ChRMing the channel

There’s a new brand of enterprise software designed to manage channel relationships, but it may be years before companies actually embrace it.

Spex, a division of Reston, Va.-based analyst firm the Meta Group, recently

delivered its first report on channel relationship management (ChRM, pronounced “”charm””). Spex looked at seven products currently available from vendors including Comergent, Oracle and Pivotal.

According to Spex analyst Zeynap Babat, the software comprises elements of enterprise resource planning (ERP), supply chain management (SCM) and customer relationship management (CRM), as well other functionalities like marketing, price and lead management.

Spex measured the software on these and five other criteria. None of the software packages contained all 11 elements, prompting Babat to conclude that there will be consolidation and partnering between some of the companies before the market even begins to mature.

Babat estimates that the American market size for ChRM right now is approximately US$280 million. That will probably double by 2005-2006, but even then it represents only a tiny portion of the market commanded by popular applications like ERP and CRM. “”We talk about billions in the ERP market. With CRM, just Siebel’s revenues are $20 billion or something. This is really a niche market compared to those,”” said Babat.

The market is still so small that Spex hasn’t broken out numbers for specific geographies. The American numbers are applicable to Canada on a proportional base, said Babat.

There is some interest from early adopters — mostly companies in the Global 2000. The key market for ChRM is companies that generate 70-80 per cent of their revenues through channel partners. But companies that are interested in a ChRM should proceed with caution, added Babat. Some of the solutions are offered by small software vendors with unproven track records. “”Given the current economic downturn (customers) need to be cautious about the future economic viability of the companies,”” she said.

Offerings from industry giants like Oracle should slot reasonably well into existing software installations. “”If they have an in-house ERP or CRM system — all these ERP and CRM guys are offering some capabilities around this functionality,”” said Babat, who pointed out that PeopleSoft already offers a package with some ChRM elements.

When conducting its research, Spex didn’t approach channel players for feedback. ChRM is designed as a top-down view of the channel, with most of the software’s benefits like brand-building and marketing focus, falling to the enterprise. But expediencies realized by the enterprise should also trickle down to its channel partners. “”When they make the selection decision, most of the companies bring in their important channel partners into the room with them to see the product,”” Babat noted.

Resellers will be able to log into most ChRM packages via a secure connection to help manage the relationship with their vendor partners. A similar model, but one hosted by distributors, has been available to resellers for some time. Last October, for example, Ingram Micro Canada opened its own XML-based (extensible mark-up language) ordering system to resellers.

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