Gartner Magic Quadrant: Enterprise Social CRM Vendors to Target Niche …

Recently, we took a first look at Gartner’s Magic Quadrant for Social CRM, and in particular those vendors who made it into the Leaders quadrant. We also noted that by far the most populated quadrant was the Niche player’s quadrant, making it unique among Gartner’s MQs. Today we will look at who those Niche players are, what they are selling to qualify as Niche players, and what is likely to happen to them.

The Social CRM market is still developing, and according to Gartner’s Social CRM report, the space is likely to see a lot of consolidation through acquisitions over the course of the coming months.

Social CRM Niche Players

In other software areas, it has generally been the case that when large vendors perceive a gap in their own portfolios, they tend to buy the technology rather than develop it themselves. And it is generally Niche players, who produce a single product or set of technologies, who end up in the acquisition firing line. There is no reason to think that in the Social CRM space, things are going to be any different.

To recap on what qualifies a vendor for inclusion in the Quadrant in the first place, the vendor must:

  • Cover at least two of the three main areas of CRM — sales, marketing, customer support
  • Have references from at least five clients who actively used the product in 2011
  • Have shown at least a 20 percent revenue growth in 2011
  • Include functionality for marketing, sales or customer service departments — such as tools for social monitoring, managing customer communities, fostering customer interaction and  managing integration with traditional CRM applications.

On top of that, Niche players provide “useful, focused, technology,” Gartner says. They understand the way the market is changing and develop their products to suit.

However, compared to the Leaders they are limited by narrow functionality, lack of a dynamic growth strategy, limited road maps, and limited potential for growth.

While Niche players are successful in their own space and in relation to their size, they need to develop their differentiators before their competitive edge disappears — something that is likely to happen by the end of the year.

Social CRM Acquisitions

Taking all these different elements into consideration, as well as the fact that major vendors like Oracle and Salesforce have been snapping up companies in the Social and CXM space, it would not be out of the question to see a number of these companies acquired in the coming months.

Marc Benioff has made no bones about the fact that Oracle is on the prowl for new acquisitions and despite Larry Ellison’s insistence that Oracle won’t be buying anything anytime soon, he has said this before, and then gone out a bought whatever he needed to plug portfolio holes.

Here, it is pertinent to remember that Oracle has only made it into the Challengers Quadrant in this MQ, while Salesforce is cited as a Leader. How long Oracle will tolerate this is anyone’s guess, but probably not for very long. So who made it into the Niche quadrant? In alphabetical order they are:

Artesian

Strong growth over the past year as well as evidence of the benefits of Artesian technologies to sales teams have projected it into the Niche quadrant this year.

  • Strengths: Strong growth over the year has led Gartner to estimate revenues of US$ 10 million, with sufficient capital funds for future growth. Gartner also estimates that 85 percent of its use cases are in sales, with the rest in customer service and marketing. As a result, Artesian has a good understanding of B2B Social CRM with proven use in lead management, social augmentation and social analytics. It has also spent time building industry-specific taxonomies, which should attract considerable interest.
  • Cautions: Artesian lacks Social CRM breadth and has not really focused on delivering support for user cases like peer-to-peer external communities. It also has limited presence outside of Europe and is only available in English so far. Gartner says there is a likelihood of acquisition during the next two years.

Demand Media

This year, Demand Media returns as a Niche player specifically in the marketing, e-Commerce and customer service use cases.

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