Analyst(s):Michael Maoz, Brian Manusama
Vendor positions in this Magic Quadrant reflect the growing demand for cloud-based customer service applications to support customer engagement through multiple channels, including those powered by AI. It remains the case that no vendor offers a suite that meets all global and cross-industry needs.
By 2019, over 85% of new packaged customer service and support software will be delivered on a cloud-based model, and SaaS will emerge as an essential selection factor for CRM customer engagement centers in all geographies and for all but the most complex processes.
Through 2019, an ecosystem containing at least four types of product and vendor will be required to build the ideal customer engagement center, the core of which will be an intelligent system for CRM case management.
By 2019, requests for customer support through consumer messaging apps will exceed requests for customer support through social media.
This Magic Quadrant examines the global market for customer service and support applications designed to enable customer service and support agents to engage customers through their preferred communication channel. It covers a wide range of customer service applications for organizations with customer engagement centers (CECs), ranging from the very small (fewer than 20 agents) through the averagely sized (50 agents) to the very large, distributed centers (over 10,000 agents).
At the heart of a CEC is a case management and problem resolution system. It requires a strong ability to create, split, federate, join, assign and escalate cases, to provide more than a marginal benefit to a CRM initiative.
The functionalities evaluated in this Magic Quadrant include those for knowledge-enabled service resolution, social media/community management and offer management. Also evaluated are interaction assistance tools and service analytics dashboards. Ideally, the applications should have tools for both agents and customers, and the vendors should have a clear point of view on how to escalate customer support from self-service to human agents and back again, while retaining the context of the interaction for reporting and future customer engagements.
The agent tools must be designed to operate seamlessly on a common platform, through common development and integration tools, open APIs, and a common graphical user interface.
As an overall set of technical and design considerations, in 2017, we place an emphasis on:
Scalable cloud-based systems
Native mobile support of vendors' customer service and support business applications
Real-time and predictive analytics
Multimodal capabilities, such as chat within mobile self-service
Support for both self-service and assisted service across device types
Context mining of voice and text
Social media engagement
Connection to the Internet of Things (IoT)
Agent guidance and nurturing
Automation of engagement using artificial intelligence (AI)-like bots and virtual agents
Digital workflow/business process management support
Use of knowledge management
The software functionality weightings for this Magic Quadrant reflect the most common requirements expressed by Gartner clients, and our view of how requirements are evolving. They are as follows:
Case management/problem/service resolution (and controls the customer master data): 20%
Knowledge-based solution with multisource search optimization: 10%
Real-time guidance/decision support: 10%
Email, chat, collaboration, cobrowsing and workflow with virtual assistant tools: 10%
Mobile support (chat, messaging, video presence, and knowledge management/content): 10%
Predictive customer analytics (e.g., sentiment, emotion, intent): 10%
Adaptive business rule engine: 5%
Social media engagement management: 5%
Support for collaborative online communities: 5%
Support for video libraries and video: 5%
Enterprise feedback management: 5%
Virtual customer assistant: 5%
IoT connections (visionary, but not weighted): 0%
Factors affecting our evaluations included the extent of a vendor's presence in the market and the observed momentum of its growth. A vendor with stagnant sales, an ineffectual marketing organization, or a vision that does not keep pace with emerging customer needs should concern prospective buyers.
Note: A product that does not control the customer master data during the customer interaction will not be a Leader, but could be a Challenger, Niche Player or Visionary.
Source: Gartner (May 2017)
Approximately 65% of bpm'online's customers are in Europe, where the company was based originally. Those using the vendor's customer service and support product average approximately 45 users each, though there are several instances of over 500 users. An advantage of the product is the availability of both marketing and sales functionality, in addition to customer service. Results from a Gartner survey of close to 200 companies looking for a CEC solution show that bpm'online's name is recognized primarily in central and eastern Europe, the U.K. and, to a lesser extent, Asia and Australia. Its core strengths are an attractive and intuitive user interface, and its relatively attractive price in comparison with the cost of large-enterprise CRM systems.
Bpm'online's product supports both on-premises and cloud-based configurations, so provides greater deployment flexibility.
Surveyed reference customers scored bpm'online highly for delivering out-of-the-box customer service processes, and straightforward case routing and management capabilities.
Bpm'online's product is easy to configure and modify, with training. Its scalability and security stand out, and it received the highest scores of all vendors evaluated for ease of use.
Bpm'online scored highly in the survey results for "cost to value." Although it is not necessarily the least-expensive option, customers perceive its sophistication to be worth the associated outlay.
Gartner has not spoken with bpm'online reference customers in complex customer service environments (retail banking, health insurance, telecommunications), or in large U.S. customer support environments.
Bpm'online customers often turn to third-party technologies for channels such as social media, mobile chat and video.
Surveyed reference customers indicated that they expected better integration capabilities than they received from bpm'online.
CRMNEXT's CEC functionality is interesting for its strong emphasis on sales force automation and customer service, and its strength in the financial advisor area. Based in India and with new offices in the U.S., CRMNEXT is a division of Acidaes Solutions. Most of its presence is in Asia/Pacific and parts of the Middle East. It has a strong presence in large-scale financial services institutions, and 80% of its revenue comes from this industry. It has very large customers, with its average customer support organization having over 10,000 users. CRMNEXT has direct sales channels in the U.S., India, Southeast Asia and the Middle East, but relies on partners outside those regions.
CRMNEXT has good presence in India, Hong Kong and Singapore, and has reach in parts of the Middle East and Africa. New operations in the U.S. are extending its reach.
CRMNEXT's system is very flexible and has built-in analytics and workflow capabilities. Its product received high scores for cost to value, or ROI, in comparison to those of its competitors. Its product supports SaaS and on-premises deployments, with both versions priced in the lower range for CEC solutions.
CRMNEXT's professional services team has good understanding of product and business processes, specifically in the financial services sector. Recent partnerships with global professional services firms open up the possibility of greater appeal to a wider range of prospective customers.
CRMNEXT has created an application framework that enables organizations to design their own business flows. The involvement of its customers in design considerations and code-free modeling shows promise.
CRMNEXT's ability to scale is a key strength.
CRMNEXT's reach is very limited beyond India, some other parts of Asia and the Gulf Cooperation Council states. There is little third-party knowledge to offer its customers an alternative to the vendor's own resources for consulting services.
CRMNEXT's limited number of independent software vendor (ISV) partners is an issue for clients needing to fill functionality gaps in its product.
CRMNEXT must boost its number of technical resources in the U.S. and Europe to attract new customers in these geographies.
Although CRMNEXT's product has no inherent limitations for customer service in multiple industries, industries other than financial services should carefully evaluate its fit to their specific use cases.
Reference customers consider that the social media engagement and mobile messaging components of CRMNEXT's product need improvement.
After moving to SaaS and expanding its unified multichannel customer service product suite, this publicly traded, U.S.-based company makes its debut in the Magic Quadrant this year. In its fiscal 2016, eGain lost money and had revenue of $69.4 million, down 9% from a year earlier. The company offers a suite of customer engagement solutions, after years of investing in technology that supports chatbot, real-time collaboration, virtual customer assistant and other AI capabilities. The eGain customer base is a mix of midsize and large B2C companies. Most of its presence is in the U.S. and Europe.
eGain has a strong offering in support of knowledge management, which is complemented by virtual assistant and AI reasoning capabilities.
eGain has a "try and buy" technology consumption model that has a success rate of more than 70%. Customers can try the product for a few weeks in a production cloud pilot, with no charge or obligation to buy.
eGain is successful at bringing attention to leading-edge technology concepts for customer service, and showcasing client success.
eGain has a good global presence, with deployment teams in Europe and the U.S.
eGain is a publicly traded company that ended 2016 without a profit, and EBITDA has been an issue for the past two years. These can be attributed to its transition to the SaaS model — the company has been generating positive cash flow.
Reference customers want better professional services and technical support during and after deployment, and indicate that delivery of projects leaves room for improvement. eGain recently launched a customer success program to ensure business value to customers.
eGain's solution is not generally used as a replacement for a customer service system with case management. Instead, it is generally used either as a layer of applications that helps customers navigate between channels, or as a complement to the existing CRM system. This may change with the just-announced v. 17 with an all-in-one desktop version.
Clients of eGain report that they want better functionality within the product suite (excepting knowledge, social and email management capabilities, where it was scored as strong).
Eptica primarily serves the B2C midmarket with deployments for approximately 100 agents. Eptica celebrated its 15-year anniversary in 2016, launching new branding and positioning. Its solution is available both on-premises and in the cloud, and it has a good spread of customers across these deployment modes. It is geared toward customer self-service, and includes engagement tools that augment, rather than replace, existing customer service software packages. Eptica's years of investments in natural-language programming (NLP) are helping it as the use of cognitive tools matures.
Eptica's solution has strong NLP and AI capabilities for understanding, routing and automatically suggesting responses to text-based customer interactions.
Eptica's solution has strong knowledge management capabilities with self-learning features, supported by NLP-based linguistic capabilities. Well-documented, open APIs enable the creation of a single knowledge base for web, social media and mobile self-service.
Eptica has elaborate partnerships with established contact center infrastructure providers, system integrators and business process outsourcers.
Clients have expressed great satisfaction with most of Eptica's product features, such as mobile chat, enterprise feedback management and video support.
Eptica is a good provider for Europe, but prospective customers elsewhere should be careful to check its references as its success outside Europe remains limited.
Eptica's reference customers informed us of frustration during and after the deployment phase, expressing their wish for better professional services and technical support.
Eptica's solution is not generally used as a replacement for a customer service system, but as a layer of applications that helps customers navigate between channels.
Components of Eptica's solution may be delivered by third-party vendors.
The core of the Freshdesk market is in the U.S. Next to serving small businesses, it has a fair customer base of midsize organizations that make departmental use of the Freshdesk product. The majority of its CEC deployments are fewer than 50 agents. The company continues to make acquisitions to complete its cloud-based solution, and has secured another round of investment capital to build a broader offering for its core market.
Freshdesk has a presence on several continents, and its customer service product is deployed in over 100 countries. Its support organization has good references from small and midsize customers.
Freshdesk's solution is very good at the basics of case management, including simple routing and escalation. Its system is intuitive and user-friendly, with an appealing user interface. It could be suitable for many smaller organizations with uncomplicated support needs.
Freshdesk Marketplace holds over 100 apps to support the core product and open up an ecosystem for developers, customers and partners.
Freshdesk has invested in strengthening its management team in terms of sales and engineering expertise.
Despite the richness of Freshdesk's solution suite, reference customers gave its CEC functions a score slightly below the average for vendors in this Magic Quadrant.
Although it has shown improvements in sales, sales capabilities, marketing and brand awareness, Freshdesk needs further improvements in sales capabilities and marketing strategy to attract midsize and/or enterprise recognition.
Gartner has not seen clients selecting Freshdesk's product for support organizations if they have complex business process needs — specifically, a high volume of interactions and five or more integration points with live data from legacy systems.
The heart of U.S.-based Lithium's customer service offering is the Lithium Engagement Platform, which combines the management of online communities and social media engagement. Typical installations of the customer service agent pool are under 50 users, which reflects its suitability for most social media engagement needs — it can scale to support more users. Lithium has work to do in marketing its capabilities for conversational user interfaces, chatbots and mobile messaging. Gartner has not seen it appear on shortlists for traditional customer service agent desktops. Instead, it supports customer engagement on social channels, as well as in its online customer communities.
Lithium is at the leading edge of customer support for a wide range of industries that wish to center customer service around the social and community experience. Its software is used in key markets (North America, Western Europe, Asia and Australia) and in many industries, including telecommunications (wireline/wireless carriers), consumer goods, retail, banking and hospitality.
Lithium is very strong at supporting customers seeking answers or support on social media channels such as Twitter and Facebook Messenger. Few companies offer both the community components and the social media engagement to create support cases where necessary, as well as strong analytics to help improve processes.
Lithium offers more than just customer support — additional value lies in promoting and strengthening corporate brands in terms of influencer management for marketing, sales and service. Its strength in gamification is especially helpful.
Lithium offers good capabilities to take conversations that begin in a public area, such as social networks and online communities, and continue them as one-to-one conversations, during which a company can use more of its information about individual customers.
Businesses that are looking for a core customer service agent desktop to do case management or activities such as upselling, cross-selling or creating CRM workflows will not find the required functionality from Lithium.
Functionality customization, system extension and complex back-end/legacy data integration are not strong features of Lithium's system.
Lithium does not offer a complete customer self-service solution that covers email, some aspects of knowledge management, co-browsing, video agents and virtual customer assistants.
Microsoft has repositioned its customer service software as an independent module within the newly branded Microsoft Dynamics 365, which is based on a cloud model that gives businesses the option of a private instance and database.
The on-premises product continues to account for the majority of the references for larger and more complex customer service requirements. New business is directed to the online model, where standard capabilities are improving. Microsoft has told us that the seamless transition of the CRM platform to Azure is nearing completion in 2017.
Microsoft offers an intuitive user interface and straightforward customization tools, which lead to fast setup of standard customer service environments.
Microsoft Dynamics 365 is a modular set of products that extend beyond customer service and share a common data service. Organizations can add other Dynamics 365 capabilities such as sales, procurement and field service.
Microsoft is one of the world's most financially stable and profitable software companies. Its product integrates with software lines that have over 1 billion users. It includes Microsoft Exchange, Office, SharePoint and an expanding set of Azure products, such as Azure Machine Learning and the Cortana Intelligence Suite.
Microsoft continues to offer both on-premises and online versions with the same or similar functionalities on the same code base. It supports a wide range of local languages. It is one of few options available to organizations in regions or industries that are unable or unready to use the cloud.
Microsoft has incorporated Unified Service Desk into its customer service product. It provides better integration capabilities as a result, as well as cloud-based field service and partnerships with third-party providers of telephony, chat and video services.
Due to repackaging of the product with more out-of-the-box functionality, Microsoft's pricing for customers using Dynamics 365 for Customer Service has increased significantly. Low total cost of ownership is no longer such a strong motivator for customers using only this module.
Although Microsoft claims to be increasing its management breadth as well as presales and direct sales personnel, it needs to do more to solve shortage in these areas, which leads to suboptimal penetration of messaging and product demonstrations, especially for complex cloud environments.
Microsoft Dynamics 365 is not purpose-built for specific industries. Microsoft has only a limited number of partners that have built templates or marketplaces that can be used across businesses and upgraded easily.
Microsoft's track record for attracting ISV partners continues to be an issue for clients wanting both business process experts and technology experts to improve their business acumen and plug functionality gaps. Clients have expressed frustration with external professional services partners' level of knowledge of Microsoft's latest product versions, and understanding of how a modern, best-in-class customer service center should be designed and built for their industry clients. Microsoft is increasing focus on new certifications and requisite partner training.
A U.K.-based provider of CEC and field service support technologies, mplsystems offers a solution particularly suited to environments that require a complex, guided contact-handling capability. The company is very good at helping clients understand the best processes for their business, and at creating solutions for them without protracted development projects. In comparison with last year, clients have been responding positively to the changes being made by mplsystems in project management and customer support to improve services.
Mplsystems has strong domain knowledge and experience within its primary target industries of retail, financial services, manufacturing and outsourced services. It has a good attitude toward training and support.
Mplsystems' solution has good configurability, scalability and flexibility, which enables customers to tailor it to their specific needs. Customers see its business workflow capabilities and knowledge base as its strong components.
With its intelligentDesktop offering, mplsystems has a differentiator that makes complex support simpler. It has a good interface, supports embedded contextual content, and uses NLP within its chat and email functionality.
Until recently, mplsystems' deployments were relatively limited in scope. It will take time for its recent, more sophisticated and multichannel deployments to become referenceable, and to confirm that it is a viable provider of CEC solutions across all channels.
Mplsystems' social and web community capabilities received low scores from surveyed reference customers.
Although there is expansion in its footprint, mplsystems is still mainly a U.K. player — the majority of its sales are in Europe and predominantly in the U.K.
Oracle has shown renewed commitment to its CRM application sector, with increased product development and new releases raising market awareness of its customer service software. Oracle Service Cloud also demonstrated innovations for customer service in 2016, including AI, virtual assistance, messaging channels and IoT, to drive business value. Combined with the vendor's new marketing initiatives, both existing and prospective customers are benefiting, with the latter showing greater interest in Oracle's portfolio. Our survey shows that Oracle is one of the top-four vendors mentioned by clients looking for a customer service solution.
Oracle Service Cloud has very good complementary applications, such as for field service, web and mobile self-service, analytics, co-browsing, policy automation, chat, and email.
With its Knowledge Foundation and Knowledge Advanced solutions, Oracle offers one of the most scalable and functional Knowledge solutions among service suite vendors.
Oracle Service Cloud is the focus of a strong effort within the company to create a more unified set of products, workflows and business use cases across the wider Oracle Customer Experience Cloud Suite application portfolio.
Delivered as a subscription service using a cloud model, Oracle Service Cloud is straightforward to set up and configure, and does not require deep involvement from IT staff.
Reference customers have encountered a range of operational challenges with Oracle Service Cloud. They identified problems around the pricing model as well as the lack of professional services and support.
One of Oracle's main CEC product features, Case Management, including service request and activity management, scored lower than the average of all participating vendors.
Although the number is growing, Gartner continues to see a limited number of ISVs creating CRM software specifically for the Oracle Service Cloud product line, or building on the Oracle application development stack.
The Oracle business application sales organization is often not as well prepared as other customer service and support software vendors are at describing the business scenarios, or the production references that prospects would like to see in order to make decisions.
U.S.-based Pegasystems has recently come to market with an extended set of capabilities it describes collectively as its Customer Decision Hub. Its products are shortlisted primarily in environments where there are frequent changes to highly complex customer service processes. Pegasystems is a profitable company that generated over $750 million in revenue in 2016. Its business is dedicated to customer engagement and business process optimization. With approximately 4,000 employees worldwide, it is among the top-three thought leaders in the CRM industry. Pegasystems' SaaS revenue, though only 8% of its total revenue, was its fastest-growing revenue type in 2016.
The Pegasystems Pega 7 platform can scale up to cater for extremely large deployments (5,000 or more users) in key industries such as banking, health insurance and high-tech manufacturing. It includes components for marketing, real-time decision support, B2B sales automation and field service.
Pegasystems supports many business models and delivery models, from business process outsourcing to the cloud, mobile, web and on-premises. It has the best ability to build, maintain and change complex cases of any CRM vendor. This means that the system can ingest targeted, contextual information (whether content, data or rules), depending on the need.
Reference customers gave Pegasystems' overall package the best cost-to-value rating of any solution assessed for vendors in the Leaders quadrant.
In the CEC sector and the CRM market overall, Pegasystems has the strongest ability in, and received the highest reference customer scores for, modeling and predicting customer behavior, and for communicating the next action to agents.
Pegasystems delivers industry-specific best practices for the insurance, healthcare and financial services sectors, as well as prebuilt templates that accelerate adoption. Gartner has also seen it move into customer service for the telecommunications field.
All of Pegasystems' large-scale reference customers with complex needs were using Pega 7 on-premises, so Gartner has not been able to assess the performance of the product's cloud/SaaS capabilities at scale.
Integrating the system with real-time data sources as well as with the telephone infrastructure remains challenging. It is also a challenge to find available Pegasystems professional services resources trained on the most recent versions of the system.
Pegasystems is mostly shortlisted for environments with frequent changes to complex processes, so may not be suited to prospects with simple CEC processes and low-level/frequency process changes.
The learning curve for achieving competence in configuring and customizing Pegasystems' offering is longer than it is for simpler packages. Although the resource pool has increased, some clients still report issues finding trained and talented third-party resources for building, extending and integrating the system. Some say that it requires a commitment from IT staff to learn and maintain new system skills.
Reference customers cite the selection of Salesforce Service Cloud as part of a broader initiative to eventually bring it together with other business application clouds, such as Sales Cloud, Marketing Cloud and the App Cloud. Gartner estimates that 20% of Salesforce's new revenue came from Service Cloud in 2016, making Salesforce the leading CEC vendor measured by sales volume (it expects to exceed $2 billion in 2017). Salesforce is not, however, a leading vendor in its capabilities to deploy in complex B2C service centers.
Salesforce customers — particularly large enterprises — see the vendor not just as a CRM software provider, but as a strategic advisor on how to innovate and grow their business overall. This is a rare position of trust that very few competitors can match.
For B2B customer service operations — especially those with an established Salesforce presence in the sales department, Service Cloud is a routinely shortlisted product in the U.S., Western Europe, Japan, Australia and New Zealand. New partnerships are bringing Salesforce into the public sector as well as the communications and media, and insurance sectors.
Key new customers — both B2B and B2C — have shown enough faith in the CEC product to invest more than $10 million per year in Salesforce, while retiring ageing homegrown systems and/or systems from competitors. They consider the Salesforce application platform to be a strategic asset.
Salesforce's enormous influence in the market has attracted a global list of key system integrators and several hundred complementary software providers, as well as over 3,500 applications to the Salesforce AppExchange.
The emerging capability to blend analytics, marketing, the IoT and customer service through the Salesforce platform, together with a wide choice of AppExchange partners, attracts many businesses to the customer service platform as well as the broader Salesforce ecosystem.
Many enterprises are not convinced that a multitenant, cloud/SaaS-only product will scale, integrate with real-time legacy systems (including IVR) or older billing and procurement systems, or have the low latency required for complex B2C environments.
Salesforce may not have the required capabilities for businesses with business process management needs (environments with rapid process change or complex processes).
Though most reference customers find the support they receive from Salesforce to be good, some pointed to a lack of clarity about the pace of delivery of new functionality, and the limitations of existing customer service functionality.
It can be very time-consuming and expensive to arrive at an industry-specific version of the product. Salesforce still offers only limited ability to build and support a global-class B2C CEC product. For large-scale, high-volume, complex CECs where processes must be continually synchronized and monitored (e.g., retail banking, loan origination, insurance policy administration), we recommend checking references for implementations of similar size and complexity.
Customers have expressed concern about high prices and vendor lock-in after integrating multiple Salesforce components or adding third-party components for industry-specific implementation. As clients gain more-complex CEC capabilities, they encounter maintenance complexities regarding upgrades, which are perceived as too frequent.
After a year of establishing the SAP Hybris Service Cloud brand, SAP is reporting 500 customers for the brand across multiple industries and regions. Although momentum is growing again for the products, prospective customers report to Gartner that SAP's marketing messaging for the CEC is still challenging. There are two established products: SAP Hybris Service Cloud (the version for customer service being the multitenant SAP Hybris Service Cloud) and the older, on-premises SAP CRM 7.0 system. Both these products are sold for use in case management. The cloud product comes in Standard, Professional and Enterprise editions. Reference customers in large and complex environments did not score the stability and reliability of SAP Hybris Service Cloud highly.
SAP products for contextual, unified communications (such as chat, video chat, co-browsing, audio chat and email) are based on the SAP Hybris as a Service (YaaS) microservices platform, and extend the core customer service applications.
From an organization perspective, SAP has shown a large increase in the number of resources across all functions, including sales, marketing, service and delivery, making SAP Hybris presentable as a global organization.
SAP has a broad set of features for customer service: a customer portal, social media engagement functions, integration with Facebook and other social media, SAP Business Warehouse analytics, field service features, and customer self-service features.
SAP has added SAP Clea machine learning to its general solutions. It could be directed at AI-driven customer engagement, with virtual customer assistants for customers and digital assistants to support employees in their daily activities.
SAP's reference customers noted that implementations were complex, but expressed satisfaction with the good support received from SAP.
SAP's future development for CECs appears focused on SAP Hybris as a Service (its YaaS platform), which is not yet proven as a platform for enterprise CECs. There is a confusion in the market as to how YaaS is evolving. SAP has shared that YaaS will run on SAP Cloud Platform (SCP) in addition to other cloud platforms.
Gartner has still not seen SAP Hybris Service Cloud used in a scalable, stable and complex deployment — that is, one with a high volume of interactions and five or more integration points with live data from legacy systems.
With a still-significant number of users, the on-premises SAP Interaction Center user interface is falling behind the best of breed. In addition, SAP's mobile apps to support customer self-service — contextual chat, knowledge management, video and co-browsing (much of it handled by partners), and complex case routing — were not rated highly by its reference customers.
SAP client references showed that the cost of the professional services, as a percentage of product deployment, is higher than that of most peer implementations.
U.S.-based ServiceNow, a new entrant to the Magic Quadrant, is a rapidly growing provider of cloud/SaaS business applications with approximately $1.5 billion in revenue and 4,800 employees focused on workflow improvements and agility for processes such as IT, help desk and customer service. Although software subscriptions for its customer service system amount only to between $25 and $40 million, Gartner believes that the strength of ServiceNow's installed base alone should drive strong growth in customer service applications.
ServiceNow's revenue is growing by over 35% per year, and it has customers around the globe.
ServiceNow's workflow and automation, user interface, and out-of-the-box functionality for technical support shorten the time to implementation.
As the product is on the same code base as ServiceNow's IT service management and IT operations management solutions, it has very few bugs. Customers already using other ServiceNow products should investigate the product for customer service.
The ServiceNow product for customer service is new so comes with expected issues: insufficient choice of professional services, from both within the company and third parties; limited integration capabilities with complex legacy back-end systems; and immature testing environments for all supported channels, such as customer portals and mobile messaging systems.
At this stage in its life cycle, ServiceNow's product is recommended for asset-centric support processes (analyzing software or device problems, password issues, faults). Customers looking for customer-centric process support (focused on customer nature/life time value, upselling, cross-selling and real-time offers) may consider looking elsewhere if they are in industries for which references are still emerging (e.g., insurance, hospitality, consumer goods manufacturing, retail).
For ServiceNow, we have not identified professional services partners that help specifically to improve the overall customer digital experience, or the social media engagement processes that are increasingly common ways of engaging with enterprises.
U.S.-based SugarCRM is one of the 10 most-asked-about CRM product vendors for customer service and support in Gartner's customer inquiry data. It is a privately held company with revenue of $125 million in 2016 (Gartner estimate), of which 20% may be attributable to the CEC sector. Most SugarCRM deployments in the CEC sector are in small and midsize support organizations that are existing SugarCRM clients. For this Magic Quadrant, we examined SugarCRM Enterprise v. 7.7.
SugarCRM's CEC product is available globally both on-premises and in the cloud, which is a big advantage for companies worried about latency. The vendor continues to release frequent enhancements.
SugarCRM's basic features for problem resolution, case management and case routing were scored highly by reference customers for ease of setup and management. It is relatively straightforward to take over system maintenance, configuration and customization after implementation. The vendor has good workflow and routing capabilities.
SugarCRM's interface is easy to configure and navigate. The vendor uses an open-source stack, giving customers access to a significant number of open-source developers worldwide. The product has new, significant improvements in terms of customization tools and performance with mobile apps.
Small and midsize support organizations already using or planning to deploy sales automation, especially in B2B settings, should consider shortlisting SugarCRM's product. The cost of its software is below the average for the top-five CEC solution providers.
Reference customers scored SugarCRM's product below average for enterprise feedback management, case escalation and routing, advanced email management, knowledge management, and predictive analytics. SugarCRM has added more-advanced workflow and routing to its Enterprise edition, but some customers may not have deployed this advanced feature.
Without the visual process designer, SugarCRM's product is not strong in terms of its provision of industry templates or out-of-the-box, industry-specific functionality, business process flows or modeling tools. SugarCRM relies on partners to deliver industry-specific solutions.
While SugarCRM has open SOAP and REST APIs, its product does not provide out-of-the-box connectors to legacy or homegrown systems. This may explain the lower customer reference scores in these areas.
SugarCRM is in the process of ramping up system integrator relationships, which are currently limited.
Zendesk has one of the largest customer bases for its customer support product (approximately 100,000 subscription customers). Though most of these are small implementations for fewer than 20 users, Gartner has also observed implementations for 100 users or more. The vendor currently has 1,600 employees across North America, Europe, Asia and Australia, among other locations. Its customer service product has a cloud-based SaaS subscription model and appeals primarily to entities with midsize support organizations. Zendesk has several product packages, but we evaluated only the Enterprise plan for this Magic Quadrant.
Zendesk added several products during 2016 and expanded the functionality of others. Notable features include Zendesk Talk, with support of text in SMS, as well as the Channel framework to integrate YouTube video into the customer support experience, and the mobile web widget to add chat into the agent and customer experience.
Zendesk offers an intuitive user interface. The system is simple to set up, and its responsive design allows for deployment on websites, on mobile apps and in CECs.
The addition of analytics, satisfaction prediction and advanced voice capabilities, better testing and diagnostic tools, and security monitoring and reporting features has improved Zendesk's product.
SaaS architecture enables Zendesk's product to be deployed in most of the world's key markets.
Zendesk has good presence in Western Europe and the U.S. It also has offices in Australia, Brazil, Japan and Singapore.
Although Zendesk is present in many different industries (including software, IT services, retail, media and publishing, transportation, gaming, and mobile apps), it does not deliver industry-specific versions of its product.
Zendesk's product is untested in complex B2C environments such as retail banking, telecommunications/cable/wireless customer support agent desktops, and healthcare.
Zendesk's product received low scores from reference customers for social media engagement, content management, advanced (multisource) knowledge management and complex email workflow management.
Configuring complex processes or complex user roles with Zendesk's product is difficult. It is also hard to create complex support teams (the routing and escalation rules pose a challenge) and to support multiple organizations within a single instance. We have yet to see a Zendesk reference for a global, "follow-the-sun" implementation.
Zendesk focuses on simpler deployment environments, leaving the task of more-complex integrations to partners. Gartner has detected no significant trend for major system integrators and CRM consultancies to build Zendesk practices.
We review and adjust our inclusion criteria for Magic Quadrants as markets change. As a result of these adjustments, the mix of vendors in any Magic Quadrant may change over time. A vendor's appearance in a Magic Quadrant one year and not the next does not necessarily indicate that we have changed our opinion of that vendor. It may be a reflection of a change in the market and, therefore, changed evaluation criteria, or of a change of focus by that vendor.
Verint. (Though Verint delivers case management, process modeling and problem resolution capabilities, its broad mix of unified customer and employee engagement deployments currently aligns it best with Gartner's Magic Quadrant for Workforce Engagement Management. We will continue to monitor and evaluate its CEC offerings for clients.)
Inclusion criteria were used to determine which vendors appear in this Magic Quadrant. Gartner's inclusion criteria specified that vendors must:
Have a minimum of 15 customers using the latest version of the software for customer service and support functionality in a CEC, including examples of social media integration.
Have secured at least five new customers for customer service and support between February 2016 and February 2017 in at least two regions — for example, Asia/Pacific, Latin America, South America, North America, or Europe.
Be able to demonstrate at least $7 million in software revenue from core customer service and support in the contact center/CEC sector — that is, as the desktop of record — from new clients between February 2016 and February 2017.
Demonstrate that they will equal or exceed the previous four quarters' business results in the period 2Q17 to 2Q18.
Appear regularly on client shortlists.
Have a practice with sufficient third-party consulting and integration firms to grow at a double-digit pace for five years.
Have sufficient professional services to fulfill current customer demands and those arising between 2Q17 and 2Q18; have at least enough cash to fund a year of operations at the current "burn rate."
Have the technology to support an extension to cross-channel customer service, including AI, mobile and social media, with a strong development environment and integration framework.
Be trendsetters or "market movers," based on their software and strategies.
Table 1 shows the criteria we used to evaluate vendors' Ability to Execute. For more details, see the Evaluation Criteria Definitions section.
Product or Service
Source: Gartner (May 2017)
Table 2 shows the criteria we used to evaluate vendors' Completeness of Vision. For more details, see the Evaluation Criteria Definitions section.
Offering (Product) Strategy
Source: Gartner (May 2017)
Leaders demonstrate market-defining Completeness of Vision and the Ability to Execute that vision through products, services, sales figures and solid new references for multiple geographies and industries. Clients report that these vendors deliver high levels of value and return on their investment. These vendors' development teams have a clear vision for the emerging area of customer engagement, the growing influence of AI and the "mobile-first" future. They engineer flexible products that have easily changeable business rules. They factor in the impact on customer service requirements of advanced analytics, social media engagement and the IoT (including wearable devices).
A characteristic of a Leader is that clients look to it for clues about how to innovate in customer service, in areas such as real-time analysis for and about customers, sensors embedded in other equipment, mobile support, and extension to social communities. A Leader does not necessarily drive a customer toward vendor lock-in, but rather provides openness to an ecosystem. Clients indicate that Leaders' products have improved their organization's competitive position and helped to lower costs.
The Leaders in this Magic Quadrant each demonstrated $50 million in sales to new customers during 2016.
Challengers demonstrate a high volume of sales in their chosen markets — that is, more than 30% of their new business comes from more than one industry, and more than 50% of new sales come from sales to the broader installed base. Challengers understand their clients' evolving needs, but might not lead them into new functional areas with strong vision and technology leadership. In this respect, they follow the Visionaries.
Challengers often have a strong presence in other application areas, but they have not demonstrated a clear understanding of how to win new business in the CRM CEC market outside their installed base. They may, therefore, not be well-positioned to capitalize on emerging trends. Without a SaaS-architected cloud model, for example, a vendor cannot be a Leader (however well it performs in terms of other criteria), but can be a Challenger. Challengers frequently lack a strong worldwide presence and deployment partners. Often, their product development resources are split across multiple offerings.
The Challengers in this Magic Quadrant each demonstrated $50 million in sales to new customers during 2016.
Visionaries are ahead of many competitors in delivering innovative products and delivery models. They anticipate emerging and changing needs for customer service, and move into the new sectors associated with them. They have strong potential to influence the direction of the CRM CEC market, but they are limited in terms of execution or track record. Typically, their products and market presence are not yet complete or established enough to challenge the Leaders.
There are no Visionaries in this Magic Quadrant.
Niche Players offer important products that offer unique CRM CEC functions, or offerings for particular industries or geographic areas. They may offer complete portfolios but exhibit weaknesses in one or more important areas — they could, for example, be regional experts with limited ability to meet global needs. They may focus on supporting a small number of large enterprises or a large number of small and midsize businesses.
The Niche Players each demonstrated at least $7 million in new software license sales to new customers across two continents, in two or more industries and business models in 2016.
Customer support is both a department and an enterprise goal. As a department, it must provide the appropriate communication channels for consistent and satisfactory management of customer issues. As an enterprise goal, it is the promise to the customer that they will be treated with respect during all types of engagement, and have their problems or issues addressed.
To support customers, some interactions will remain human-assisted, although far more will be automated. Some will require customer self-service through search tools or social media channels. There has been an explosion in interest in social media tools, chatbots, virtual customer assistants and messaging platforms such as Line, WeChat, WhatsApp and Facebook Messenger. The established business applications for the CEC function are largely obsolete because of the unintuitive user experiences they offer across devices and channels. Their support for mobile customers, or customers wanting assistance via social media, consistent with self-service, is often mediocre.
Many CEC vendors have simplistic and restricted case management and trouble ticketing offerings with inflexible configuration rules and procedures that govern the input, retrieval and flow of data and information. Many are not true cloud-architected products, and even those that are often lack global data centers in which to store sensitive customer information. This is especially disconcerting for businesses with multiple support organization structures. Most CEC vendors support collaborative interactions poorly.
Despite the high value of their systems, CEC vendors have failed to incorporate new ideas and developments, such as real-time analytics, machine intelligence and social experience design concepts, into customer interaction applications for customer service. Without collaboration capabilities baked into the software, or data analytics that enable visualization of customers and their needs, interaction between employees and with customers is limited. Best practices are therefore hard to capture.
The major vendors developing customer management software now see the economic value of rearchitecting their software for social experiences. Oracle is a leading example. Aware of the innovations brought on by communication software and social software, Oracle has integrated its products. Several other vendors are doing likewise. They understand that the social revolution in software will adversely affect sales of their core systems during the next five years. Through acquisition and integration, Microsoft, Oracle, Salesforce and SAP are making good progress, whereas many other vendors in this Magic Quadrant are lagging behind in terms of innovation.
Organizations are rarely able to migrate from an old CRM CEC system to a new one if they have complex back-end processes. However, we have spoken to over 1,000 companies that have demonstrated that it is possible to take an augmentative approach, by which mobile analytics and social tools for collaboration and sharing are integrated into a CEC environment. Workflows and rules are written, often in the CRM system, and passed to the social engagement stage for more-complex deployments as experience is gathered. This is why Gartner is promoting the concept of the CRM CEC as a seamlessly integrated solution that embraces social media engagement.
As CEC suites with fuller analytics capabilities and as better mobile-centric designs reach the market, the business case for migrating to these new suites will be easier to demonstrate. Industry- and geography-specific considerations will cause businesses to accelerate investments in innovation in social-centric interfaces. Although the U.S. and Asia still lead Europe and other regions in their use of mobile messaging, virtual assistants and social media for business processes, they do not lead in their use of mobile channels. In addition, although the mining, chemicals, industrial machinery, oil and gas industries are under no great pressure to progress in this regard, the high-tech, media and entertainment, retail and consumer goods, banking, and telecom sectors do need to advance in 2017.
Prospective buyers regularly come up against two issues that reflect the complexity of this market.
The first is the complexity of the information required to support customers, and the complexity of the business rules and processes that frame the steps within each interaction. It may help prospective buyers to know that:
For simpler customer service process models, the vendors that dominate Gartner's conversations with clients are as follows: Microsoft, Oracle, Salesforce, SugarCRM and Zendesk. However, we also regularly recommend that clients consider Astute Solutions, Wilke Global and Zoho.
For more complex business rules and processes, we tend to discuss bpm'online, CRMNEXT, mplsystems, Pegasystems and SAP (SAP CRM), but we also discuss Oracle (Siebel) and Vertical Solutions.
For more specialist functions for consolidated agent desktops, mobile, social customer engagement and self-service, we often recommend the following vendors for use by customer service agents: Coheris, Conversocial, Dimelo, eGain, Moxie, Sparkcentral and SpiceCSM.
Note: Above lists presented in alphabetical order.
The second issue concerns the availability and applicability of cloud-based solutions. As a delivery model for CRM CECs, SaaS is being accepted and preferred by many organizations. However, in many parts of the world as well as in some industries and environments, cloud-based customer service business applications are not yet preferred, due to issues of data residency and latency. These areas include:
Locations where there are concerns about data privacy, latency and application availability. Notable examples are Central and Eastern Europe, many parts of Asia (including India and China) and South America.
National/federal governments and healthcare organizations subject to strict regulations.
Complex environments with high call volumes, high transaction volumes and real-time integration with legacy systems, which can slow performance.
In our evaluations, we indicate when we see a potential challenge for a product in view of these factors.
In 2016, for new projects, more than 80% of the new CEC deployments worldwide were SaaS-based and at least 90% of CECs used some form of SaaS application (often for a specific capability, such as knowledge management, feedback management, or web or video chat).
In 2017, complete customer service solutions delivered as SaaS will remain most prominent in B2B, low-volume contact centers and in non-process-intensive B2C centers.
We conducted over 150 online surveys and 50 telephone interviews with vendors' reference customers, as well as over 1,000 inquiry calls with Gartner clients wanting to evaluate products. We also interviewed vendors, attended their product demonstrations, and interviewed business consultancies and system integrators.
Product/Service: Core goods and services offered by the vendor for the defined market. This includes current product/service capabilities, quality, feature sets, skills and so on, whether offered natively or through OEM agreements/partnerships as defined in the market definition and detailed in the subcriteria.
Overall Viability: Viability includes an assessment of the overall organization's financial health, the financial and practical success of the business unit, and the likelihood that the individual business unit will continue investing in the product, will continue offering the product and will advance the state of the art within the organization's portfolio of products.
Sales Execution/Pricing: The vendor's capabilities in all presales activities and the structure that supports them. This includes deal management, pricing and negotiation, presales support, and the overall effectiveness of the sales channel.
Market Responsiveness/Record: Ability to respond, change direction, be flexible and achieve competitive success as opportunities develop, competitors act, customer needs evolve and market dynamics change. This criterion also considers the vendor's history of responsiveness.
Marketing Execution: The clarity, quality, creativity and efficacy of programs designed to deliver the organization's message to influence the market, promote the brand and business, increase awareness of the products, and establish a positive identification with the product/brand and organization in the minds of buyers. This "mind share" can be driven by a combination of publicity, promotional initiatives, thought leadership, word of mouth and sales activities.
Customer Experience: Relationships, products and services/programs that enable clients to be successful with the products evaluated. Specifically, this includes the ways customers receive technical support or account support. This can also include ancillary tools, customer support programs (and the quality thereof), availability of user groups, service-level agreements and so on.
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.
Market Understanding: Ability of the vendor to understand buyers' wants and needs and to translate those into products and services. Vendors that show the highest degree of vision listen to and understand buyers' wants and needs, and can shape or enhance those with their added vision.
Marketing Strategy: A clear, differentiated set of messages consistently communicated throughout the organization and externalized through the website, advertising, customer programs and positioning statements.
Sales Strategy: The strategy for selling products that uses the appropriate network of direct and indirect sales, marketing, service, and communication affiliates that extend the scope and depth of market reach, skills, expertise, technologies, services and the customer base.
Offering (Product) Strategy: The vendor's approach to product development and delivery that emphasizes differentiation, functionality, methodology and feature sets as they map to current and future requirements.
Business Model: The soundness and logic of the vendor's underlying business proposition.
Vertical/Industry Strategy: The vendor's strategy to direct resources, skills and offerings to meet the specific needs of individual market segments, including vertical markets.
Innovation: Direct, related, complementary and synergistic layouts of resources, expertise or capital for investment, consolidation, defensive or pre-emptive purposes.
Geographic Strategy: The vendor'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.