G00251937

Magic Quadrant for the CRM Customer

Engagement Center
Published: 13 May 2013

Analyst(s): Michael Maoz

The blend of social media engagement with CRM software is evolving the
contact center into the customer engagement center. Gartner's 2013 CRM
customer engagement center Magic Quadrant looks at vendors that
respond to the challenge of "any channel" customer service engagement.

Strategic Planning Assumption

By 2015, organizations that have not embraced the concept of the customer engagement center
will lose customers to competitors that have.

Market Definition/Description
The CRM customer engagement center (CEC) refers to a logical set of technologies and business
applications that are engineered to provide customer service and support, regardless of the
interaction (or engagement) channel. The goal of the CEC is not only to provide service to
customers as they move among communications channels including social media while
retaining the customers' context, but also to deliver the appropriate business rule to determine the
next best action, information or process with which to engage the customers.
For the past 12 years, Gartner referred to CECs as customer service contact centers. As the need to
engage customers and prospects on new channels such as social media has expanded, we have
evolved the term "contact center" to "customer engagement center," and thus, we have renamed
our Magic Quadrant (see "Magic Quadrant for CRM Customer Service Contact Centers," published
in April 2012).
At their most basic level, CRM CEC applications handle a wide range of tasks, including engaging
customers and prospects across multiple channels, and handling trouble ticketing, order
management, case management, advisory services, problem diagnostics and resolution, account
management, and returns management. The focus of the engagement might also be for
government, nonprofits and higher education, in which the target not always is customers, but
could also be students or citizens. This may also involve knowledge-enabled resolution (such as
advanced search tools), process-centric/enabled service resolution, community management, and
management and service analytics dashboards.

CRM Business Applications for Customer Service Engagement

A complete CEC solution, although not available from a single vendor, will contain all of the
following functional components:

Customer service and support (CSS) problem management, trouble ticketing and case
management

Knowledgebase solutions, content management and advanced desktop search

Real-time analytics/decision support

Social media engagement for customer service

In-line support of mobile consumers

Peer-to-peer (community/blog/forum) support and/or integration

CRM databases for account/contact/offer information

Desktop integration with telephony, co-browsing, mobile and Web extension of the solution to
online communities interested in peer-to-peer (P2P) collaboration management

Social service process analysis

Real-time feedback and surveys

The ability to connect to remote sensors embedded in equipment such as consumer electronics

(For a breakdown on the weightings applied for the evaluation, see "Social Media for CRM Will
Force a Shift From Contact Centers to Customer Engagement Centers.")
The agent must be able to support the customer, whether the customer is on a website or a mobile
device, at a kiosk or in a vehicle, on Facebook or on Twitter, or in a community or a blogosphere.
This means:

The agent sees what the customer sees.

The agent knows the path the customer has taken before the voice conversation takes place
(that is, he or she knows the communication context of the interaction).

The agent has the tools to solve the customer's problem or address the customer's issue from
a remote location.

The CEC needs to send out proactive, automated alerts. For example, when the status in a backend system changes to one of which the customer needs to be aware (such as a bank balance,
credit card fraud, flight delays, available upgrades, price range reached, a special offer on cars or
insurance policy exceptions), an alert is sent to one or several devices until the customer responds
that he or she has received the notification.
The application must contain business rules for complex entities, such as contact, enterprise,
subsidiary or partner, and the workflow processes to route a case, opportunity or order based on
the rule set for the specific relationship. Optionally, the application should be available as a
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subscription service in a cloud-architected model for all relevant industries. (Some industries, such
as telecommunications and federal government agencies, may not be ready for this model, and onpremises software or private cloud may be preferred.)
A case may be routed from one department to another, depending on type. The case can link to all
interactions across channels, whether email, online, SMS or a phone call. An application supports
multiple languages simultaneously. In some situations, real-time decision support is important.
Multiple back-end systems synchronize using their own rules for example, credit card fraud;
telecommunications-specific functions, such as telecommunications billing, service and resource
management; product life cycle management; digital content; and advertising bundling and
integrated order management.

Magic Quadrant
Figure 1. Magic Quadrant for the CRM Customer Engagement Center

Source: Gartner (May 2013)

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Vendor Strengths and Cautions

Amdocs
Amdocs is a profitable company with more than $3.25 billion in sales in 2012. It has a
comprehensive set of software and services to communications service providers (CSPs), in terms
of telecommunications, media and satellite. In the CEC market, Amdocs is a niche provider, with a
business and vision directed at customer service contact centers and the customer experience to
its target industry.
Strengths

In the telecommunications industry, Amdocs has the advantage of a comprehensive set of

products as part of the Customer Management Version 8.x and new CM9, ranging from an
order management and billing platform, customer service functionality for the agent desktop,
device management, a catalog and retail interaction manager, together with libraries of
interaction flows.

Amdocs is a strong and profitable company, with customers and professional services
resources in every major geographic location.

For prospects with deployed Amdocs assets, the company offers strong insight on the future of
the telecommunications customer. It understands retail operations and the contact center in
telecommunications and mobile, and it has good integrated billing capabilities.

Amdocs' consulting has strong experience in project management, best practices and key
performance indicator mapping, and the support organization receives high marks.

Cautions

References have pointed to gaps in the agent desktop product, including knowledge
management, reporting/analytics and industry-specific capabilities outside of CSPs
(telecommunications). Look to partners to close functional gaps.

Amdocs has not kept pace with the needs of clients in the areas of cloud-based systems
(although it does offer a managed service option), sentiment analysis, online communities or
social media engagement. Some recent partnership strategies have improved its abilities. A
new capability for real-time decision making is emerging.

Amdocs is not recommended for customer service contact center shortlists across industries
other than telecommunications, although it may be appropriate for consideration on longlists.

Despite Amdocs articulating leading ideas for customer experience, Amdocs references have
not expressed the view that it is best of breed in areas such as chat, knowledge management,
co-browsing and virtual assistants.

Amdocs has limited traction in growing third-party external service providers (ESPs) for
consulting and implementation services.

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Astute Solutions
Astute Solutions is a small (estimated revenue of less than $20 million in 2012) niche provider of
cloud-based (software as a service [SaaS]) and on-premises customer service functionality,
primarily to the consumer affairs market and primarily in the U.S. and the U.K.
Strengths

Astute has continued to develop its products to meet changing customer demand, most
recently with more-advanced cloud capabilities and improved knowledge management. It also
has a clean and useful social product for CRM Social Relationship Management (SRM). It
has a good natural-language processing tool that is useful for customer sentiment analysis.

Astute's ePowerCenter version 8.x is available either on-premises or in a cloud subscription

model, primarily in small and midsize customer service centers (15 to 100 agents). Through an
acquisition, it can now offer a cloud-based computer telephony integration (CTI) component in
addition to extending the application to mobile devices.

The vendor has strong knowledge of and functionality for customer service processes in
industries such as restaurants, hospitality, consumer goods and retail (nonbanking or other
financial services), as well as best-of-breed capabilities, such as Facebook-based chat.

Cautions

Astute is a small company (fewer than 100 employees), and it has a limited software partner
ecosystem and a small integrator/consultancy partner practice. In 2012, there was no small
degree of reorganization in sales and marketing.

References point out customer support issues outside of the United States, although Astute has
moved to 24/7 global support.

The product requires improvement to the configuration module and other components in
multicountry/multiclient operations environments that require large data volumes. In the design
phase, new customers need to think through their requirements, rather than re-engineering the
system once it has been developed.

The system is rarely deployed in large-scale, multichannel operations of large, distributed

international service environments.

Kana
Kana has one line of business focused on the public sector, another on midsize- to large-enterprise
customer service and another focused on customers looking for a cloud-based product centered on
the midmarket. This multipronged strategy will continue to limit its leadership potential in the
emerging CEC market. Our assessment of Kana replaces the Sword Ciboodle assessment because
Ciboodle was purchased by Kana in 2012. See "Kana Buys Ciboodle for Improved Customer
Service and Social CRM Reach" for a summary of the Kana acquisition of the Ciboodle product.

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Strengths

The combined assets of Kana could, over time, yield to the deployment of best-in-class CECs.
The Kana Enterprise, with an agent desktop, knowledge, social and mobile components, gives
the company good material to scale an integrated product.

Management has invested in a broad set of customer service and support tools to reach many
constituencies: public sector, midsize businesses, the traditional customer service
representative and those looking for social media tools.

The product can be configured for multiple user roles, which speeds the average handling time
for a task, streamlines/shortens the training period and makes new processes easier to
introduce.

Cautions

Kana requires another 12 months to sharpen its marketing skills and develop third-party
partners to sell and deploy its products. Selling multiple solutions within four product families
has diminished Kana's ability to excel in the core CSS area in particular, for deploying what
would be considered a CEC.

Kana Enterprise is not for complete customer service in a multitenant SaaS platform model.

Despite Kana demonstrating good social engagement tools, we have not seen large or complex
deployments tied into a customer service engagement center.

Prospects should look for the local availability of professional services personnel for the specific
product set that they wish to deploy, backed by references.

Lithium Technologies
Lithium Technologies was founded in 2001 and is dedicated to helping organizations engage
customers on social media channels. It has raised almost $100 million during the past 12 years, and
it has used it to build a broad cloud-based platform of products to understand, support and
improve the online customer experience. Its offering is not a traditional customer service CRM
system. It is because of its strong focus on customer engagement on social channels, while
connecting these interactions (as necessary) to a broader CRM initiative or process, that Lithium is
included in the CEC Magic Quadrant.
Strengths

Lithium has a very strong community platform, as well as a social moderation tool, which allows
support organizations to both support online user communities and engage those customers.

The tool easily integrates with other (non-Lithium) CRM customer service systems, allowing a
business to focus on the emerging task of better engaging with customers on social media
channels.

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Lithium provides good professional services for setup, advice on creating social media
engagement teams (a unique value-add is gamification techniques), and ongoing analytics on
the progress and effectiveness of the support organization engaging on social media.

Lithium offers additional tools such as a knowledgebase (Lithium Tribal Knowledge Base) and a
module to interact with clients on social media (Lithium Q&A), as well as a mobile application.
The Private Support Manager module allows an agent to continue a conversation that begins
inside a public area, such as an online community, and continues into a one-on-one
conversation, whereby more corporate information about the customer can be brought to bear
on how to proceed with the client.

Cautions

Lithium's system is not a replacement for a traditional CRM system, in the sense that it lacks a
customer master and must link to the systems where the customer information and other
business rules exist.

Industries such as health insurance, telecommunications, governments, universities and most

other industries should think of Lithium's system as part of an augmentation strategy to deepen
customer engagement, versus a replacement for a CRM system.

As a small vendor, with limited global consultancy relationships and a SaaS subscription model,
its reach to assist prospects and customers in all geographies and languages needs to be
carefully investigated.

Microsoft
Microsoft Dynamics CRM for CSS continues to be used primarily for on-premises deployments and
in nontraditional customer service contact environments, where the real value may be in supporting
a customer request for information, or the needs of students, citizens or government officials to
interact with other people. There are many scenarios across industries (examples are government,
healthcare, higher education, real estate and retailing), in which the flexibility of the system to
support a range of interactions makes it a good shortlist product. Microsoft has not been able to
provide Gartner with complex and scalable examples of the cloud-based delivery model of the
product for CECs.
Strengths

The Microsoft Dynamics CRM product has good overall attributes, such as built-in workflows, a
highly regarded Software Development Kit (SDK), good customization capabilities, a growing
end-user community contributing ideas, and multichannel process integration.

The product blends sales, service and marketing, as well as tightly integrates with other
Microsoft assets, such as Office and SharePoint, and offers the promise of deeper integration of
Lync and Skype.

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There has been continued improvement of the user interface in particular, screen layout,
active fields, intuitive scripting and reduced keystrokes to accomplish standard tasks.

The company has the benefits of solid financial standing and commitment to the CRM product
line, global data centers, sales, marketing and service, access to a deep bench of developer
resources, and global deployment partners.

Cautions

Clients mention as a concern the lack of trained professional services partners that understand
best-in-class customer service centers and how to configure Microsoft Dynamics CRM to
achieve this.

Outside of some areas of the public sector, the product does not provide industry templates
that deliver a significant amount of functionality and process flow out of the box. Prospects
should look to partners to deliver industry capabilities.

For an organization with complex customer service center requirements, on-premises is the
only proven option today. Also, arriving at an accurate sense of infrastructure requirements is
challenging.

Microsoft has not briefed Gartner on direct support capabilities. For third-party support,
prospects should evaluate the local partner's capabilities in providing support.

A multitenant cloud version of the customer service product for large and globally distributed
CECs has not been demonstrated.

The integration of social media engagement components has not been seen, although
Microsoft's acquisition of Netbreeze is a welcome sign of awareness of the need.

Nice Systems
Nice Systems continues to improve its messaging and experience around driving insightful
customer interactions. Its set of customer support functionality includes next-best-action, crosschannel interaction, process automation and guidance, interaction analytics, and compliance and
recording tools. It is a nontraditional provider of CEC, in that it does not own the customer record.
Nice's tools are more of a complementary offering, often making it a complicated purchase decision
for customer service managers. Nice offerings provide the agent with actionable information in real
time.
Strengths

Nice's Real-Time Impact (RTI) product helps with decisioning and is useful for customer service
organizations tasked with upselling/cross-selling during inbound interactions.

The integration of real-time feedback and the advances in support of the mobile customer,
together with a partnership with Amdocs, are giving Nice not only greater appeal to prospects,
but also greater reach.

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References cite the ease with which information and data from multiple systems can be
assembled and the workflows created to drive the customer dialogue.

The integration of RTI with the rest of the vendor's assets for recording, agent training,
governance, analytics and back-office workflow support creates good synergies for prospects
owning other Nice products.

Cautions

The company's success in markets outside of the customer service agent world has inhibited a
focus on deploying more (and better trained and incentivized) sales teams globally in this area.

Not all organizations find the methodology of the Nice professional services group intuitive or
easy to follow. The company can be flexible, although it requires some persistence.

Nice does not spend sufficient energy focused on the emerging need for customer engagement
by service agents on social media channels, such as Facebook, Twitter and user communities.

There is no multitenant cloud version of the core RTI product.

Pricing policies are not clear and explicit.

Oracle (Siebel)
Seven years after Oracle acquired Siebel Systems, the Siebel Contact Center and Service product
continues to be sold, maintained and modernized, albeit not rearchitected in a SaaS/cloud
multitenant model. It has broad functional coverage and a diminished partner ecosystem from its
peak (in regard to the numbers of engaged professionals on new projects), yet it has areas of deep
industry expertise. It remains a standard for large-scale call/contact centers looking for scalability
and access to a global pool of third-party professional services, and with an inclination for the
Oracle product line.
Strengths

Siebel remains the only large-scale customer service contact center product deployed globally
by large enterprises in 2013 across multiple business-to-business (B2B) and business-toconsumer (B2C) industries.

The new Siebel Open UI on versions 8.1.1.x and 8.2.2.x when referenceable (Gartner expects
this to be by the end of 2013) will introduce a much-improved user experience. There are
application limitations that we believe are due to the nature of Internet Explorer, rather than an
issue with Siebel.

The acquisitions and native developments that are a part of the Oracle Social Relationship
Management product lines will give Siebel greater capabilities for social media management
when referenceable on the Siebel platform.

The product line has global software support and distribution, and a global presence of
professional services for multiple industries.

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Oracle continues to fund enhancements to the v.8.1.x and v.8.2.x product lines, as well as is
extending integration in areas such as knowledge management, marketing, real-time
decisioning, workflow and policy administration. Upcoming agile development capabilities and
a better user interface will energize the product.

Cautions

End users continue to find Siebel nonintuitive and the interface outdated for the current
generation of customer service agents. The UI changes are underway, and this needs to be
accompanied (for many of their clients) with deeper and simpler Microsoft Outlook integration
(unless clients have purchased the Oracle product Siebel CRM Desktop).

The product is neither best-in-class for mobile consumers wanting in-line support, nor best-inclass as a peer-to-peer community capability tightly connected to the customer service
process. We have not seen the system providing an advanced social media management
capability.

Siebel is an on-premises software product, and there are no plans to rearchitect it to deploy
with a subscription cloud product.

Before making a decision for Siebel Contact Center and Service in their industry and
geography, prospects should perform reference checks of similar businesses that have
deployed the prospects' version of the product in the past 15 months to ascertain that the
software version has local professional resources to assist with the deployment. Oracle does
offer customers the option of having the application managed for them as a private cloud
deployment.

Non-Oracle customers running B2B customer service or technical support centers may find
Siebel Contact Center and Service either too functionally rich or costly (that is, if prospects have
simple requirements or a small number of users).

Oracle (Service Cloud)

Oracle Service Cloud is the customer service product acquired as a part of Oracle's RightNow
Technologies acquisition in early 2012. Its products continue to be integrated to parts of the Oracle
technology stack (see "Oracle to Acquire RightNow Technologies, Boost Cloud Portfolio"). It is the
cloud offering for Oracle customers and prospects looking for a customer service solution with a
SaaS subscription model.
Strengths

The acquisition of the product by Oracle will lead to greater scalability as the product leverages
Oracle technologies. Oracle has multiple technologies that it can weave into the offering to
augment its capabilities.

The system provides a cross-channel customer service functionality in the contact center and
for Web self-service.

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The system, delivered as a subscription service in a SaaS model, is straightforward to set up

and configure, and it doesn't require heavy IT involvement.

Oracle Service Cloud has strong industry representation in the high-tech industry; government
agencies; retailers; education, travel and consumer electronics industries and branches of
telecommunications. It does not focus deeply on industry-specific processes for example,
billing, price catalogs, order execution and underwriting.

Cautions

The functional components of the Oracle Service Cloud continue to undergo development, with
a number of new add-ins to other Oracle products that may create complexity.

Gartner has not seen large deployment teams or configuration teams from the largest system
integrators and global consultancies, such as IBM, Accenture, Deloitte and Capgemini, for the
CEC or traditional contact center desktop.

During the transition period of RightNow Technologies into Oracle, Gartner has observed a
theme of client inquiry about the turnover in the sales and professional services staff, as well as
new approaches to contracting, which requires an adjustment of expectations for existing
customers of RightNow.

Organizations leaning heavily in the direction of an all-Microsoft environment or a non-Oracle

stack could face resistance from their IT organizations in regard to deepening the commitment
to the Oracle Service Cloud product.

The product lacks an on-premises software model, and prospects will need to consider an onpremises Oracle product, such as Siebel, or another alternative.

Parature
Gartner has been following the U.S.-based and privately held Parature since 2003, just two years
after its founding, but it is only in 2013 that we see its product sufficiently robust, and corporate
leadership and marketing sufficiently staffed, to place it in the Magic Quadrant. The company has
subtly shifted from selling to mostly small and midsize companies to selling to larger enterprises,
albeit for smaller customer support organizations.
Strengths

Parature has a good management team that has scaled and improved its clout in the market,
making it better able to build partnerships and assure prospects that it is a company with
growth potential.

The underlying product is very strong architecturally, built on a multitenant SaaS model. For
analytics, it embeds Business Objects, and for companies looking to integrate the product into
a more complete CRM system, open APIs and partnerships with Microsoft Dynamics CRM and
others facilitate the integration.

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In the past two years, Parature has added good mobile capabilities, as well as social media
engagement capabilities, to complement its problem resolution/trouble ticketing ability.

The product is not limited to customer service for the support agent: It has modules for
customer Web self-service and assisted service, as well as the ability to assist customers
and/or prospects on social media channels.

Cautions

We would like to see larger and more-complex processes supported by the product, as well as
a stronger presence outside of the United States.

Parature is often not a substitute for a CRM suite, but rather, a complementary piece of an
ongoing sales, marketing and support initiative or system.

The company is not well-known in most parts of the world, and to grow and deepen its
presence outside of the United States would require a much more serious investment of time
and money than the company has made to date.

Pegasystems
Pegasystems' license revenue grew approximately 18% in 2012, and its overall revenue reached
more than $461 million, as it continues to exploit weaknesses in the software market for stable,
modern solutions that incorporate business process management (BPM) as an integral part of the
customer interaction.
Strengths

In the CRM space overall, Pegasystems has the best ability to model and predict a customer's
behavior, create a workflow to support that customer, and to then associate the best action to
execute with (and for) the customer.

The company has expanded the reach and depth of its professional service partner network, as
well as improved slightly in the area of partnerships with complementary vendors.

The company delivers industry-specific best practices that we have evaluated, specifically for
insurance, healthcare and financial services, as well as prebuilt templates, which accelerate
adoption.

Pegasystems offers a highly scalable solution (1,000 or more concurrent users in an integrated
environment with 99.95% uptime) and provides good support.

Cautions

The majority of IT-driven organizations do not favor Pegasystems' BPM, model-based approach
(which is different from traditional software coding environments) for CEC Whereas industries
such as insurance, healthcare and financial services are drawn to a product with a rule engine
to resolve complexity, the product may not be the ideal choice for a shortlist in which there are
infrequent changes and low complexity.

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Pegasystems has less multi-industry experience outside North America and the U.K., and
prospects should look for references with similar requirements.

The company has more work to do to demonstrate its vision for mobile device support, and it
demonstrates a lack of commitment to customer engagement across social media channels.

salesforce.com
In 2012, salesforce.com's revenue grew 37% compared with the previous year and exceeded $2.25
billion. Gartner estimates that 60% of new revenue came from the Service Cloud line, making
salesforce.com the leading vendor, as measured by sales volume. However, it is not a leader in
complex B2C service centers and lags in certain aspects of best-of-breed social media engagement
vendors.
Strengths

For B2B customer service operations, especially those with an established salesforce.com
presence in the sales department, Service Cloud is recognized as a de facto shortlist product
by most North American and Western European organizations. Several key new Service Cloud
global deployments in B2B demonstrate the product's scalability.

Key new customers both B2B and B2C have shown enough faith in the customer service
contact center product to invest more than $10 million per year, as well as to retire homegrown
systems and/or systems from competitors that were at an end-of-life stage, and they consider
the salesforce.com application platform a strategic asset.

The salesforce.com product for customer service has an excellent GUI, simple design tools,
intuitive navigation and a good understanding of the importance of Web communities, although
it is primarily partners that provide the Web community capability. There is good integration with
back-end systems, such as Oracle ERP, SAP and telephony infrastructure.

The added benefits of the customer portal, partner portal, social media monitoring and the
Salesforce Ideas products draw customers to the Service Cloud.

Cautions

We have heard from Gartner clients, who have set up salesforce.com in multiple parts of their
organization, that they have found themselves with multiple salesforce.com "orgs" (often
thought of by users as "instances"). These instances are built with different workflows, tabs,
custom objects and integration points that could need rationalizing. As a result, companies
must develop a strategy that addresses if, when and how they should combine different orgs.

Salesforce.com support does not demonstrate sufficient depth or consistency yet to deal with a
global set of complex customer service environments in a timely manner (for example, those
that require integrations and ongoing support of phone switches, email exchanges or back-end
real-time processing systems).

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References relate that product pricing for complex customer service environments is not as
transparent as the published guidelines suggest.

The vendor is largely unproved in large, complex, retail, B2C contact centers that is, largescale, high-volume call centers where processes must be continually synchronized and
monitored, such as retail banking, loan origination, insurance policy administration, bill
processing and fraud management. Prospects should base decisions on proven references in
their industry and process model.

The company has limited Asian, South American or Eastern European presence in larger-scale
(more than 200 seats) customer service contact centers.

The product's analytics capabilities and complex sentiment analysis functionality continue to
improve, but as with the support of customers on social channels such as Facebook and
communities, need to be better.

SAP
The SAP Customer Service solution has the advantage that it is often bundled into a more
comprehensive SAP licensing deal, which makes it attractive to some clients. There is good growth
of the reference base for B2B support, but far less evidence of large Customer Service deployments
in B2C contact centers that require the support of high-volume, complex business processes, or
customer engagement on social channels. Examples of segments that require this support include
financial services, retail banking, retail mobile operators and healthcare.
Strengths

SAP is a strong and profitable company, mitigating the financial risks of making a large and
ongoing investment in the product.

Once we have references who can validate the product for customer service, the current SAP
EhP2 (also known as Enhancement Package 2) for SAP CRM 7.0 could provide useful customer
support capabilities.

Capabilities for the customer engagement center should improve through the third quarter of
2014 due to partnerships, such as with the social analytics vendor, NetBase. NetBase is at the
foundation of SAP Social Customer Engagement OnDemand. Prospects should look for
references of the recently released SAP Jam, an enterprise social networking product released
in November 2012.

SAP's marketing of an integrated business application suite that supports end-to-end customer
processes is compelling to clients from an IT and line-of-business perspective, because it
simplifies the application portfolio and promises better speed-to-solution delivery.

Cautions

SAP lags market requirements for a proven, scalable CEC application suite in all of its
geographic regions. It is not expected to close this gap through 2014.

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We have yet to see deployments of the Customer Service solution for a complex environment in
a multitenant cloud model.

The company has not kept pace with market demand for advanced real-time decisioning/next
best action solutions, content aggregation and delivery, or knowledge management. SAP
clients looking for CSS solutions on the Web, mobile device, contact center or peer-to-peer
communities should not expect SAP to close this gap through 2014.

Gartner has observed a significant leadership change in the CRM practice during the past 12
months. This situation may account for the low awareness that Gartner clients reflect regarding
the key reasons for looking at an SAP offering for Customer Service solutions, particularly in the
contact center and evolving CEC. Until such time as SAP demonstrates the benefit of an
integrated all-SAP approach for CSS over best-of-breed choices outside SAP, it will continue to
fall behind the competition.

Zendesk
Zendesk was founded only in 2007, yet it has grown and scaled the company to support more than
30,000 customers across the world, 80% of which we estimate are small implementations of less
than 20 users. It has raised almost $100 million in investment capital, and it may launch an initial
public offering by the end of 2014. Zendesk's product has a cloud-based SaaS subscription model
and appeals primarily to organizations with small to midsize support organizations with simple
needs. The company has several product packages, and we evaluated the Enterprise package for
this Magic Quadrant.
Strengths

The user interface is very well-designed and receives high praise from reference customers. For
supervisors, in particular, many of the product features are also available on mobile devices,
such as the Apple iPad.

As a modern system with published interfaces, it is straightforward to integrate with social

media tools or telephony products. Because it is not a CRM system with an underlying
customer record, it often will integrate with other CRM packages, such as Microsoft Dynamics
CRM.

The SaaS architecture allows the product to be deployed in most key world markets.

The company has a good presence for support and data in Western Europe and the United
States, with additional facilities in Australia.

Cautions

We were unable to validate the solution for large and/or complex customer support
organizations. Prospects should demand industry-, geography- and process-specific references
before proceeding.

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References have found that creating business process rules or workflows for multiple user
types or complex processes is difficult. Reporting and analytics are acceptable, although
customers would like more-advanced features.

The company will need to continue to reassure prospects and clients that an isolated security
breach will not recur.

Zendesk's customer support tool is not feature-rich. It assumes that the user group will use the
open APIs to integrate into the underlying systems that hold the rules for other customer
activities.

The product is not a replacement for the core system of record but rather, it integrates to such
an ERP and CRM system.

Vendors Added or Dropped

We review and adjust our inclusion criteria for Magic Quadrants and MarketScopes as markets
change. As a result of these adjustments, the mix of vendors in any Magic Quadrant or
MarketScope may change over time. A vendor appearing in a Magic Quadrant or MarketScope one
year and not the next does not necessarily indicate that we have changed our opinion of that
vendor. This may be a reflection of a change in the market and, therefore, changed evaluation
criteria, or a change of focus by a vendor.

Added
The following vendors were added: Kana, Lithium Technologies, Parature and Zendesk.
Oracle Service Cloud replaces Oracle RightNow CX Cloud Service.

Dropped
Sword Ciboodle was replaced by Kana as a result of its acquisition by Kana. Kana Enterprise is the
product evaluated for this Magic Quadrant.

Inclusion and Exclusion Criteria

We look at the presence that a vendor has in the market and the momentum of its growth. A vendor
with stagnant sales or an ineffectual marketing organization should concern prospective buyers.
Gartner's criteria specify that vendors should:

Have a minimum of 15 customers using the software for CSS functionality in a contact center,
including examples of social media integration

Have at least five new customers for CSS during the past four quarters in at least two
geographic regions for example, the Asia/Pacific region, Latin America, South America, North
America and Europe

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Be able to demonstrate at least $7 million in software revenue for core CSS in the contact
center (that is, as the desktop of record) from new clients during the past four quarters

Demonstrate that they will equal or exceed the previous four quarters of business results in the
upcoming four quarters

Appear regularly on client shortlists

Have a practice with sufficient third-party consulting and integration firms to grow at a doubledigit pace for five years

Have sufficient professional services to fulfill current and future customer demands during the
next six months, as well as have at least enough cash to fund a year of operations at the current
burn rate

Have the technology to support an extension to cross-channel customer service, without the
need to code in a new development environment, including mobile and social media

Be trendsetters or market movers, based on their software and strategies

Evaluation Criteria
Ability to Execute
Product/Service (Weight 2013 and 2012: Standard)
Advances in software architectures particularly in Web orientation, support of mobile devices,
video and Web communities are all Web 2.0 requirements that complicate the user's choice. The
vendor must have a scalable SaaS model or have the option of an on-demand delivery model for
some part of its platform to be a Leader.

We weight the extent to which the company offers a componentized offering, as well as
complete functionality across several service models.

We continue to see greater need for strong mashup capabilities that enable organizations to
embed applications in the customer service representative's desktop. We also see a strong
demand for declarative systems that enable flexible logic flows. User organizations prefer to
design their own business objects, workflows and business processes, without resorting to
vendor support. We expect this demand for composite applications (through in-house
development and application extension to the Internet/website) to accelerate.

We see a great need for advanced (real-time) decision support and complex knowledge solution
capabilities, business rule engines and customer feedback management.

The CSS application should have out-of-the-box functionality, which means a strong set of
industry- and process-specific business logic and data. Through process design or functionality
breadth, the system must support end-to-end customer service processes (from customer need
to resolution) for the chosen market. Published APIs are critical to connect (or expose) an

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application's customer service functionality with another system or process. Vendors will be
measured on the capabilities of their product releases to support customer service, and on the
technical support of their multichannel and cross-channel environments.

The vendor must have either a stable product development team for each product module it
sells or a demonstrably successful strategic partnership.

Overall Viability (Weight 2013: Standard; 2012: High)

We evaluate the capability of the vendor to ensure the continued vitality of a product, including a
strong product development team to support current and future releases, as well as a clear road
map regarding the direction that the product will take until 2015. The vendor must have the cash on
hand and consistent revenue growth during four quarters to fund current and future employee burn
rates and to generate profits. The vendor is also measured on its capability to generate business
results in the CEC market.
Sales Execution/Pricing (Weight 2013 and 2012: High)
We evaluate the capability of the vendor to provide global sales and distribution coverage that
aligns with marketing messages. It must also have specific experience with selling its CEC to the
appropriate buying center. The strength of the management team is key as well.
Market Responsiveness (Weight 2013 and 2012: High)
We evaluate the vendor's capability to perceive evolving customer requirements and articulate that
insight back to the market, as well as create the products for readiness as demand comes online.
Marketing Execution (Weight 2013: High; 2012: Standard)
We evaluate the capability of the vendor to consistently generate market demand and awareness of
its CEC solution through marketing programs and press visibility. In an ideal world, marketing
execution should be less critical than some other factors; however, the business reality is that
marketing success can fuel future growth and improvements.
Customer Experience (Weight 2013 and 2012: High)
The vendor must produce a sufficient number of quality clients and references with varying levels of
sophistication to prove the viability of its product in the marketplace. References are used as part of
the evaluation criteria for the ability to execute and create a vision for how organizations can
improve customer service. Included in this criterion are implementation and support. The vendor
must be able to provide internal professional services resources or partner with system integrators
with vertical-industry expertise, CEC domain knowledge, global and localized country coverage,
and a broad skill set (such as project management or system configuration) to support a complete
project life cycle. The critical point on customer experience is to ascertain the degree of change
management that accompanied the implementation. Often, the end user experiences discomfort
from the change processes that were introduced with the new system, not from the new software.

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The vendor's customer support organization must also be able to provide satisfactory, prompt
service to its customers in all regions of the world.
Operations (Weight 2013 and 2012: Standard)
Clients must understand where the vendor's CEC business is currently, and where it is going, with
regard to viability and direction. The vendor must offer consistent and comprehensible pricing
models and structures, including for such contingencies failure to perform as contracted, or
mergers and acquisitions. The vendor is measured on its flexibility to support multiple pricing
scenarios, such as on-premises licensing, as well as application on-demand offerings, such as
hosted and multitenant. The vendor must have sufficient professional services in-house or
through third-party business consultants and system integrators to meet evolving customer
requirements.
Table 1. Ability to Execute Evaluation Criteria
Evaluation Criteria

Weighting

Product/Service

Standard

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

Standard

Sales Execution/Pricing

High

Market Responsiveness and Track Record

High

Marketing Execution

High

Customer Experience

High

Operations

Standard

Source: Gartner (May 2013)

Completeness of Vision
Gartner analysts evaluate technology providers on their ability to convincingly articulate logical
statements about current and future market direction, innovation, customer needs, and competitive
forces and how well they map to the Gartner position. Ultimately, technology providers are rated on
their understanding of how market forces can be exploited to create opportunity for the provider.
Market Understanding (Weight 2013 and 2012: Standard)
The market for CEC is highly diverse because of the multichannel nature of customer interaction
and the wide range of processes that need to be supported. To succeed, a vendor must
demonstrate a strategic understanding of current and future CEC opportunities that are unique to its

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target market. This may be new application functionality, evolving service models (such as the CEC)
or in-line analytical capabilities for unique customer segments.
Marketing Strategy (Weight 2013 and 2012: Standard)
The vendor can describe its go-to-market strategy as something other than growing until it is
acquired by a larger company. Even with this as the endgame, it must be clear how prospects will
be protected or even benefit from such a strategy. We look for a well-articulated strategy for
revenue growth and sustained profitability. Key elements of the strategy include a sales and
distribution plan, internal investment priority and timing, and partner alliances.
Sales Strategy (Weight 2013 and 2012: Standard)
The strength of the sales force, especially in a challenging economic period, means the difference
between floundering and steady/rapid growth. We are looking for highly trained sales leaders who
are able to quickly differentiate the value proposition of products and services over the competition.
Offering (Product) Strategy (Weight 2013: High; 2012: Standard)
Specific vision criteria include:

Social (collaborative/social media management) CRM.

Intelligent decision automation.

BPM (supporting a threaded service task across functional areas, regardless of channel).

Creation of content about the most likely customer intentions and how to address them, based
on continuously variable business scenarios. The vendor has a sufficiently broad set of
products to ensure the success of the product over time. Without an advanced SaaS product
plan, a vendor or product cannot be considered visionary.

Support of mobile customers.

Business Model (Weight 2013 and 2012: High)

To be a Leader through the second quarter of 2014, the vendor should have a SaaS and an onpremises application option for most of or all of the suites, unless the SaaS infrastructure can
provide aspects of a private cloud. Application modules are tightly integrated and have business
process modeling capabilities and advanced workflow. The company has a strategy to appeal to its
key vertical industries that is, it integrates with systems unique to an industry, delivers packaged
functionality and workflows for an industry (such as those for the telecommunications, automotive
and consumer goods industries), and delivers B2B as well as B2C interactions. Vendors with only
one or the other model will need to prove convincingly why their model will continue to be
successful.

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Vertical/Industry Strategy (Weight 2013 and 2012: Standard)

Unless a product is deployed as a strong add-on to an existing technology stack, a deep
understanding of one or more vertical industries will be crucial to offer differentiation.
Innovation (Weight 2013 and 2012: Standard)
Innovative vendors incorporate concepts that extend to consumer technologies and service virtual
assistants and may have customer service functions embedded in communities (for example,
Facebook, LinkedIn, Fan Pages and formal support communities). The vendor understands major
technology/architecture shifts in the market and communicates a plan to use them, including
migration issues the shifts may cause for customers on current releases. In most cases, the
architecture is built to operate in a SaaS delivery model as well as on-premises. We examine how
well the vendor articulates its vision to support service-oriented business applications.
Mobile-based applications must be fully supported, applications must have a smart client and be
decomposable as widgets or as part of a larger mashup. Applications must help optimize a
predictive customer analytics system directly or through tightly integrated partners. These
predictive analytics alert management, agents or customers when service patterns are detected that
might signal the need to adjust a business strategy or direction, or indicate that the likelihood of a
particular business scenario occurring has changed (for example, customers responding to a notice
on defective parts, an accident or financial news). The vendor will be measured on the capability of
its architecture to support global rollouts and localized international installations. The vendor must
have the tools for IT and business users to extend and administer the CEC application. The
customer is the final arbiter of whether a company is Visionary.
Geographic Strategy (Weight 2013 and 2012: Standard)
The vendor understands the needs of the three largest markets the EU, North America and the
Asia/Pacific region and knows how to build a strategy to focus on aspects of the overall market.
In South America, Brazil is quickly emerging as a significant source of interest in CEC solutions, and
we examine vendor readiness to serve this crucial current and future market.

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Table 2. Completeness of Vision Evaluation Criteria

Evaluation Criteria

Weighting

Market Understanding

Standard

Marketing Strategy

Standard

Sales Strategy

Standard

Offering (Product) Strategy

High

Business Model

High

Vertical/Industry Strategy

Standard

Innovation

Standard

Geographic Strategy

Standard

Source: Gartner (May 2013)

Quadrant Descriptions
Leaders
Leaders demonstrate market-defining vision and the ability to execute against that vision through
products, services, demonstrable sales figures, and solid new references for multiple geographies
and vertical industries. Clients report that the vendors deliver a high level of value and return on
their commitment. The development team has a clear vision of the implications of business rules,
and the impact of social networking on customer service requirements. A characteristic of a Leader
is that clients look to the vendor for clues as to how to innovate in customer service in areas such
as embedded sensors in equipment, mobile support and extension to social communities. The
vendor does not necessarily drive a customer toward vendor lock-in but, rather, provides openness
to an ecosystem. When asked, clients reply that a Leader's product has affected the organization's
competitive position in its markets and helped lower costs. Leaders can demonstrate $50 million in
sales to new customers during the past year.

Challengers
The vendors in the Challengers quadrant demonstrate a high volume of sales in their chosen
markets (that is, more than 30% of new business by percentage comes from more than one
industry, and more than 50% of new sales come from sales into the broader installed customer
base). They understand their clients' evolving needs, yet they may not lead customers into new
functional areas with their strong vision and technology leadership. They often have a strong market
presence in other application areas, but they have not demonstrated a clear understanding of the
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architect cloud model, the product and/or vendor that may have fulfilled other Leader criteria could
be found in the Challengers quadrant. The vendors in the Challengers quadrant may not have
strong worldwide presence or deployment partners. Vendors in the Challengers quadrant can
demonstrate $50 million in sales to customers during the past year.

Visionaries
Visionaries are ahead of potential competitors in delivering innovative products and delivery models.
They anticipate emerging/changing customer service needs and move into the new market space.
They have a strong potential to influence the direction of the CEC market, but they are limited in
execution or demonstrated track record. Typically, their products and market presence are not yet
complete or established enough to challenge the leading vendors.

Niche Players
Niche Players offer important products that are unique CEC functionality components or offerings
for vertical segments. They may offer complete portfolios but demonstrate weaknesses in one or
more important areas. They could also be regional experts, with little ability to extend globally. They
are usually focused on supporting large enterprises, rather than small and midsize businesses.

Context
The established business applications for the CEC function are largely obsolete because of their
outdated programming models, lack of a native cloud architecture and poor abilities in social media
engagement as a part of a customer service offering. They are simplistic and restricted by inflexible
configuration rules and procedures that govern the input, retrieval, and flow of data and information.
They support collaborative interactions poorly. Despite the high value of these systems, they have
failed to evolve to incorporate new ideas, such as social experience design concepts, into customer
interaction applications for customer service. Without collaboration capabilities baked into the
software, interaction among employees and between employees and customers is limited, and best
practices are hard to capture or suggest.
The major vendors developing customer management software fail to see sufficient economic value
in rearchitecting their software for social experience. They are aware of the innovations brought on
by communication software and social software, and they are actively pursuing an acquisition
strategy. They understand that the social revolution in software will adversely affect sales of their
core systems during the next five years. By pursuing a tactic of acquisition and integration, Oracle,
SAP and salesforce.com are making good progress, whereas many other vendors covered in the
Magic Quadrant lag behind in innovation in this area.
Organizations are rarely able to migrate from an old system to a new one. More than 500
companies have demonstrated that it is possible to take an augmentation approach by which social
CRM tools and internal social tools for collaboration and sharing are integrated into the CEC
environment. Workflows and rules are written, often in the CRM system, and passed to the social
system. This is not ideal it's a stopgap step that supports some experimentation and sets the

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stage for more-complex deployments, as experience is gathered. This is the reason that Gartner is
pressing the concept of the CEC as a seamlessly integrated solution that embraces social media
engagement.
As more-complete social-centric CSS systems CEC suites, which have a deeper mastery of realtime analytics reach the market in 2014 and beyond, the business case for migrating to the new
tools will be easier to demonstrate. There are industry-specific and geography-specific
considerations that will cause businesses to accelerate investments in innovation in social-centric
interfaces. The U.S. is at least one year ahead of Europe and other geographies in social media for
business processes. High-tech, media and entertainment, retail and consumer goods industries,
telecommunications providers, and banking need to move forward during 2013 and 2014. Mining,
chemicals, industrial machines, and oil and gas industries are under far less pressure to evolve.

Market Overview
The market for CEC applications for the CRM customer service is fragmented, based on the
complexity of the information required to support the customer and the complexity of the business
rules or processes that form the steps in an interaction. In many parts of the world, such as India
and China, cloud-based customer service business applications are not yet the preferred model.
There are many good vendors not found in this Magic Quadrant, including:

BPMonline

Coheris

Conversocial

CRMnext, a division of Acidaes Solutions

Dimelo

Infor

Jacada

MPL Systems

Pitney Bowes

SugarCRM

Vertical Solutions

Gartner analysts are available for assistance with evaluations and comparisons of these companies
and products, and others.
As a delivery model for CECs, SaaS is being accepted by many organizations. However, Gartner
has observed resistance to SaaS in several areas, including:

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Locations in which there is greater caution due to fears regarding data privacy, latency and
application availability for example, Central and Eastern Europe, many parts of Asia (such as
India and China) and South America

National/federal governments and healthcare organizations in which regulations inhibit

penetration

More-complex environments with high call volumes, high transaction volumes and real-time
integration with legacy systems, which can slow performance

In our evaluations, we point out when we foresee a potential challenge for a product based on these
limitations. Through the second half of 2014, complete customer service solutions delivered in the
SaaS model will be most prominent in the B2B, low-volume call/contact center, or in the nonprocess-intensive B2C centers.
As the market matures, the rating scales from one year to another can shift. The result is that a
product that has not improved or declined could still show a shift in position on the Magic Quadrant
that has resulted from a change in the weighting of a criterion between 2012 and 2013.
By 2014, as more applications are built in a cloud-based model, SaaS will emerge as a critical
selection factor at all levels of the CEC. In 2013, at least 75% of CECs will use some form of SaaS
application as part of the contact center solution. This could be for knowledge management,
desktop CRM functionality, feedback management or chat. Through 2014, fewer than 20% of
organizations will select SaaS for complex business process support.

Recommended Reading
Some documents may not be available as part of your current Gartner subscription.
"Social Media for CRM Will Force a Shift From Contact Centers to Customer Engagement Centers"
"Predicts 2013: CRM for Customer Service and Support in the Age of the Everywhere Customer"
"Planned Research for 2013, CRM Customer Service Strategies, Processes and Technologies"
"Magic Quadrant for CRM Customer Service Contact Centers"
"CRM Technologies for the Emerging Customer Engagement Hub"
"Social CRM Has Made Your New Customer Service Systems Obsolete"
"Magic Quadrant Criteria for CRM Customer Service Contact Center, 2012"
"Use Gartner's Pace-Layered Application Strategy to Structure Customer Service Applications
Based on Business Value"
"Magic Quadrants and MarketScopes: How Gartner Evaluates Vendors Within a Market"

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Evaluation Criteria Definitions

Ability to Execute
Product/Service: Core goods and services offered by the vendor that compete in/
serve the defined market. This includes current product/service capabilities, quality,
feature sets, skills and so on, whether offered natively or through OEM agreements/
partnerships as defined in the market definition and detailed in the subcriteria.
Overall Viability (Business Unit, Financial, Strategy, Organization): Viability includes
an assessment of the overall organization's financial health, the financial and practical
success of the business unit, and the likelihood that the individual business unit will
continue investing in the product, will continue offering the product and will advance
the state of the art within the organization's portfolio of products.
Sales Execution/Pricing: The vendor's capabilities in all presales activities and the
structure that supports them. This includes deal management, pricing and negotiation,
presales support, and the overall effectiveness of the sales channel.
Market Responsiveness and Track Record: Ability to respond, change direction, be
flexible and achieve competitive success as opportunities develop, competitors act,
customer needs evolve and market dynamics change. This criterion also considers the
vendor's history of responsiveness.
Marketing Execution: The clarity, quality, creativity and efficacy of programs designed
to deliver the organization's message to influence the market, promote the brand and
business, increase awareness of the products, and establish a positive identification
with the product/brand and organization in the minds of buyers. This "mind share" can
be driven by a combination of publicity, promotional initiatives, thought leadership,
word-of-mouth and sales activities.
Customer Experience: Relationships, products and services/programs that enable
clients to be successful with the products evaluated. Specifically, this includes the ways
customers receive technical support or account support. This can also include ancillary
tools, customer support programs (and the quality thereof), availability of user groups,
service-level agreements and so on.
Operations: The ability of the organization to meet its goals and commitments. Factors
include the quality of the organizational structure, including skills, experiences,
programs, systems and other vehicles that enable the organization to operate
effectively and efficiently on an ongoing basis.
Completeness of Vision
Market Understanding: Ability of the vendor to understand buyers' wants and needs
and to translate those into products and services. Vendors that show the highest
degree of vision listen and understand buyers' wants and needs, and can shape or
enhance those with their added vision.
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Marketing Strategy: A clear, differentiated set of messages consistently

communicated throughout the organization and externalized through the website,
advertising, customer programs and positioning statements.
Sales Strategy: The strategy for selling products that uses the appropriate network of
direct and indirect sales, marketing, service, and communication affiliates that extend
the scope and depth of market reach, skills, expertise, technologies, services and the
customer base.
Offering (Product) Strategy: The vendor's approach to product development and
delivery that emphasizes differentiation, functionality, methodology and feature sets as
they map to current and future requirements.
Business Model: The soundness and logic of the vendor's underlying business
proposition.
Vertical/Industry Strategy: The vendor's strategy to direct resources, skills and
offerings to meet the specific needs of individual market segments, including vertical
markets.
Innovation: Direct, related, complementary and synergistic layouts of resources,
expertise or capital for investment, consolidation, defensive or pre-emptive purposes.
Geographic Strategy: The vendor's strategy to direct resources, skills and offerings to
meet the specific needs of geographies outside the "home" or native geography, either
directly or through partners, channels and subsidiaries as appropriate for that
geography and market.

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