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Markets, M-14-0678 M. Nitzan |
Research Note 16 July 2001 |
E-Mail Response/E-Service: The Transformation Continues During the next four years, the demand for ERMS systems will continue to increase at a 45 percent average yearly rate. However, the market is changing, which will affect strategic thinking in e-service and vendor selection.
Customer Service and Support Strategies
— Customer Relationship Management
Key Issues
How can enterprises integrate e-mail response management system technology into the overall corporate customer service and support strategy?
Who will emerge as the leading vendors of customer service and support technologies and applications?
Strategic Planning Assumption
By 2003, ERMS functionality will be completely integrated into more-complete CRM suites (0.8 probability).
Note 1
The ERMS Market
The market demand for ERMS has increased steadily during the past four years and is expected continue showing 24.7% double-digit growth during the next four years. We estimate that investment in ERMS as part of an overall e-service strategy will reach $900 million by 2005 (0.8 probability). This represents 5 percent of the overall CRM market, which is expected to reach $15 billion during that same period, and 25 percent of the total e-CRM market of $5.6 billion. Although revenue is expected to increase, it will do so in a decreasing fashion. Gartner projects that this revenue growth will drop year-over-year from 54 percent in 2001, to 24 percent in 2005 (0.8 probability).
ERMS applications are designed to address incoming e-mails and Web forms using one or more of the following capabilities:
| Response management — Managing and tracking e-mail from arrival through response, which includes service-level management and reporting | |
| Content management — The use of content analysis techniques, including AI, keyword searching and natural language processing, to automate the problem identification process and the preparation of the response | |
| Content tracking — Using prospect and customer service records to create more-qualified leads or service experiences to maximize future business and create a more fulfilling and appreciated customer service interaction |
During the past three years, enterprises have focused on coping with the increasing volume of e-mail messages and Web forms. This has been the primary factor driving the purchase of ERMS applications. During the next five years, there will be two primary drivers for ERMS implementations:
1. Customer Demand for Self-Service: As enterprises come under pressure from customers to deliver better and more-feature-rich self-serve Web sites, e-mail will become part of a more-complete contact center strategy. For example, a contact may begin with an e-mail submission, but may transition to a customer request to interact with an agent online through chat, VoIP, browser sharing, the telephone or the Web.
2. Spiraling Customer Service Costs: Rising costs and swelling contact volumes are forcing enterprises to more fully automate the handling of e-mail and Web forms. Less than 15 percent of businesses can match customer demand for high-quality responses, while meeting organizational requirements to minimize customer service costs. To accomplish this, enterprises must embed more intelligence in the automation of e-mail and Web forms. A number of options are available from suppliers (e.g., e-service vendors, CRM application suites vendors, telephony/infrastructure manufacturers and ASPs) to assist with this effort.
The Vendor Landscape
There has been little innovation in the basic functionality of ERMS solutions during the past three years. The two most widely used features — auto-acknowledge and auto-suggest — have been part of basic ERMS functionality since its inception. More-advanced features (e.g., auto-response and integration with outbound marketing automation) require a much higher degree of integration and automation than a stand-alone solution can provide. As a result, stand-alone ERMS vendors have all but disappeared. This now-extinct group of vendors included the original providers of response management technologies, as well as basic e-mail handling capabilities. (Note that the vendor listings that follow are representative, not comprehensive.)
Stand-alone ERMS providers have merged; been acquired by a BOB e-service vendors, CRM suite vendors or telephony infrastructure vendors; or have gone out of business. For example, to round out its e-service offerings, eGain Communications acquired Sitebridge (a collaborative chat vendor), Big Science (a vendor providing virtual service agent technology for online customer care) and Inference (a knowledge base vendor). Other examples include Cisco System's purchase of Webline (a Web collaboration vendor), Kana Communications' purchase of Silknet Software (an e-commerce application vendor) and connectify (an outbound e-mail vendor), and Genesys Labs' purchase of Adante (a response management vendor).
A rapidly emerging e-mail enhancement is e-questioning, or intuitive Web querying, whereby a user queries the Web site in free-form language. Using language processing, a knowledge base and XML messaging, e-questioning enables a customer or service agent to receive instant text and graphical response. This technology, available from enterprises such as iPhrase Technology, could radically reshape the self-service marketplace.
Action Item: Keep in mind that stand-alone ERMS vendors are a thing of the past.
E-Service Vendors
Vendors with e-service offerings are some of the primary sources of ERMS technology. These vendors are able to address interactions from channels other than e-mail. The vendors also offer tools and technologies such as FAQ, interactive chat, self-help, collaboration tools and VoIP. Vendors in this space include Kana Software, eGain, Chordiant Software, Webtone, Delano Technologies (which is on our vendor watch list, indicating viability is uncertain) and Banter.
Key criteria for evaluating e-service offerings include the following:
| Seamless integration among all e-service channels | |
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| A unified central knowledge base with cognitive processing capabilities | |
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| Support for context-sensitive, natural language searching | |
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| Automated Web agents | |
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| Cross-media/cross-channel skills-based routing (see Research Note T-13-2993, “Contact Center Technologies for a CRM Focus: 2001–2004”) | |
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| Participation in an overall e-service (e.g., chat, self-help, collaboration, universal queuing and VoIP) offering. | |
No vendors meet all of these criteria: No leaders in e-service have emerged. E-service vendors that do not provide these capabilities by 2003 will disappear or be acquired (0.8 probability). We expect to see additional mergers and acquisitions of e-service vendors during the next two years, as the larger CRM vendors and ERP vendors expand their customer service offerings.
CRM Application Suites Vendors
Many CRM application suite vendors (e.g., Siebel Systems, Nortel Ebusiness, PeopleSoft, SAP, Onyx Software, Pivotal, e.piphany and Oracle) provide ERMS and e-service functionality. However, it is imperative that enterprises understand their overall CRM goals and objectives before deciding to purchase an ERMS solution from a CRM suite vendor. Although these vendors have been slow in providing e-service functionality, including the most basic ERMS, a number of them are rearchitecting their products to be more Internet-enabled, thus improving their ability to deliver more compelling e-service offerings. By 2003, ERMS functionality will be completely integrated into more-complete CRM suites (0.8 probability).
Telephony and Infrastructure Manufacturers
ERMS technology can also be found embedded in the solutions offered by telephony and infrastructure providers such as Cisco (Webline), Avaya, Genesys, eShare and Interactive Intelligence. These vendors provide enterprises with a universal queue management and portal systems, ACD, CTI, predictive dialing and switching capabilities. Although these vendors focus primarily on infrastructure support for the contact center (e.g., telephony middleware), they also offer ERMS solutions within their proprietary architectures. The primary advantage of working with this set of vendors is tighter integration with the routing, queuing and workflow functions the vendors offer in their existing platforms. It is also a good option for contact centers that have not adopted CRM application suites. Nonetheless, these vendors account for a small percentage of the revenue generated from ERMS purchases. Telephony and infrastructure manufacturers will continue to gain market share during the next two or three years, because 85 percent of call centers do not have a packaged CRM application.
Type A, Type B and Type C Enterprises Enterprises are identified as “Type A,” “Type B” or “Type C,” based on the aggressiveness with which they adopt and use technology. Briefly defined:
| Type A enterprises (pioneers) are technology-driven and are often willing to risk using immature, cutting-edge technologies to gain a competitive edge. | |
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| Type B (mainstream) enterprises are moderate technology adopters, implementing new technologies once they have proved to be useful and have entered the mainstream. | |
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| Type C enterprises (followers) are technologically risk-averse and cost-conscious; they are usually among the last to adopt new technologies. | |
ERMS systems are also available through an ASP, such as eGain, EchoMail, Talisma, Synchrony, eConvergent, PeopleSupport and Island Data. These vendors provide enterprises with the technology, applications, support and infrastructure necessary to respond to e-mail inquiries, as well as other e-service functionality (e.g., chat, Web collaboration and self-help). The attraction of working with an ASP is speed to market and the ability to provide e-mail support without investing in IT staff, hardware or software. Using an ASP is a cost-effective way to provide ERMS functionality. The disadvantage of ASPs is they are not likely to address the overall e-service needs of the enterprise.
Action Item: ERMS applications should be at the core of most enterprises' e-service plans. Enterprises should invest in ERMS systems from vendors that address inbound e-mail handling, as well as provide functionality to meet the overall e-service (e.g., chat, self-help, collaboration, universal queuing and VoIP) goals of the enterprise.
ACD Automatic call distribution
AI Artificial intelligence
ASP Application service provider
BOB Best-of-breed
CRM Customer relationship management
CTI Computer telephony integration
ERMS E-mail response management system
FAQ Frequently asked questions
VoIP Voice over Internet Protocol
XML Extensible Markup Language