-centric with heavy use of CRM analytics — particularly when focused on marketing initiatives. Gartner estimates that B&D is the 13th largest CRM service provider worldwide, with revenue estimated to be US$130 million.

Strengths

• Customer satisfaction — References continue to laud B&D, which received high customer satisfaction (as in past years).
• Industries — B&D focuses CRM effort and skills on selected vertical industries, including insurance, banking, retail and telecommunications/media in Europe, while its North American practice focuses on discrete manufacturing.
• Analytics — B&D, as a firm, generates more than 60% of overall revenue from business intelligence (BI). This is reflected in its CRM practice, which has strong marketing analytical skills in areas such as lead management, segmentation and campaign automation. B&D also recently acquired Hub'Sales to expand services related to Web analytics.

Cautions

• Growth — B&D's CRM revenue growth in 2011 was about 5%, which is below the market average.
• Program and project management — B&D had relatively low scores in program management and project management execution, as well as knowledge transfer from its references, compared with competitors.
• Global delivery — B&D has small numbers of offshore resources in India, Tunisia and Mauritius. The company uses nearshore or off-site centers, but it lags behind most competitors in its ability to use offshore resources to deliver CRM services. Customer references said that 71% of work was done on-site, 24% was done off-site but in the same country, and 5% was done nearshore, and there were no projects using offshore resources. This is aligned with the business consulting and analytic approach that requires higher on-site presence, but it limits scalability and price competitiveness at times.
• Geographic coverage — B&D has a strong presence in France, Belgium and Switzerland, a growing presence in the U.K., and a differentiating presence in North Africa. B&D has only a small presence in the U.S., and it remains comparatively weak in parts of Europe (the Nordics, Italy and Central Europe) and other regions of the world (Asia/Pacific, the Middle East, Africa and Latin America) when compared with market leaders. It should be noted that B&D recently announced the acquisition of the U.S.-based firm AbilityCRM, which may improve presence in North America, and this acquisition will also bring additional Microsoft Dynamics CRM competencies.

Capgemini

Capgemini is positioned in the Leaders quadrant. Capgemini is a good fit for enterprises seeking help with large-scale projects needing both CRM advisory and implementation skills. Gartner estimates that Capgemini is the fourth largest CRM service provider worldwide, with CRM revenue estimated to be slightly over US$1 billion.

Strengths

• Peer recommendation — In our reference checks, Capgemini had the highest score related to the likelihood of a client recommending the firm to a friend or colleague.
• Industry focus — Capgemini takes a vertical industry approach to its services and leverages business consulting and vertical expertise. The largest proportion of Capgemini's CRM focus, staffing and project experience continues to be in the public sector (the U.K. and France), banking and insurance, telecommunications, discrete manufacturing (particularly in Germany) and retail.
• Quality and experience of consultants — Reference checks cited Capgemini consultants' competencies, industry experience and project teams as the leading reasons for selection. Capgemini has more than 5,300 CRM consultants, and most of these are trained on SAP, Oracle or Microsoft CRM solutions.
• Integrated delivery model — Capgemini's delivery model is a competitive differentiator in the U.S., the U.K. and the Netherlands that utilize its global delivery capabilities, but is less differentiating in France and Germany, which uses local delivery almost exclusively. Overall, reference customers said 66% of CRM project work was done on-site, 3% off-site in the same country, 21% offshore and 10% nearshore.

Cautions

• RFP responses and price — The most commonly reason cited by references from other providers that evaluated but did not select Capgemini was due to a poor response to the RFP, and the second reason cited was its price being perceived as high.
• Functional skills — Capgemini's reference customers rated Capgemini well below average on CRM-specific domain skills, including sales, marketing and customer service expertise.
• Limited geographic spread — Capgemini's CRM practice does 55% of its work in Europe and 38% of revenue in North America, with the strongest presence in France and the U.K. This concentration in Europe is higher than that of other Leaders in this Magic Quadrant. Capgemini has a small presence in Asia/Pacific and only a minor presence in Latin America.

Cognizant

Cognizant is positioned in the Leaders quadrant. Cognizant is a good fit for organizations seeking strong technical implementation skills, but Cognizant also has a rapidly developing business advisory service in selected industries (for example, pharmaceuticals, insurance and banking, healthcare in the U.S. and communications in Europe). Gartner estimates that Cognizant is the sixth largest CRM service provider worldwide, with CRM revenue estimated to be US$500 million.

Strengths

• Growth — CRM service growth far exceeded Cognizant's overall company growth of 33% in 2011 and had the highest growth of the vendors in this assessment.
• Value for price — Cognizant had one of the highest ratings for "quality for fees paid" in this CRM study.
• Technical skills — References gave Cognizant the highest overall scores for technical skills of all participants. This, coupled with high overall value and openness to rehire, suggests customers are very pleased with Cognizant's past performance on CRM technical implementations.
• Global delivery balance — Cognizant makes extensive use of offshore capabilities in India for all implementation projects to drive cost competitiveness, but it also does a good job of balancing these with local resources. Reference customers said that Cognizant delivers 51% of the workload via offshoring (the third highest of the providers in this assessment but down from 60% in 2010), 8% off-site but in the same country, and 41% on-site. It is estimated that 75% of total CRM-focused resources are from global delivery centers.

Cautions

• Business consulting skills — During the past five years, Cognizant has steadily improved the seriousness with which clients and prospects rate its business consulting services. That said, only 12% of references said that the project mix was more than 50% business strategy or process redesign compared with technology or software implementation. This compares with an average of 26% for all vendors and more than 45% for the market leaders peer set.
• Industry experience and RFP replies — According to references from other providers that evaluated but did not select Cognizant, the most common reasons Cognizant lost competitive bids in 2011 was firstly due to lack of industry experience and secondly due to poor responses to RFPs. This finding, coupled with the still emerging business consulting services, suggests that while Cognizant's strategic direction is clearly on vertical solutions and consultative approaches, many customers have not perceived Cognizant to have succeeded in this shift to vertical solutions.
• Geographic coverage — Cognizant continues to have fewer local resources outside the U.S., U.K. and Switzerland than other service providers. Although Cognizant has a focused investment strategy to expand geographically and has local CRM resources in 10 other European countries (including France, Spain, Italy, Belgium and the Nordics), it has fewer resources than other Leaders in this Magic Quadrant. Additionally, compared with these Leaders, Cognizant has limited local resources in emerging markets, including China, Japan, South Korea, Latin America, Africa and the Middle East.

CSC

CSC is positioned in the Visionaries quadrant. CSC focuses on "customer intimacy" solutions that are industry-oriented and which integrate processes, technology and change management for large enterprises. CSC is a good fit for enterprises seeking business-led CRM capabilities in financial services, government, transportation and retail industries with a particular strength in analytics and industry-specific innovation. Gartner estimates that CSC is the 14th largest CRM service provider worldwide, with CRM revenue estimated to be between US$125 million and $130 million.

Strengths

• Impact — While CSC is less visible in the CRM market, client references report above-average satisfaction and value for CRM services. These findings, when combined with CSC's relatively smaller CRM practice, support CSC's strategy to focus on smaller, focused business-led CRM solutions to deliver demonstrable value, often utilizing software as a service (SaaS)-oriented CRM solutions.
• Cultural fit and customer satisfaction — References cited the alignment of CSC's approach to the client's business culture and objectives, particularly for enterprises that prefer smaller, focused teams with more-experienced resources. Aligned to this is the very high customer satisfaction rating also provided by the references for CSC engagements.
• Peer recommendation — CSC has markedly improved its propensity of clients to recommend the firm to a friend or colleague, with ratings among the highest in the assessment.

Cautions

• Growth — CSC's CRM revenue has been growing very slowly compared with competitors at about 3% in 2011, substantially below the market rate. In particular, CSC's shift to smaller SaaS-based projects has impacted revenue growth for CRM services. CSC's CRM services have grown faster than the overall CSC's application service growth, which has been flat.
• Global delivery — CSC continues to have limited offshore resources for CRM. Customer references said that 78% of work was done on-site, 9% off-site but in the same country and 3% nearshore, and 10% of projects used offshore resources. This reflects CSC's consultative approach to CRM as a business-centric solution in most instances rather than driven by large-scale technology integration and deployment. This may impact CSC's ability to scale and be price-competitive for large technology-centric implementations.
• Reference checks — The two most common reasons for not choosing CSC cited by references from other providers that evaluated but did not select CSC in 2011 were firstly their perception of CSC's poor track record in CRM and secondly due to poor client reference checks.

Deloitte

Deloitte is positioned in the Leaders quadrant. Deloitte is a good fit for enterprises that seek business-consulting-led comprehensive CRM solutions. Gartner estimates that Deloitte is the third largest CRM service provider worldwide, with CRM revenue estimated to be between US$1.4 billion and $1.6 billion.

Strengths

• Vision and CRM leadership — Deloitte has approached CRM services as part of business transformation and customer experience enrichment. Deloitte brings together a full set of capabilities that includes strategy and business process consulting, technology, creative design (via Deloitte Digital) and analytics often focused on transforming the "front office" of customers. Customer references rated Deloitte among the leaders for CRM vision and overall thought leadership.
• Growth — Deloitte outgrew its largest competitors in 2011 in terms of total CRM-related revenue, with a growth rate of about 18%, which is significantly higher than the overall industry.
• Customer satisfaction and peer recommendation — Deloitte received among the highest ratings from references for both the likelihood of a client recommending the firm to a friend or colleague and for overall client satisfaction scores.
• Industries — Deloitte approaches the CRM market through a vertical go-to-market model that leverages globally deployed CRM practitioners. In Europe, Deloitte's CRM vertical focus is on telecommunications, technology, banking, insurance and the public sector. In North America, the focus is on manufacturing, financial services, the public sector and healthcare.

Cautions

• Understanding client needs — According to references from other providers that evaluated but did not select Deloitte, the most common reason Deloitte lost competitive bids in 2011 was that it did not demonstrate an understanding of the client's business needs, particularly when the clients were requiring less complex and technology-driven solutions but more business transformation solutions.
• Price and global delivery — The second-biggest reason Deloitte was rejected by buyers was because the price was too high. Deloitte's business model is focused on delivering a higher proportion of business consulting services compared with most others in this Magic Quadrant that typically use relatively fewer offshore resources on projects. Although Deloitte has significant offshore capabilities to be used on technology implementation, reference customers said that 74% of the workload was handled on-site, 11% off-site but in the same country, 2% nearshore, and only 13% offshore, which represents a considerable higher on-site profile than most providers.
• Microsoft partnership — Deloitte has extensive support for SAP, Oracle and salesforce.com but does very little with Microsoft Dynamics CRM due to a conflict of interest with its audit relationship with Microsoft.

IBM GBS

IBM Global Business Services (GBS) remains positioned in the Leaders quadrant. IBM GBS is a good fit for enterprises seeking help with large, complex CRM initiatives that combine both business consulting and technology innovation. This is especially true when the requirements span multiple geographies.

Strengths

• Vision and CRM leadership — IBM has a vision of CRM that is an extension to its corporate strategies related to "Smarter Planet" and "Smarter Commerce." It informs that vision with research from the IBM Institute for Business Value. IBM seeks to bring together new approaches to the customer, commerce, analytics and social/mobile interactions to design a new "front office" for customer engagement. Customer references rated IBM among the leaders for CRM vision, overall thought leadership and expertise in CRM marketing-related services.
• Integrated services and software — IBM has invested in analytics and marketing software, processes and services that are CRM-centric. There have been more than $3 billion in investments in CRM-related software acquisitions, including SPSS, Unica, Coremetrics, Tealeaf Technology, Varicent Software, Vivisimo, Cast Iron Systems and others. IBM has worked to integrate these assets into CRM analytics capabilities as well as part of CRM marketing services. IBM has also invested in industrialization of services and reuse of assets, including software and process templates.
• CRM scale — IBM GBS has one of the two largest global CRM practices that encompasses business, technical and domain skills across all major CRM platforms. IBM's vision of CRM is significantly broader than the scope of this assessment in that it includes aspects of commerce, analytics, software and business process outsourcing (BPO) services that other providers would not include as CRM. Relative to the scope of this assessment, Gartner estimates that IBM's revenue for CRM services within the scope of Gartner's CRM definition to be between US$1.8 billion and $2.0 billion. This scale and scope enable IBM to provide CRM services in all regions and to address the needs of local regional customers as well as the needs of the largest global multinational enterprises.
• CRM analytics — IBM's CRM services are aligned with corporate initiatives that include Smarter Planet, Smarter Commerce, SmartCloud, analytics and mobility. IBM stands out in its CRM analytics capabilities that are at the intersection of BI software, CRM software and CRM analytic services. IBM also views Smarter Commerce and CRM to be highly linked and integrated from both a solution perspective and service perspective.

Cautions

• Price and business understanding — According to references from other providers that evaluated but did not select IBM, the two most common reasons IBM loses competitive bids is because of the price of its services and because IBM consultants did not demonstrate an understanding of the client's business needs. IBM approaches the market from a complex CRM and solution perspective, and it is likely that customers that may have been looking for a predefined technology approach or that need only limited vertical expertise might look to other providers with lower price points.
• Cross-services execution — Investments in better cross-collaboration within IBM GBS are beginning to show traction, but they still have room to improve value for enterprise buyers that consume multiple services from IBM GBS and/or IBM Global Technology Services (GTS).

Infosys

Infosys is positioned in the Challengers quadrant. Infosys is a good fit for enterprises that have a need for good value and/or multicountry technology-led CRM solution implementations. Gartner estimates that Infosys is the fifth largest CRM service provider worldwide, with CRM revenue of about US$500 million.

Strengths

• Technical skills and scale — Infosys earned above-average client feedback for skills in technical architecture, system integration and service-oriented architecture (SOA) expertise. It also has one of the largest CRM practices in terms of resources, with more than 6,000 CRM practitioners globally.
• Balanced global delivery — Infosys makes good use of offshore capabilities in India on almost all CRM implementation projects. Reference customers said that Infosys delivers 55% of the workload from offshore (the second highest of the providers in this Magic Quadrant but down from 68% in 2010), 2% from nearshore, 4% off-site in the same country, and 38% on-site, giving it a good balance of work globally with scalability and leverageability of key technical staff.
• Industries — Infosys has organized by vertical sectors, and in Europe, the greatest proportion of Infosys' CRM resource skills and project experience is heavily focused on telecommunications, consumer goods, retail and utilities, while in North America, the focus is prevalently on automotive, high technology, financial services, consumer packaged goods (CPG) and retail.

Cautions

• Team members and understanding the business — According to references from other providers that evaluated but did not select Infosys, the two most common reasons that Infosys lost competitive bids in 2011 were that the team members put forth did not meet expectations or did not appear to be the right fit for their organization, and they did not demonstrate an understanding of the business issues.
• Customer satisfaction — Infosys was slightly below average in overall customer satisfaction, overall value and willingness of customer references to recommend to peers. None of these scores were poor, and customers said they would likely rehire Infosys. The lower-than-average scores were likely due to inconsistent execution from engagement to engagement, whereby at times, Infosys was not able to bring critical resources and/or subject matter experts to engagements in a timely fashion.
• Geographic coverage — Infosys generates most of its work in the U.S., the U.K., Australia and Norway. Infosys has a limited local presence of CRM resources in 10 other European countries (notably in Switzerland, France, Sweden and Finland), and sizable teams in China and Japan. However, compared with the Leaders in this Magic Quadrant, the company still has gaps in emerging markets, such as Latin America, Eastern Europe and Africa, which they are striving to address.
• Business consulting — Even with Infosys' incorporation of its business consulting capability into its consulting and system integration unit, only 19% of references said that the project mix was more than 50% business strategy or process redesign compared with technology or software implementation. This compares with an average of 26% for all vendors and more than 45% for the Leaders in this Magic Quadrant.

Logica (Now Part of CGI)

Logica is positioned in the Niche Players quadrant. It provides CRM services in multiple countries and continues to invest in CRM as part of its vertical solutions, such as customer care in telecom and citizen-centric services in the public sector. Gartner estimates Logica revenue for CRM to be the 11th largest worldwide, with revenue between US$175 million and $195 million prior to its merger in August 2012 with CGI, with almost all of this revenue derived from Europe. We anticipate that there will be significant refinement of the CRM service focus and geographic coverage as the integration of CGI and Logica takes place in the second half of 2012 and first half of 2013.

Strengths

• Analytical CRM — Logica's customer references rated Logica above average in information architecture, data migration and SOA efforts. Logica demonstrated advanced understanding of areas such as combining and integrating social data and "traditional" data.
• Industries — The greatest proportion of European CRM resource skills and project experience is in public sector, discrete manufacturing, transportation, energy and utilities then insurance and banking.
• Vision — Logica articulates a very strong vision related to "applied customer insight" that integrates social CRM, mobile and analytics as part of business transformation and sets out how to interact with and support customers. This vision has only been adopted by a small set of customers in some specific industries so far but is gaining traction alongside "traditional CRM."

Cautions

• Customer satisfaction and willingness to recommend — Within this assessment of the largest CRM providers, Logica's references had the lowest overall customer satisfaction rating and were the least willing to recommend the service provider, and Logica also had a low rating related to likelihood of rehire and project management execution.
• Team members and understanding the business — According to references from other providers that evaluated but did not select Logica, the two most common reasons that Logica lost competitive bids were that the team members put forth did not meet expectations or did not appear to be the right fit for their organization and that Logica had problems understanding the client's business issues.
• CRM practice leadership — Logica formed its global CRM practice in 2011. Prior to this, CRM had not been a strategic focus for Logica, and as a result, the CRM execution has not been well-coordinated across geographies into a single coherent practice. This resulted in inconsistent vision and execution for CRM during the past five years. We anticipate that the global practice, along with the CGI integration, will have a significant impact.
• Geographic coverage — Logica's CRM coverage is available in 15 European countries (with the main focus on France, the U.K., Finland, Sweden, Germany and Spain), and it does not have a significant presence in major countries such as the U.S., Italy and Russia or regions such as Australasia, Latin America and the Middle East, when compared with the market leaders. We anticipate that the integration with CGI will dramatically change this, particularly for North America.

NTT Data

NTT Data is a Niche Player in this Magic Quadrant. NTT Data is a good fit for European, Australian and Japanese enterprises that require CRM solutions that have complex business requirements. Gartner estimates that NTT Data is the ninth largest CRM service provider worldwide, with CRM revenue estimated be between US$230 million and $245 million.

Strengths

• Industries — NTT Data approaches CRM services in Europe from a business and vertical solution perspective, with the focus on discrete manufacturing (automotive), telecommunications, insurance and banking. In North America, the focus has been on discrete manufacturing and retail.
• Cultural fit — Customer references rated NTT Data high in cultural fit as well as the quality of the members of the project team and NTT Data's geographic capabilities.
• CRM vision — NTT Data scored higher with reference customers than most competitors on having a better vision of CRM and on engagement execution due to the team members on the project and the technical architecture expertise.

Cautions

• Awareness — NTT Data is the aggregation of multiple acquisitions during the past several years, including Cirquent, Keane, Value Team and Intelligroup. There is limited market awareness of NTT Data as an integrated whole, and CRM services are more linked to the legacy acquisitions than to NTT Data. NTT Data reference customers scored it low on influence with senior management. As NTT Data continues to acquire small consulting firms that have geographic and/or domain specialization, it will be critical that an overall NTT Data brand emerge and become more prevalent.
• Growth — NTT Data grew CRM revenue at about 6%, which is slightly below the market average in 2011, and it has not been able to gain market share.
• Global delivery — NTT Data lags its competitors in its use of global delivery. It has very few offshore and nearshore centers. Customer references said that 46% of work was done on-site, 49% off-site but in the same country, 1% nearshore and only 4% offshore. This will be a competitive disadvantage in bidding on CRM implementations that require large-scale technology efforts.
• Geographic coverage — NTT Data's CRM coverage is concentrated on 10 European countries (with the main focus on Italy, Germany, the U.K. and Switzerland), and has a limited presence in many major countries with substantial CRM markets, such as the U.S., France and the Nordics. NTT Data has significant presence in Japan, Brazil and Australia but limited presence in other countries in Asia/Pacific, Latin America and the Middle East as compared with the market leaders.

PwC

PwC is positioned in the Visionaries quadrant. PwC has a focus on business transformation through technology in general and CRM in particular. This focus on CRM has had a significant impact on customers and has been a hallmark of PwC's CRM competitive differentiation in the past two years. PwC is a good fit for enterprises seeking business consulting-led solutions in specific industries and geographies. Gartner estimates that PwC is the 10th largest CRM service provider worldwide, and CRM revenue is estimated to be US$180 million.

Strengths

• Growth — Gartner estimates that PwC's CRM solution implementation service growth is well above the market growth rate, at about 30% from 2010 to 2011.
• Consulting skills — References rated PwC very high in CRM competencies related to business and CRM technology, including industry knowledge, business consulting, change management, project management, knowledge transfer and technical skills.
• Customer satisfaction — References rated PwC among the highest in customer satisfaction and cited their willingness to recommend PwC to peers.
• Industries — The greatest proportion of PwC's resource skills and project experience is in insurance, banking, business services, utilities, discrete manufacturing and telecommunications.

Cautions

• Team members and poor RFPs — According to references from other providers that evaluated but did not select PwC, the two most common reasons that PwC lost competitive bids in 2011 were that the proposed team members put forth did not meet expectations and that the responses to RFPs were poor. These reasons were cited as especially acute when the customer focus was on CRM technology deployments rather than on business transformation.
• Breadth and depth — Enterprises that need specific CRM business or technology skills may find their needs met; however, those seeking both advisory and implementation capabilities across a wide range of technologies will need to carefully assess whether PwC has the necessary talent.
• Geographic coverage — PwC's CRM coverage is strong within the U.S., U.K. and Germany. CRM coverage in Asia/Pacific is focused on Japan and Australia. PwC's CRM practice coverage is limited in other countries such as France, Spain, Italy, China, the Nordics and regions such Latin America and the Middle East when compared with the Leaders in this Magic Quadrant.

Tata Consultancy Services

TCS is positioned in the Challengers quadrant. TCS is a good fit for enterprises seeking multicountry and technology-heavy CRM projects. Gartner estimates that TCS is the seventh largest CRM service provider worldwide, with CRM revenue estimated to be between US$320 million and $340 million.

Strengths

• Growth — Gartner estimates that the TCS growth was among the highest in the market, with a growth rate of about 30% for CRM services in 2011.
• Technical skills — Compared with other vendors, TCS had above-average client feedback for technology competencies, including information architecture, data migration, information and analytics, SOA and technical architecture skills.
• Global delivery — TCS heavily utilizes India-based offshore resources on implementation projects. Reference customers said that TCS utilized offshore delivery for 63% of their services (the highest of the providers), with most other services being delivered on-site.
• Industries — TCS's greatest portion of CRM resource skills and project experience in North America is in banking and insurance, discrete manufacturing and then in telecommunications. In Europe, the skills are focused in the same industries but with an additional focus on retail.

Cautions

• Understanding the business and RFP responses — According to references from other providers that evaluated but did not select TCS, the two most common reasons that TCS lost competitive bids were that it did not demonstrate an understanding of the client's business requirements and that the RFP response was poor.
• Cultural fit — TCS was rated by its reference customers as relatively low in cultural fit in both North America and Europe.
• Business consulting — While TCS aims for more business roles, clients continue to perceive the company to be more technology-focused. Only 4% of references said that the project mix was more than 50% business strategy or process redesign compared with technology or software implementation. This compares with an average of 26% for all vendors and more than 45% for the Leaders in this Magic Quadrant.
• Vision — The TCS CRM practice was formed in 2000. From 2007 through 2009, TCS embedded its CRM practitioners within industry units, which reduced the overall TCS focus on CRM. In 2010, TCS recentralized its CRM practice globally and has been investing to rebuild the CRM practice. This approach has succeeded in better execution, and TCS has regained market traction. However, its vision focuses too heavily on technology-focused operational CRM implementation of projects and lacks focus on innovation in business-oriented complex CRM solutions, compared with competitors.

Wipro

Wipro is positioned in the Niche Players quadrant. Wipro is a good fit for enterprises seeking strong CRM technology implementation skills for all the major CRM platforms (including Oracle, SAP and salesforce.com). Gartner estimates that Wipro is the eighth largest CRM service provider worldwide, with CRM revenue between US$230 million and $245 million.

Strengths

• Value — Wipro utilizes solid offshore-centric teams that have been very effective and efficient and that complement on-site teams. Customer references rated Wipro as the highest in overall value among the CRM providers, reflecting consistent execution for relatively low fees.
• Balanced global delivery — Wipro makes extensive use of offshore capabilities in India on most implementation projects; however, Wipro is now delivering a higher proportion of work on-site. Reference customers said that Wipro delivers only 31% of the workload offshore, 21% off-site but in the same country and 48% on-site.
• Industries — Wipro's greatest portion of CRM resource skills and project experience in North America is in discrete manufacturing, banking and insurance, and telecommunications. In Europe, the skills are focused in the same industries but with an additional focus on utilities.

Cautions

• Customer satisfaction — In our reference checks, Wipro had one of the lowest overall customer satisfaction scores.
• Understanding the business and RFP responses — According to references from other providers that evaluated but did not select Wipro, the two most common reasons that Wipro lost competitive bids in 2011 were that it did not demonstrate an understanding of the business and that it also had poor RFP responses.
• Geographic coverage — Wipro's CRM local resource coverage is limited outside the U.S., the U.K., France, Germany, Australia and Saudi Arabia. Approximately 60% of revenue is from North America. The company is still relatively weak in Spain, Italy, Belgium, Denmark, Austria, Norway, China and South Korea when compared with the market leaders.
• Business consulting — Only 7% of references said that the project mix was more than 50% business strategy or process redesign compared with technology or software implementation. This compares with an average of 26% for all vendors and more than 45% for the Leaders in this Magic Quadrant.

Vendors Added or Dropped

We review and adjust our inclusion criteria for Magic Quadrants and MarketScopes as markets change. As a result of these adjustments, the mix of vendors in any Magic Quadrant or MarketScope may change over time. A vendor appearing in a Magic Quadrant or MarketScope one year and not the next does not necessarily indicate that we have changed our opinion of that vendor. This may be a reflection of a change in the market and, therefore, changed evaluation criteria, or a change of focus by a vendor.

Added

Logica

Dropped

Many vendors that appeared in either the 2010 CRM service Magic Quadrant for Europe or the 2010 CRM service Magic Quadrant for North America were dropped due to lack of scale in this year's combined worldwide analysis. These providers all continue to provide CRM services but did not meet the minimum revenue inclusion requirements for this assessment. These providers may be an excellent fit for CRM services based on the enterprise needs related to technology platform, geographic scope, vertical industry and/or CRM domain. These providers include:

• Patni Computer Systems (acquired by iGATE)
• T-Systems
• Siemens
• HCL Technologies
• Hitachi Consulting

This document is an update to Magic Quadrants done separately in the past for both North America and Europe. This Magic Quadrant combines the prior two assessments into a single worldwide assessment for CRM service providers that offer these services in multiple regions. Services include CRM strategy development, CRM solution architectures and designs, deployment of CRM solutions (from software vendors including Oracle, SAP, salesforce.com and Microsoft), customer CRM software development and integration, CRM analytics, and deployment and training (change management).

Gartner's Magic Quadrant research process involves primary research with direct client references supplied by the various CRM service providers and each service provider's representation of its organization. The analysis involves weighting both sources of information, with a heavy emphasis on client feedback. As a result, many of the individual categories have "client reference" criteria factored into the scoring. Gartner considers client feedback to be one of the most-critical measures of a service provider's success.

Gartner evaluates service providers on their ability to execute and their completeness of vision. When the two sets of criteria are evaluated together, the resulting analysis provides a view of how well the provider performs a spectrum of services compared with its peers and how well it is positioned for the future. This evaluation is a snapshot in time. The competitive nature of the CRM service provider market over time affects the relative position of evaluated companies. In addition to understanding positions in this Magic Quadrant, enterprises must conduct due diligence and check references. Enterprises also should ensure that their business culture is synergistic or, at a minimum, compatible with the service provider's culture. The most-critical criteria for project success are a provider's ability to work within an enterprise's business culture, and a provider's ability to work with an enterprise's people to effect the organizational change essential to a successful CRM program. This is more critical now for CRM services than ever due to the transformational nature of CRM deployments and the impact of enterprises changing how they interact internally and with customers and partners.

A broad group of providers offers CRM services. Magic Quadrants do not include all vendors in a given sector. Many service providers focus only on parts of the overall solution. Companies considered for evaluation in this Magic Quadrant research are those that act as advisors and provide implementation services that encompass most or all levels of a solution, as outlined above. Further, providers also were evaluated in more detail using a combination of quantitative and qualitative criteria. Note that vendors — assuming they meet the inclusion criteria — cannot elect to be excluded from a Magic Quadrant.

Quantitative Criteria for This Magic Quadrant

• Service providers that demonstrated CRM solution implementation service revenue derived from clients in both North America and Western Europe
• A minimum of $125 million (in U.S. dollars) for 2011 in CRM service revenue (excluding value-added reseller [VAR] revenue, outsourcing and managed service revenue, and software maintenance and support fees).

Qualitative Criteria for This Magic Quadrant

This Magic Quadrant focuses on the CRM-project-based services that include consulting and solution implementation services for North America and Europe (note that this research excludes managed services and outsourcing). The defining factor in this Magic Quadrant evaluation is that the service provider demonstrates the ability to implement solutions in large enterprises that are focused on enhancing CRM and customer experiences. CRM solutions increasingly require a broad set of business, consulting, technical and management disciplines that must be brought together seamlessly.

We evaluate the set of offerings for CRM programs that include the ability to provide:

• Advisory and consulting services on CRM solutions decisions
• Insight across industries for CRM solution decisions
• Consulting services for CRM architecture and design (technology) environments
• A comprehensive set of system integration and implementation services across the CRM products and technologies (both on-premises and SaaS-based)
• Ability to bring multiple business and technical domains into CRM solutions, including but not limited to business consulting, social CRM, mobility and digital, customer information and analytics, master data management, workflow and business process management

Based on these requirements, this analysis heavily weighted the ability of a service provider to bring a multidisciplinary approach to CRM business issues and consistently craft and deploy holistic solutions. Not to be overlooked, technology functions still play an important role; however, as those skills are closer to commoditization, we placed more weight to business-led, information-centric, mobility, social and analytic capabilities.

Provider evaluation was based on:

• Gartner analysts' interactions with enterprises, which reveal interest in specific CRM service providers
• Vendor demonstration of depth and breadth of CRM service capabilities
• The service provider's current and potential market impact, as measured by frequency of appearance on shortlists
• Ability to provide consulting and solution implementation services (including program and project management) across multiple CRM software platforms (such as from Oracle, SAP, salesforce.com, Microsoft, and so forth)
• References from customers that completed surveys related to the provider's vision, competencies and outcomes on recent CRM engagements

Many service providers focus only on parts of the overall solution. The companies evaluated in this research act as advisors and provide implementation services that encompass most or all levels of a CRM solution, and the vendors were then evaluated in more detail using a combination of quantitative and qualitative criteria, as outlined earlier.

Evaluation Criteria

Ability to Execute

Gartner analysts evaluate service providers on the quality and efficacy of the processes, systems, methods or procedures that enable IT provider performance to be competitive, efficient and effective, and to positively impact revenue, retention and reputation. Ultimately, service providers are judged on their ability and success in capitalizing on their vision.

Product/Service: Core services offered by the provider that compete in/serve the CRM service market. This includes current service offerings, as defined in the market definition and expressed by growth, capacity, market penetration, skills availability, breadth and depth of offering, and so forth. Subcategories include:

• Assessment of services in key CRM business skills for sales, marketing and CSS
• Analysis of technical knowledge and skills
• Assessment of a provider's ability to develop services to meet emerging market needs

Overall Viability (Business Unit, Financial, Strategy, Organization): Viability includes an assessment of the overall organization's financial health, the financial and practical success of the business unit and the likelihood of the individual business unit to continue to invest in the service, continue offering the service and advancing the state of the art within the organization's portfolio of services.

Sales Execution/Pricing: The technology provider's capabilities in all presales activities and the structure that supports them. This includes solution visualization, deal management, pricing and negotiation, presales support and the overall effectiveness of the sales channel.

Market Responsiveness and Track Record: Ability to respond and adapt to changing competitive forces as opportunities develop, competitors act, customer needs evolve and market dynamics change. This criterion also considers the provider's history of responsiveness, and the ability to quickly address changing requirements.

Customer Experience: This criterion considers the provider's:

• Specific client feedback on the their experience working with CRM external service providers (ESPs)
• Demonstrated ability to deliver on key metrics that drive the overall "client experience" when working with a CRM ESP

Operations: The ability of the organization to meet its goals and commitments. Factors include the quality of the organizational structure, including skills, experiences, programs, systems and other vehicles that enable the organization to operate effectively and efficiently on an ongoing basis. Subcategories include:

• Organizational and business model
• Applied use of methodologies
• Global delivery model capabilities

Source: Gartner

Completeness of Vision

Gartner analysts evaluate service providers on their ability to convincingly articulate logical statements about current and future market direction, innovation, customer needs, and competitive forces and how well they map to the Gartner position. Ultimately, service providers are rated on their understanding of how market forces can be exploited to create opportunity for the provider.

Market Understanding: Ability of the provider to understand buyers' needs and translate these needs into products and services. This will include both business and technology buyers across all three CRM domains. Vendors that show the highest degree of vision listen to and understand buyers' wants and needs, and can shape or enhance those wants and needs with their added vision. Subcategories include:

• Service provider's knowledge and articulation of key market direction and trends
• The analysis of the service provider's executive leadership (including thought leadership, continuity, operational capabilities, and so forth)

Marketing Strategy: A clear CRM service marketing strategy with a differentiated set of messages consistently communicated throughout the organization and externalized through appropriate channels emphasizing differentiated positioning statements. This will clearly specify targeted markets, solutions and differentiating characteristics.

Sales Strategy: The strategy for selling CRM services that uses the appropriate network of direct and indirect sales, partner networking and alliance relationships that extend market reach to both prospects and the customer base.

Offering (Product) Strategy: A technology provider's approach to solution development and delivery that emphasizes differentiation, functionality, methodology, and feature set as they map to current and future requirements. Subcategories include:

• Service provider's strategies for partnerships and alliances
• Vision for creating new and/or additional CRM business
• Integration of multiple domains (business and technical) into solution

Vertical/Industry Strategy: The technology provider's strategy to direct resources, skills and offerings to meet the specific needs of individual market segments, including verticals.

Innovation: Direct, related, complementary and synergistic layouts of resources, expertise or capital for investment, consolidation, defensive or pre-emptive purposes. Subcategories include:

• Approach to customer experience design and development
• Sustainable investment in proactive tools, methods and/or locations for CRM solution development
• CRM solution development that addresses vertical or process-specific instances and integration of multiple competencies and disciplines

Geographic Strategy: The technology provider's strategy to direct resources, skills and offerings to meet the specific needs of geographies outside the "home" or native geography, either directly or through partners, channels and subsidiaries, as appropriate for that geography and market.

Source: Gartner

Quadrant Descriptions

Leaders

Leaders are performing well today, gaining traction and mind share in the market; they have a clear vision of market direction and are actively building competencies to sustain their leadership position in the market.

Challengers

Challengers execute well today for the portfolio of work selected, but they have a less-defined view of market direction. Consequently, these service providers may be the "up and comers" of the future, or they may not be aggressive and proactive enough in preparing for the future.

Visionaries

Visionaries articulate important market trends and direction. However, they may not be in a position to fully deliver and consistently execute. They may need to improve their optimization of service delivery.

Niche Players

Niche Players focus on a particular segment of the market as defined by such characteristics as functional area (that is, sales, marketing or service), vertical industry, client size or project complexity. Their ability to execute is limited to those focus areas and, therefore, is assessed accordingly. Their ability to innovate may be affected by this narrow focus.

The Magic Quadrant for CRM service providers analyzes the market for CRM consulting and solution implementation services. The relative positioning of vendors in this Magic Quadrant is based on inclusion criteria and key criteria for evaluating the ability to execute and completeness of vision. Consulting and solution implementation projects require a blend of business, industry, technology, project and program management skills that must align with your objectives, institutional and business culture, and employees. Do not simply select service providers in the Leaders quadrant. All selection processes are enterprise-specific; consequently, vendors in the Challengers, Visionaries or Niche Players quadrants may prove to be more appropriate for your requirements. Many smaller service providers not covered in this Magic Quadrant may be appropriate for your needs on smaller or regional-specific projects.

What Happened?

Over the past 10 years, CRM-related services have focused on the strategy and deployment of CRM software to support the sales and marketing operations of enterprises. Services to plan, customize, integrate and deploy these solutions were large, time-consuming and expensive initiatives. Typically the cost of consulting, implementation and management services was three to six times the cost of the software licenses, and Gartner has occasionally observed projects being as large as 10 times the cost of software. In addition to the services for initial deployment, there are also software maintenance fees (typically 16% to 22% of license fee) as well as ongoing application management services, with multiyear contracts being similar to the initial deployment fees. Thus, the total service fees over the life of the software have often been 10 to 15 times the initial license fees for the software. This investment has also had limited flexibility due to the level of customization of the implemented solution, along with the complexity of the business and technical environments.

Business executives have become the primary drivers for CRM solutions, and they have become less tolerant of large-scale software implementations and are also looking to CRM solutions to drive revenue growth. There has been a shift from the focus on large-scale CRM software deployments to a holistic view of the customer from an enterprise perspective. This focus shifted the consulting and system integration efforts related to CRM from software deployment to how the information related to the customers is integrated into the operational fabric of the enterprise.

What's Happening?

The CRM services market is estimated to be $30 billion, with robust growth forecast for enterprise application services from 2010 through 2015 (7.1% compound annual growth rate), which is significantly higher than most other application services (for more information, see "Forecast Analysis: Application Solution Services, Worldwide, 2010-2015"). During the past one to two years, disruptive forces — such as social CRM, mobility and cloud computing — are catalysts to force organizations to rearchitect their CRM strategy and integrate the sales and marketing components in a more holistic way that redefines the front-office operations and also integrates these with the existing back-office processes and systems. This requires an increased emphasis on enterprise architectures and information architectures that integrate the CRM applications into the business operations and with other operational systems (that is, ERP, supply chain management and electronic commerce). The architectures and integration will be different for each vertical and each enterprise, so this shift also requires much more of a business-centric consultative approach, with some level of vertical expertise, technology consulting, design and system integration efforts than stand-alone CRM software deployments. This shift encompasses data warehouse, analytics and BI competencies to derive maximum usage of the CRM analytics as part of sales performance improvements, customer service and enhanced marketing campaigns.

SaaS-based CRM and customer analytics are now part of most CRM solutions, and early leaders have found great return on these multidimensional initiatives that increase the richness and pervasiveness of the customer experience. Led by salesforce.com, SaaS now accounts for 31% of the CRM software market and is growing at 36% annually, which is three times the rate of on-premises CRM solutions. This rapid shift from large on-premises CRM to SaaS is having a dramatic impact on application services. Service providers are faced with maintaining the revenue streams from large on-premises CRM as the transition to the new multidimensional CRM solutions are taking place. Therefore, while traditional on-premises CRM solutions will still be the core for most CRM service providers, to compete effectively, providers must also offer multidimensional solutions that involve SaaS, mobile, business process management (BPM), social CRM and customer analytics that are integrated around CRM information. A more detailed discussion and marketplace implications can be found in "Competitive Landscape: CRM Service Providers, North America and Western Europe" and "Competitive Landscape: CRM Service Providers, Asia/Pacific."

How to Use This Magic Quadrant

Selecting the right CRM service provider requires focused and deliberate evaluation. The market for CRM services is maturing, but the ability to address complexity from business perspectives as well as achieve complex technology integration will be highly differentiating for the next few years. These factors have led providers to re-establish their CRM strategic focus, market strategies and competitive aims, forcing new approaches to differentiation and, thus, leading to changes in positions of providers included in the 2012 results. This year's Magic Quadrant saw notable shifts in the positioning of vendors, including:

• The first offshore heritage provider positioned in the Leaders quadrant
• Realignment of the Leaders
• Separation of "India-centric" providers
• Emergence of consultancies as CRM visionaries

While positions are helpful to understand the relative strengths and weaknesses, this research reflects providers whose focus on CRM produces scalable breadth and depth for this blend of business and technology skills. Use this Magic Quadrant to help inform your thinking, recognizing, however, that Leaders — as indicated by position — may not be the right fit for your business simply because of that positioning. Gartner offers an array of IT sourcing life cycle research, insight, tools and templates to assist your decision making for simple or complex project needs.