A Change of Plans

The customer relationship management (CRM) boom, once marked by multi-million dollar technology acquisitions, is over, and in 2003, CG companies shifted the spotlight from CRM solutions to CRM-related functions. In particular, CG companies looked to one-time fringe CRM technologies such as trade promotion management (TPM) as the next step in the evolution of their CRM programs, a trend analysts say they expect to continue in 2004.

Many CG companies made their CRM investments in years past, says Kara Romanow, senior research analyst at AMR Research. She says she saw little movement in the CRM market in 2003 among CG companies at all.

"A lot of companies didn't get what they thought they were going to get from CRM," Romanow says. "A lot of those million-dollar CRM implementations weren't wild successes."

Late Start

CG companies started 2003 behind U.S. industries overall in CRM investments, says Christine Overby, senior analyst with Forrester Research. According to her research, by the end of 2002, 35.4 percent of CG companies had made investments in CRM as opposed to 40.9 percent for industries overall.

"We started the year with a lot of home-grown CRM systems and even spreadsheets," Overby says. "What I saw over 2003 and what I expect to see in 2004 is companies beefing up their trade promotion management systems."

In the past, only smaller CRM providers, such as CAS and MEI, focused on TPM. Now, CRM giants such as Siebel and PeopleSoft have incorporated TPM into their offerings.

"In the past, trade promotions were kind of a tack-on," says Romanow. "Now, it's a pretty big piece of it."

Another CRM-related development Overby sees is that companies are using technology to build profit-and-loss models. CG companies are tracking how much it costs them to generate revenues with specific customers to stop cases in which they undercut themselves to sell into a particular retailer, Overby says.

Data Reaches Forefront

In addition, consumer data issues have come to the forefront of CRM for CG companies, analysts say. CPG companies are no longer focusing just on general sales but are using CRM to drive more sophistication and precision into their trade marketing, Overby says. Retailers went more with loyalty programs and card-based programs in 2003, expanding the available data on consumers and improving consumer personal profiles.

As a result, there are more CPG companies using promotional programs directly tied to consumer data, Overby says. For example, CVS and Proctor & Gamble in 2003 both did promotions that were directly tied to consumer buying habits. For Romanow, such data improvements are well past due.

"The forecast accuracy rate in this industry is abysmal," Romanow says. "Anything we can do to get closer to the customer and get the customer more willing to share data has become the focus of CPG manufacturers."

2003 Key Highlights

In October, Siebel announced its new product strategy, "CRM For Everyone," and previewed Siebel 7.7, due out in Spring 2004. New customers for 2003 include Heinz, which standardized on Siebel 7, Unilever Bestfoods Germany, Malaysian beer distributor Guinness Anchor Berhad and Bayer Yakuhin, Bayer's Japanese unit. Siebel acquired Upshot Corporation, a pioneer in hosted CRM, in October.

The June release of SAP's CRM 4.0 product included trade promotion management, a recognition by a major CRM provider that gave legitimacy to the TPM market, according to Overby. SAP customer wins for 2003 included Colgate-Palmolive, Dial, Fraser & Neave, Nestle, adidas-Salomon and Beck's.

Oracle's attempted acquisition and subsequent battle with PeopleSoft dominated Oracle's headlines this year. Oracle's acquisition effort launched in June and is still pending, with the Justice Department giving an extended review of the attempt. Oracle says a decision is expected early in 2004.

PeopleSoft acquired J.D. Edwards, creating what PeopleSoft called the "world's second largest enterprise applications software company" with $2.8 billion in annual revenues. The acquisition later led to the November launch of PeopleSoft EnterpriseOne CRM 8.9, incorporating elements of the J.D. Edwards product line.

Microsoft burst onto the CRM scene in January 2003 with the release of Microsoft CRM. In December, Microsoft announced the availability of Microsoft CRM 1.2, the first scheduled new release for its CRM product.

New partners for CAS this year include Manugistics, on a CPG solution for optimizing pricing and promotion strategies and maximizing trade promotion profitability, and IBM, which combined its middleware and hardware services with CAS' CPG applications to increase speed to market and supply chain efficiency.

In October, MEI announced a partnership to combine its TPM technology with modeling technology from Demantra. New solutions released this year include the MEI Consumer Goods Suite, used by Schwan's, Acosta and Mott's, and a Web-based trade and retail management solution for small and mid-sized enterprises.

Dendrite acquired Synavant in June. New customers announced during the year include Purdue, PepsiCo France and AstraZenece's China unit on Dendrite's WebForce sales channel management solution, and Merck on its field sales management solution.

New customer wins for Thinque over the past year include PepsiAmericas, which deployed Thinque MSP for Field Sales to automate pre-sales processes, and Tom's of Maine, a personal care products manufacturer, which selected Thinque MSP for retail execution and order automation.

CRM in 2004

Instead of new CRM initiatives, CG companies are making fundamental improvements to their existing systems. The emergence of data synchronization and UCCnet have created synchronized price and data standards and given CG companies a common language