- Who Uses Partner Relationship Management?
- Exploring the Market Dynamics and Trends of PRM
- Key Points to Consider with PRM Vendors
- Summary
Exploring the Market Dynamics and Trends of PRM
There are several essential trends affecting the PRM marketplace. Both from a vendor and user perspective, this marketplace is in the midst of a major transition from a niche to a potentially dominant force in the area of consortia and private Trading Exchanges, eCRM implementations, and the definition of sell-side e-commerce initiatives. The trends that are having the most impact in this marketplace are briefly described here:
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Demand chain metrics have arrived. Being able to gain visibility into the demand chain and its implications for pricing, promotional effects of bundling, relative success of a new product introduction, and strategy development of opt-in marketing programs all emanate from strong metrics. The need for metrics associated with lead generation, lead tracking, and the return on investment in specific marketing programs all make the integration of metrics critical for the continued evolution of PRM applications going forward.
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Integration with CRM and order-management applications. Especially for the demand chain vendors in the PRM arena, the integration with Siebel's eChannel initiatives is critical. The capability of a PRM system to coexist and share data with Sales Force Automation (SFA), Customer Relationship Management (CRM), and Enterprise Resource Planning (ERP) systems is essential. The extent of this integration will be critical for the ongoing development of the PRM marketplace.
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Partnerships are essential. The capability to integrate a PRM vendor's applications with those of CRM, sell-side order management, and e-procurement applications is critical. For both vendors in the demand chain and in the post-sales arenas of the PRM marketplace, these partnerships are important for the long-term growth of companies. Often, the partnerships will serve as the differentiators in the markets served.
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Technology expertise. In search of differentiation, many PRM vendors are moving toward a service strategy. Yet the need for finding sustainable differentiation through the development of new technologies will force companies to acquire the technology expertise to deliver value in these markets. With the post-sales companies typically having 30% or more of their total organization in development and engineering, the implications for both integration and new product creation are evident. For those companies with fewer than 20% of their headcount in engineering, there is the corresponding question: "Are services really high enough margin to sustain the lack of technology differentiation?" Undoubtedly, companies with a primary focus on services will need to continually define their direction in terms of the incremental expertise they can provide to their customers. Clearly, the highly leveragable aspect of technological innovations is driving the post-sales aspects of the PRM marketplace today.
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Responsiveness is more important than random predictability. As indirect channel members become more attuned to using PRM applications, the BackOffice systems that are used for fulfillment need to be aligned with responsiveness over random predictability. As Proctor & Gamble (www.pg.com) looks to the key metrics of responsiveness within its distribution channels, one of the key results of developing an ongoing PRM system is the velocity of transactions that can be accomplished with more efficient sharing of information.
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Branding and marketing messaging consistency. Imagine how difficult it would be to find a good cup of coffee in the morning if every Starbucks outlet had the flexibility of designing its own variation of the famous corporate logo. The fact that brands and the equity they provide are some of the most important assets for a company further highlights the need for having a cohesive and scalable PRM application for propagating the clearest messages with the highest possible frequency. Protecting the brand of a company is critical, and there are several companies striving to define this area of PRM today.
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Vertical focus with a strong business plan. The early experiments with vertically oriented public trading exchanges show that just because a company has a strong vertical market orientation, it is not assured success. One of the key aspects of the PRM industry today is that there are many companies that are actively developing vertically oriented applications, and they need sustaining partnerships with other vendors throughout different areas of the sell-side industry to be successful. Just a singularity on a vertical market is relatively useless without the insights and domain expertise that partners can provide. The focus on partnerships in conjunction with vertical focus can make a significant difference in the development of a focused-market strategy.
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Domain expertise with extranets, VPNs, and the ASP model. Clearly, these are the channels of distribution that PRM vendors use to reach their customers. What's becoming increasingly evident is that the ASP model has matured from the centerpiece of a business model to more of an ancillary and facilitating technology that can drive a revenue stream for a PRM vendor whose focus is on the software, not the method of delivery. PRM vendors who have strengths of understanding about extranets, VPNs, and the fundamentals of creating a solid ASP delivery model will tend to dominate the marketplaces they serve.
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Battle for mind share in the channel will be won with personalized content. The fact is that distributors and VARs have several competing lines to choose from when recommending a product to clients. Many of these channel members are actually focused on trimming the number of products they carry. What separates the companies that will continue to gain mind share and sales in the indirect channels and those that will not are the companies that focus on the information and transaction needs of their channel. One of the most effective ways for companies to increase the value to their channel is to listen to them, especially in the area of product development direction and consistency of messaging. Clearly, the PRM tools make it possible for channel members to communicate the unmet needs of products for the development of future products. The accelerated nature of product life cycles is forcing the development of collaborative tools for handling the development of products interactively.