Analyst Perspectives

At Oracle OpenWorld this week the company announced its next generation of business applications call Oracle Fusion Application ,  , which Larry Ellison touted in his closing day keynote at last year's conference, as I noted then. I attended the conference partly to learn what Oracle is doing in providing applications for sales organizations. In the late 1990s Siebel Systems introduced customer relationship management (CRM), which proved to be the next generation of sales-assisting technology after sales force automation (SFA). Since Oracle acquired Siebel a few years ago, it has advanced CRM through its own products and those acquired with PeopleSoft, and more recently with the Oracle OnDemand offerings. At OpenWorld Oracle began the formal  unveiling of next generation applications called Oracle Fusion Applications for CRM. Under this umbrella is a portfolio of applications designed to help lines of business with specific activities and processes, especially those involving sales operations and managers.
I was eager to attend a session at OpenWorld that had the phrase sales performance management (SPM) in its title because Oracle has not explicitly recognized this as a category for sales applications and also other sessions on its new approach to sales applications. More than five years ago our firm defined SPM as a category and since then has provided research and education on it. More and more sales organizations are adopting applications in this category to replace their SFA and CRM applications; SPM includes applications for managing incentives and rewards, compensation, goals, coaching, assets, territory, quotas and other sales functions not well addressed by those older applications. The need for these types of applications is clear from our benchmark research on SPM, which found only 13 percent of organizations to be very satisfied with SFA and many organizations rating other applications more important than it to their sales operations and performance.

Oracle states that its application suite will set a new standard for sales performance. That is an overstatement, at least now, but it is a step in that direction. Oracle Fusion CRM for Sales begins to address shortfalls in previous generations of CRM and SFA applications and focuses on improving the planning, prospecting and productivity of sales organizations. It starts with a common Fusion Desktop (shared by all these application sets) that contains a schedule, work task lists, activities and connections to help manage your day from a work perspective, not the technology-first perspective of e-mail and personal productivity tools. Fusion Desktop has a capability called Activity Stream through which you can subscribe to track items important for you in an approach similar to Facebook's that lets you monitor updates from friends or businesses. This approach also resembles that of Salesforce Chatter, which my colleague covered recently, but it is tightly integrated into Oracle Fusion as a whole whereas salesforce.com has made Chatter a collaborative environment separate from its other applications.

Oracle sees three paths for using Fusion for Sales: its own SFA environment, Microsoft Outlook and mobile devices, each of which it demonstrated at the conference. The SFA approach is a straightforward integration of applications; the other two require some explanation. For mobility Oracle has Fusion Mobile, which its sales applications use to support devices such as the Apple iPhone and RIM BlackBerry. Oracle provides access to applications from a calendar that brings together information about an account, opportunity and details of a meeting. This is a more structured approach than salesforce.com's and supplies what the sales rep needs. It can connect to the LinkedIn social media site for reviewing information about attendees or the sales pipeline.
In personal productivity, Oracle has integration with Microsoft Outlook in a manner similar to Microsoft's Dynamics CRM applications. Tasks such as opportunity, contact, leads, customers and sales pipeline use related information. Personal and business contacts and information can be separated for reviewing and updating and help the e-mail-centric sales world integrate them with communications. Oracle has provided additional screens and selections that become part of the Outlook environment to make it an embedded experience for sales professionals.

Fusion CRM for Sales includes applications called Sales Predictor, Territory Management, Quotas, Incentive Compensation and Forecasts. Each provides simple interaction, which is a dramatic change from cumbersome CRM and SFA approaches. Oracle recognizes that personal productivity technology should not be used for sales processes and shows organizations how they can transition from spreadsheets to its new platform, especially with sales forecasts, in which our research into sales and forecasting processes found frequent usage and errors resulting from it. To take one example, Fusion CRM for Sales makes it easy to manually adjust territories during an actual review without dealing with issues of old-fashioned database administration. This will work for basic administration tasks, but for more complex activities such as territory optimization,

users will have to develop them outside of the application and then import the results into it.
Fusion Sales Predictor uses Oracle Real-Time Decisions and its data mining technology to determine the likelihood that prospects will buy products. Oracle has embedded predictive and historical analytics in the Fusion applications that can correlate opportunity to value of potential sales and its impacts on the pipeline and quotas through multi-pass analytics that uses rules and simulations. Having written about the importance of sales analytics, I see this capability as valuable for analysts in a sales operations team, but it is too technical for most members of sales organizations. It's likely, however, that they will process opportunities discovered with these analytics on a daily or weekly basis.
Fusion Sales Quota Management provides the ability to define and update quotas and allocate them across the organization. It enables the distribution of ratios based on previous performance or on predicted results based on market potential. It brings together order, forecast, pipeline and sales potential information to help develop quotas. This level of sophistication is impressive but probably too much for most sales managers, who will want to push a button rather than perform the iterative steps to get to the right quota and then determine changes to it.

Fusion Incentive Compensation Management brings a fresh approach with geographic representation of quota attainment and the ability to drill down into specific territories. In addition it can provide some analytics and thresholds to track performance to quota. It also can plot the progress of sales reps from earning to attainment. The compensation management capabilities are straightforward in providing weighting and calculations and guiding design and application of plans. The application can generate sales plans in Adobe Acrobat files. For SPM Oracle faces the most difficult competition in this area, where established vendors have strong positions and even Oracle partners with Xactly Corp. in the current Oracle CRM OnDemand.
Oracle helps sales people be self-sufficient by enabling them to drive sales campaigns by applying corporate templates to specific targets and providing some of basic functions that marketing organizations typically do. This is extremely helpful for sales folk who have little or no support from marketing and also provides sales automation. Oracle also has improved the opportunity to review competitive information through quick search and access to external information. The Oracle Customer Center will provide more detailed information.

Oracle brought out a potential customer, the manufacturer Emerson, to discuss Fusion CRM for Sales, although it had not yet purchased. Two definite early adopters are Oracle itself, whose 10,000 sales reps currently use reports and spreadsheets, and Australian Finance Group (AFG), where 2,500 reps use analytics and spreadsheets. Obviously it will be critical for Oracle to get more organizations to sign up, but judging from the sparse attendance in the educational sessions, there probably were not many at the conference.

Oracle also was pushing established customers to be current on releases of its applications as they wait for availability of Oracle Fusion. Most observers predict it will ship by the end of Oracle's fiscal year next June. Until then Oracle is really not a contender in the market for sales performance management, and I would not advise organizations to invest in older applications from Siebel. Oracle does provide a robust SFA offering in CRM OnDemand and announced release 18 of it (http://www.oracle.com/us/corporate/press/173761), which does have a great set of embedded analytics. In fact much of those sales analytics are the basis for the analytics in Fusion CRM for Sales. Our new benchmark research into sales analytics (http://www.ventanaresearch.com/sam) already shows a significant demand, but it will be a challenge to get sales organizations to move to a dedicated technology environment even though it could help them generate valuable metrics.

The market for sales performance management presently is led by applications providers that I have assessed including Callidus, Merced Systems, Synygy, Varicent and Xactly and niche vendors like Cloud9 Analytics, which focuses on the sales pipeline. But Oracle is not alone in having overlooked sales performance management - it is not a focus for salesforce.com or SFA providers like CDC, Infor, Microsoft, NetSuite, Sage and SAP. Most of the vendors and IT analyst firms are still protecting SFA as a category, but their perspectives lack interaction or research directly with sales organizations, many of which no longer see SFA as providing the operational and management-level applications needed for the entire sales organization.

For now Oracle Fusion CRM for Sales looks promising in its potential to provide an array of applications for sales performance management. Oracle's intention to provide it in cloud computing form will help, but the company needs to build credibility among sales reps, sales operations personnel and executives that the new generation can be as strategically important as Siebel was in the 1990s. Oracle's own sales approach has to compete with the "cool" of salesforce.com to "wow" decision-makers in sales organizations and as they strive to make this application suite known and validated. You will have to balance the short term interest in their marketing of the new applications with the date that these applications will be available in either on-demand or on-premise approach with the existing vendors that I mentioned that deliver today in sales performance management. If you are not sure about Oracle Fusion Applications for CRM and for the needs of sales, just let me know as we are already addressing questions and concerns of organizations.

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Regards,

Mark Smith - CEO & EVP Research