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IBM Adopts SugarCRM
International Business Machines Corporation (IBM) manufactures and sells hardware and software as well as hosting and consulting services for the full gamut of computer products, ranging from mainframes to nanochips. IBM has a leading product or service in almost all areas of computing, including big data
analytics, data warehousing, cloud computing, IT security services, enterprise resource planning, and expert systems. One exception is in the area of customer relationship management (CRM) systems, where IBM has instead chosen to partner with leading CRM companies—first Siebel and then SugarCRM-
rather than develop and market its own software product.
By the late 1990s, IBM had implemented almost 900 of its own CRM applications internally. However, these applications were often specific to a division, so that IBM's salespeople making a call about a specific product to a customer were often uninformed about the customer's overall history with IBM, their needs,
and their reliance on other IBM products. Moreover, IBM lacked a way to oversee and forecast sales for all its divisions, an application that would make the sales pipeline" visible to managers. As a result of these shortcomings, IBM decided to scrap its collection of CRM applications and embark on a company-wide
implementation of Siebel's CRM system. Founded in 1993, Siebel Systems, Inc. began by developing and selling sales force automation software and quickly grew to be the leader in the CRM industry. The Siebel implementation at IBM was a huge project involving the transfer of 72 million records from IBM's
legacy databases and a project team of over 100 IBM employees. In addition to rolling out Siebel CRM internally, IBM announced in 1999 that it would begin integrating Siebel with its other products, and together, the two companies began selling CRM packages.
May Be Sto...
IBM could have chosen to adopt Oracle CRM, a product that competed with Siebel; however, Oracle was IBM's major challenger in the database marketplace. In the 1980s, IBM researchers had developed the first relational database, but IBM had not realized the tremendous market potential of these databases
and was slow to bring the product to market. Larry Ellison hired former IBM researchers and other relational database researchers and launched Oracle, initiating an IT revolution in databases that successfully challenged IBM's dominance in the traditional, nonrelational database field. IBM rushed to catch up, but
Oracle has maintained a strong position and continues to be IBM's direct competitor in the database, middleware, and server market.
IBM's Siebel implementation was considered a success, and the company became Siebel's largest client. Then in 2006, Oracle bought Siebel. Hence, when IBM announced in 2012 that it was dropping Siebel for SugarCRM, many IT business analysts saw it as a blow aimed at Oracle. Founded in 2004, SugarCRM
is a relatively small company with just over 400 employees. It markets only one product, its customer relationship management software, which by 2015 was being used by over 1.5 million salespeople. The software's key selling points are its intuitive interface, its accessibility by mobile devices, and its integration of
Sales and L.
In addition to the competitive relationship between Oracle and IBM, there were other reasons for IBM's major shift. The IT industry is constantly changing, and IBM's salespeople face an ongoing challenge of interacting with a diverse range of IT professionals within the company in order to provide accurate, expert
information to customers. Siebel's CRM provided IBM with a highly visible sales pipeline, a feature desired by most sales management teams. A primary goal of IBM's implementation of SugarCRM was to continue to provide this visibility while also improving support for the company's salespeople in the field.
Another goal of the SugarCRM implementation was establishing rapid, mobile access to expertise, data, and the network of relationships customers have with IBM. To accomplish this, IBM wove its own enterprise social networking (ESN) and predictive analytics tools into the Sugar platform. The ESN platform-
IBM Connections provides a medium for sales teams to collaborate with experts on complex deals through instant messages, Twitter feeds, and other real-time tools. IBM's predictive analytics tool, Cognos SPSS, lets salespeople and business managers mine databases to predict trends and purchasing patterns
to optimize sales.
Since Oracle's purchase of Siebel, analysts have predicted the gradual death of Siebel, with the assumption being that Oracle would prefer to advance its own product, even though Oracle has said it plans to continue to release new versions of Siebel at least up until 2020. However, to date, Oracle has not
developed a version of Siebel that leverages social media. So, some companies like IBM who can afford to implement a new CRM have made the decision to do so. Siebel's market share has dropped to under 15 percent.
IBM's adoption of SugarCRM is considered a success. After a 12-month pilot project involving senior management and 4000 salespeople, the platform now known as Sales Connect was launched in late 2013 and adopted by 45,000 IBM salespeople worldwide. By 2014, Gary Burnette, IBM's vice president
transformation, reported that two million sales opportunities had been entered into the system and users were recording 15,000 meetings per week.
More importantly, if IBM needs to change features within SugarCRM, it can do so easily and relatively cheaply. SugarCRM's system is open source, which means that IBM has the right to inspect and change the software code to accommodate its current and future needs. IBM could work with programmers at
SugarCRM to make such modifications or simply do the work in-house. Moreover, IBM could eventually buy SugarCRM itself. SugarCRM claims to be the world's fastest growing CRM company, and IBM does not have a similar CRM in its current portfolio of products.
What is an
1. Why did IBM drop Siebel and implement SugarCRM?
. Using an ERP
2. Why do you think IBM waited several years before switching to SugarCRM?
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3. How have the CRM needs of IT software companies changed over time? How do you think they will change in the future?
4. How are the CRM needs of other industries changing?
Chapter 9. Business Intelligence and Big Data
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