Marketscope for Sales Config 138288[1]

ResearchPublication Date: 10 April 2006 ID Number: G00138288

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MarketScope for Sales Configuration, 2Q06 Robert P. Desisto

The sales configuration market has become bifurcated between large vendors, such as SAP and Oracle, and small niche offerings, with little in between.

Publication Date: 10 April 2006/ID Number: G00138288 Page 2 of 11

2006 Gartner, Inc. and/or its Affiliates. All Rights Reserved.

WHAT YOU NEED TO KNOW

ERP vendors, such as Oracle and SAP, will continue to expand functionality and tighten integration for sales configuration systems, making it difficult for best-of-breed vendors to maintain market share. Other than for small vertical niches or new deployment models, such as "Software as a Service," point-solution vendors will struggle. Continue to evaluate best-of-breed vendors, because functionality gaps remain in the larger suite vendors' offerings, especially where a heterogeneous ERP or CRM environment may exist.

MARKETSCOPE

Base sales configuration functionality (that is, constraint-based product configuration engines) is becoming commoditized, and many enterprises are on their third generation of sales configuration system deployments. Gartner's MarketScope for Sales Configuration, 2Q06 (see Figure 1) provides specific guidance for enterprises that are deploying or have deployed sales configuration solutions to re-evaluate and for potential users seeking to purchase a sales configuration solution.

Market/Market Segment Description Sales configurators reduce complexity and improve productivity by helping salespeople or customers in a self-serve environment match customer needs to unique products and service offerings. Sales configuration systems are used to configure ship-to-order (STO), assemble-to-order (ATO) and engineer-to-order (ETO) products (see Note 1), and to configure nonproduct information, such as pricing, discounts and customized financing plans (see Note 2).

Inclusion and Exclusion Criteria These criteria are required to be included in the Sales Configuration MarketScope:

Valid sales configuration offering with a proven two-year track record of delivering production sales configuration systems to multiple clients

Demonstrated active market participation, including, but not exclusive to, inbound customer inquiries to Gartner by current customers, and an attempt to sell or market product to new customers

Cash position to fund at least one year of business operations at current burn rate

Provide sufficient professional services or partnerships to fulfill current and future customer demand during the next six months

Rating for Overall Market/Market Segment Overall Market Rating: Promising

Our outlook for investing in sales configuration technology continues to be "promising." Every vendor but one is rated less than positive. Generally, larger enterprise suite vendors remove viability concerns, but tend take longer to install. Smaller vendors tend to have more agility, but suffer from viability issues.



Evaluation Criteria

Table 1. Evaluation Criteria

Evaluation Criteria Comment Weighting

Overall Viability (Business Unit, Financial, Strategy, Organization)

Viability includes an assessment of the organization's overall financial health, the financial and practical success of the business unit or company, and the likelihood of the individual business unit or company to continue investing in the sales configuration product, to continue offering the product and to advance the state of the art within the organization's portfolio of products.

high

Customer Experience Relationships, partnerships, products and services/programs that enable clients to be successful with sales configuration systems. Specifically, this includes the ways customers receive technical, implementation or account support. This can also include ancillary tools, customer support programs (and the quality thereof), availability of user groups and service-level agreements. Key metric is successful live production deployments.

high

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

standard



Evaluation Criteria Comment Weighting

Product/Service Core goods and services offered by the vendor that compete in/serve the sales configuration market. This includes current product/service capabilities, quality, sales configuration feature sets, skills, technology, architecture, whether offered natively or through original equipment manufacturer agreements/partnerships as defined in the market definition and detailed in the subcriteria. Because of the emergence of price management software as a distinct market, a greater emphasis is placed on core product configuration capabilities that support all three manufacturing styles: ship-to-order, assemble-to-order and engineer-to-order.

standard

Source: Gartner

Figure 1. MarketScope for Sales Configuration, 2Q06

StrongNegative

Caution Promising Positive StrongPositive

Access Commerce xBigMachines xBlue Martini Softw are xCincom xClick Commerce xComergent Technologies xFirepond xOracle xOracle JD Edw ards CRM xOracle PeopleSoft CRM xPivotal xSAP xSelectica xSiebel Systems xSSA Global xTacton Systems xTDCI xWebcom x

As of March 2006

RATING

Source: Gartner (March 2006)



Vendor Product/Service Analysis Access Commerce Access Commerce continues to increase its customer base in North America with six new customers in 2005. The company also added more resources in North America (currently 18), but this number is still below what it needs to be to provide good geographical support across all subregions of the United States. Access Commerce has a good position in Europe in midsize deals and has a stable financial performance overall in 2005. We continue to rate Access Commerce as "promising." Access Commerce is a good fit for complex ATO- and ETO-related organizations, and the company can now support some basic e-commerce capabilities such as shopping carts.

BigMachines BigMachines provides compelling packaged functionality for industrial product manufacturers, instrument and high technology by providing technology to support ETO manufacturing processes. BigMachines is particularly strong in submanufacturing segments such as fluid handling, compressed air, oil and gas field machinery, material handling, medical instrumentation, imaging and networking equipment. Its products can be deployed on premise or hosted. The company has several live deployments with integration with Salesforce.com and Siebel OnDemand. BigMachines is rated "caution" because it remains a small vendor with limited geographical presence and market awareness, and its professional service organization is good but small and is one constraining factor to growth. Customers with ETO requirements should consider BigMachines.

Blue Martini Software On 1 March 2005, Blue Martini Software announced its acquisition by Multi-Channel Holdings, in an all-cash transaction valued at $4 per share. Multi-Channel Holdings is a privately held Golden Gate Capital portfolio company and is the parent entity of multichannel retail software vendor Ecometry (see "Blue Martini Gains Funding, But Strategy Still Unclear"). Although Blue Martini has good technology for sales configuration, this is not a primary market focus for the company, which is supported by the fact that it had only one new sales configuration customer in 2005. Therefore, we downgrade Blue Martini's rating to "caution."

Cincom Cincom provides a good solution for ETO manufacturing styles and has an intuitive maintenance environment for developing and managing product configuration rules for all manufacturing styles. Enterprises have found that Cincom provides quality support and implementation services. Despite offering its own ERP solution, Cincom has deployed its configurator with third-party ERP systems such as SAP. We rate Cincom "promising." Its biggest obstacle going forward is increasing its market awareness and presence. Manufacturing companies, especially those with ETO requirements, should consider Cincom.

Click Commerce We have not seen Click Commerce adding new customers for its sales configuration product. Click Commerce has made acquisitions in the areas of product information management, partner relationship management and online service sales (Elance). However, the company's focus does not appear to be in the sales configuration market. We recommend that new customers consider alternatives for sales configuration and established customers assume limited enhancements and



support for Click Commerce's sales configurator in the future. We rate Click Commerce "strong negative."

Comergent Technologies Comergent Technologies has added improvements to its user interface, performance and functionality (such as constraint richness) in the past 12 months. Comergent customers like the simplicity of the maintenance environment for administering product configuration rules and ERP integration capabilities. Comergent now supports constraint behavior (which, as noted in our 2004 MarketScope, it did not do at the time). Enterprises have found that Comergent provides a reliable architecture for managing product information, a good customer support organization and a scalable architecture. Comergent has little geographical presence outside of North America; however, because of the company's ability to create new business and maintain customer satisfaction, we rate Comergent "promising." Customers looking for an integrated e-commerce suite or stand-alone sales configuration should consider Comergent.

Firepond Firepond has undergone significant changes in the past two years. The company is now private, it has a new CEO and it has changed its primary delivery model to on demand. As a public company, Firepond had difficulty executing as a profitable business. Going private has enabled it to retrench to develop a more-predictable business model, which will take time to prove successful. Firepond has focused on integration with Salesforce.com and awareness among higher-end Salesforce.com customers has risen. Our rating continues to be "caution" as Firepond continues to reinvent itself. Customers who desire an on-demand sales configuration delivery should consider Firepond.

Oracle Oracle has continued to increase the number of its reference customers worldwide, offers deep integration with other Oracle applications (such as manufacturing), has demonstrated an easy-to-use rule maintenance environment, and has strong business viability. Oracle has demonstrated its ability to solve simple and complex configuration problems. It has a large global support team worldwide. Thirty-five percent of Oracle's sales configuration customers are outside North America. Oracle Configurator can be accessed in a wireless environment, but does not support a disconnected laptop running stand-alone. Oracle Configurator will be the basis for Oracle Fusion's configuration technology. We continue to rate Oracle "positive" and we will carefully track its penetration into non-Oracle e-business suite customers. All current or future Oracle enterprise applications (Oracle, PeopleSoft, Siebel Systems) should consider Oracle Configurator.

Oracle JD Edwards Oracle JD Edwards EnterpriseOne continues to lack a true constraint-based configuration engine, and Gartner has not seen proof it has been an active participant in the market (no new sales configuration evaluations in 2005). The future of its configuration technology remains undetermined for the next three years, with Oracle focusing primarily on Oracle Configurator for Oracle Fusion. The longer-term uncertainty of the product and lack of constraint-based evaluation is the reason why we rate Oracle JD Edwards "caution." Currently deployed or future Enterprise One customers that do not require a full constraint-based evaluation engine should consider this product because of the integration with the JD Edwards EnterpriseOne ERP system.



Oracle PeopleSoft CRM The PeopleSoft CRM configurator is not part of the strategic plans for Oracle Fusion. Oracle will focus its future development plans on enhancing the current Oracle e-business sales configurator (Oracle Configurator) for Oracle Fusion. Therefore, our rating for PeopleSoft CRM sales configurator is "strong negative." Oracle states that the PeopleSoft CRM configurator will be covered under the existing support policy as are other PeopleSoft CRM offerings, but established customers should consider migrating to Oracle Configurator or industry alternatives during the next two years. We do not recommend that any new prospects consider PeopleSoft CRM Configurator; instead, consider Oracle Configurator along with industry alternatives.

Pivotal Pivotal is no longer selling its sales configurator, and therefore is not an alternative for new customer deployments. Established customers should begin to plan for migration to other products or assume limited support on the offering for the future. Therefore, we rate Pivotal "strong negative."

SAP SAP's commitment to Internet Pricing and Configurator (IPC) as its future sales configurator is a positive strategic direction (see "SAP Stakes Its Sales Configuration Future on the IPC"). Some SAP Variant Configurator customers that have used extensive Advanced Business Application Programming code for customization will experience migration pain. Only customers willing to upgrade to mySAP ERP 2005 will be able to take advantage of the new embedded IPC version. We do not recommend that companies trying to perform one-off custom integration embed earlier versions of IPC with earlier versions of SAP ERP (pre-mySAP ERP 2005). Customers cannot buy the IPC by itself, but they can buy users for a business scenario (business-to-consumer per transaction, business-to-business per user, R/3-CRM-ERP per user). This can be done in the framework of R/3, ERP, CRM or business suite licensing. Customers charged separately for this in older contracts should attempt to stop the ongoing maintenance fees, because this should now be part of their suite agreements. SAP maintains its "promising" rating until we see more market validation of this new approach.

Selectica Selectica has proven experience with handling complex configuration problems, expanded pricing configuration functionality, a good user interface for maintaining sales configuration rules and strong scalability. However, lack of adoption of its rearchitected service-oriented product released December 2004 (one new customer in 2005) and some customers that decided not to buy because of high costs causes us to rate Selectica as "promising." Selectica has a strong cash position (more than $90 million), but its lack of new customer business in this market is a concern. Because of its experience and technology, Selectica should continue to be considered on shortlists for complex sales configuration evaluations.

Siebel Systems Siebel Systems' configurator has complete functionality and is well integrated with the rest of Siebel's CRM applications. It supports connected and mobile disconnected environments. However, the basis for Oracle's next-generation business application, Oracle Fusion, will be the Oracle Configurator, not Siebel. By 2009, Oracle will release its new Oracle Fusion sales configurator (0.6 probability). Users implementing Siebel CRM capabilities, including quote and order management, prior to the delivery of Oracle Fusion may find Siebel sales configuration solutions a better short-term option during the next 24 months, but will likely experience initial



migration issues when moving sales configuration constraint rules from Siebel to the new Oracle Fusion application solution. Because of Siebel's large installed base on the sales configurator, we expect Oracle to continue with the Siebel 8.0 release and maintenance fixes. Additional capabilities delivered in the latest release, Siebel 7.8 (July 2005) include new functionality to support product eligibility, compatibility, promotions and up-sell/cross-sell, as well as the ability to use these components as a Web service for non-Siebel applications. However, because we believe the long-term direction for Oracle is the Oracle Configurator, we rate Siebel as "promising." Only customers deploying Siebel's CRM suite should consider the Siebel sales configurator.

SSA Global SSA Configuration (purchased from Baan) is a functionally complete product configurator for complex ATO and ETO manufacturing styles. V.6.0 now supports industry-standard application servers (such as Apache Tomcat and IBM WebSphere). SSA Global's financial standing is an improvement for established Baan customers. Enterprises that are still on the older Baan Configurator may have to rewrite some of their configuration rules to take advantage of improved features. We rate SSA Global "caution" as it continues to absorb E.piphany, rationalize product lines and tries to acquire new customers (fewer than 10 in 2005). Only current SSA Global customers should consider the SSA Configurator.

Tacton Systems Tacton Systems has a simple-to-use environment for modeling product configuration rules. However, it has limited distribution and implementations in North America, and company size (approximately 35 people) causes us to rate it as a "caution" for this market. Tacton has distribution partnerships outside of Europe, but many are still under development. Therefore, customers outside of Europe should assume the entire responsibility for deployment (such as limited partner availability). Tacton has several North American customers that have had success taking complete responsibility for their deployments. Tacton's partnership and experience deploying with IBM make it an alternative for IBM WebSphere Commerce users with sales configuration requirements.

TDCI TDCI initially entered the sales configuration market through its Mac-Pac customer support and services business. The company's initial focus was to provide support and implementation capabilities for companies that had Mac-Pac, including the Mac-Pac Expert Configurator. TDCI, has launched a new version of the configurator, BuyDesign, and is now selling it to non-Mac-Pac accounts. The technology is based on rule-based decision trees, not constraint-based evaluation. This may be a problem for customers that require highly unstructured user selection. TDCI's configurator has shown particular strength in building products. We rate TDCI "caution" because the company must prove it can be successful in the long term outside the Mac-Pac customer base, and because a constraint-based evaluation engine should be added to its portfolio. Established Mac-Pac customers and new customers who want a rules-based decision paradigm should consider TDCI.

Webcom Webcom is a new entrant in our Sales Configuration MarketScope. The company traditionally supported hosted (not true on-demand one-to-many; see "Findings From the Gartner 2006 Global Research Meeting: Enterprise Application on Demand") and on-premise deployment options. In January 2006, Webcom released its multitenant architecture that meets the definition of Software as a Service. We have not validated this architecture at this time. The company's primary vertical



focus is industrial equipment and high technology (such as software and computers). The small size of the company (fewer than 30 people), limited funding and its newness in the sales configuration market are the primary reasons why we rate Webcom "caution." Midsize or larger divisions of large industrial manufacturing companies should consider Webcom.

RECOMMENDED READING

"Magic Quadrants and MarketScopes: How Gartner Evaluates Vendors Within a Market"

"SAP Stakes Its Sales Configuration Future on the IPC"

"Constraints Still Key for Product Configurator Deployments"

Acronym Key and Glossary Terms

ATO assemble-to-order

ETO engineer-to-order

IPC Internet Pricing and Configurator

STO ship-to-order

Note 1 Product-Based Sales Configuration

STO products have little variability other than a predetermined set of attributes, such as color and size. Some office equipment, household appliances and televisions fall into this classification. The role of a configurator is to match customer needs with product attributes that best serve those needs. In many cases, this problem is solved by using a simple parametric search engine or relational-database technology.

ATO products are configurable offerings made up of standard components. They are configured based on customer needs and intercomponent attribute relationships (such as compatibility). Computers and telecommunications equipment fall into this classification. ATO configurators model products in terms of attributes whose values may be data-driven or formulaic. Formulas can represent simple-weight calculations or product resource use (for example, equipment power consumption). ATO configuration engines dynamically create bills of material for order fulfillment.

ETO products are configurable offerings that consist of standard and custom-engineered components. They have the same features as ATO products, but involve some level of engineering analysis to be configured. Commercial aircraft, power generation equipment and heat exchangers fit into this classification. ETO configurators can model engineering processes, create complex bills of material, generate engineering drawings and computer-aided design information, and resolve unpredictable spatial constraints.

Note 2 Non-Product-Based Sales Configuration

Pricing configuration enables selling channels to deploy customized trade promotions and implement complex pricing and discounting strategies. It can provide competitive advantage through quick deployment of up-to-date pricing policies based on product, sales territory and customer information.



Finance configuration enables selling channels to calculate financial justifications (for example, return on investment or life cycle costs), provide lease vs. buy analysis, and generate customized financing plans.

Gartner MarketScope Defined

Gartner's MarketScope provides specific guidance for users who are deploying, or have deployed, products or services. A Gartner MarketScope rating does not imply that the vendor meets all, few or none of the evaluation criteria. The Gartner MarketScope evaluation is based on a weighted evaluation of a vendor's products in comparison with the evaluation criteria. Consider Gartner's criteria as they apply to your specific requirements. Contact Gartner to discuss how this evaluation may affect your specific needs.

In the below table, the various ratings are defined:

MarketScope Rating Framework

Strong Positive Is a solid provider of strategic products, services or solutions.

Customers: Continue investments.

Potential customers: Consider this vendor a strong strategic choice.

Positive Demonstrates strength in specific areas, but is largely opportunistic.

Customers: Continue incremental investments.

Potential customers: Put this vendor on a shortlist of tactical alternatives.

Promising Shows potential in specific areas; however, initiative or vendor has not fully evolved or matured.

Customers: Watch for a change in status and consider scenarios for short- and long-term impact.

Potential customers: Plan for and be aware of issues and opportunities related to the evolution and maturity of this initiative or vendor.

Caution Faces challenges in one or more areas.

Customers: Understand challenges in relevant areas; assess short- and long-term benefit/risk to determine if contingency plans are needed.

Potential customers: Note the vendor's challenges as part of due diligence.

Strong Negative Has difficulty responding to problems in multiple areas.

Customers: Exit immediately.

Potential customers: Consider this vendor only if there are no alternatives.



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Marketscope for Sales Config 138288[1]