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CRM - citizen relationship management?
That's right, Tom Siebel wants to empty your dustbins...

By Ben King

Published: Tuesday 20 November 2001

Last week, Siebel appointed former UK PM John Major to its European board. Why? Because government is the next big market for CRM and all the big vendors are eyeing public sector budgets with greedy eyes. Ben King reports.

Many of the big customer relationship management (CRM) players - including eWare, Onyx, Oracle, and Siebel - are hungrily bidding for contracts in the government space. They are promising to cut project delivery times, reduce implementation costs and deliver better services, all by selling modified versions of the software they have been selling to businesses for years.

It makes a lot of sense. Many of the things local government does basically involve running call centres - from arranging for rubbish collection to allocating housing benefit or student loans, they have to correctly store details about 'customers' and manage contacts with them.

So why not use existing call centre software and customer tracking software?

The contracts are beginning to roll in. In June, the US state of Michigan announced it will "standardise" on Siebel Systems - meaning it will move all its hardware onto Siebel technology. It's a massive contract win for the vendor. In the UK, Leeds City Council is the first to start installing Siebel.

Local government is obviously the logical place to start, as well as a huge market. But Siebel and co are clearly focused on signing up national customers, from quangos and government agencies to entire departments.

Major joins a quartet of heavyweight retired politicos from the four biggest markets who will team up to open doors for Siebel in France, Germany, Italy and the UK. Though Major may spend some time twisting the arms of local politicians into buying Siebel, his main job will be to start selling Siebel to central government.

Other CRM vendors are getting in on the act, with Onyx establishing a special task force to sell ebusiness applications to government and bidding for a contract in Brent (where it happens to share its name with one of the capital's leading waste disposal contractors).

Oracle recently signed a deal with Cambridge City Council, which is projected to form the basis of a broader CRM project covering all the council's services.

Some commentators look at these developments with weary incredulity. "E-government? I call it e-legacy," said one analyst who asked not to be named. "The only reason they're moving into this space is that their core markets are saturated."

For Siebel, however, going for government is a no-brainer, as a spokesman explained: "It's about scale. CRM started off in the business-to-business space, where companies manage hundreds or thousands of customers. Around two years ago, it started moving into the business-to-consumer space, with hundreds of thousands of customers. Now we're moving into the government-to-consumer space, where there are millions of relationships to manage."

The government market certainly isn't a glamorous place to be pitching for business, and the general reputation of government IT projects is extremely bad. The typical life cycle of a government IT project has been repeated again and again: big contract announced; protracted tendering process; big systems integrator wins deal; personnel change, specifications shift, project runs over budget; project gets cancelled amid a storm of bad publicity.

One of the many reasons why big government IT projects typically go over budget is that they are building things from scratch, many of which basically reproduce the functions of CRM software anyway - for example they keep a big file of customer data and present it to call centre operatives.

Most government departments in the UK will have similar requirements for their benefits systems, and countries across the world will have basically the same requirements too. So, rather than getting a company like EDS to build a bespoke database system for every UK council, why not get a company like Siebel to develop an off-the-shelf solution, one they can sell from Chelmsford to Kalamazoo?

It ought to be cheaper to buy, quicker to deploy and easier to integrate and expand. In theory, it should even go wrong less often. That's the story from spokespeople in local government, at any rate, though it's too early to tell whether solutions will really be delivered on a massive scale.

Local government is also counting on CRM systems to help it to deliver services electronically. Government organisations increasingly find themselves having to offer services through a number of different channels, for example, internet, call centres, walk-in offices and eventually, perhaps, mobile phones.

It's a much tougher proposition than just running an office or a call centre, and one that no one in the public sector has really cracked. However, specialist companies like Siebel seem to have a better chance of making it work than big systems integrators.

The big e-government players - think Capita, EDS, ICL, and ITNet - are not likely to find themselves instantly displaced. Instead of building their own CRM-style systems for government, they'll be paid to put in eWare, Onyx or Siebel.

As Ivan MacDonald, CEO of eWare, said: "They have the experience of dealing with government that CRM companies don't have. So they will have to keep on working with the big e-government players."

But whether CRM companies will be able to deliver their services more efficiently than the big e-government players on their own remains to be seen. Compared to their corporate clients, they will find it much harder to deliver in the public sector, with its tortuous decision-making procedures and complex maze of vested interests.

Yet for anyone who can crack this market the rewards are long contract times and substantial public sector budgets that should keep them in lucrative business for years. But the CRM industry is already widely criticised for the high number of projects that don't deliver. There are bound to be some big failures on the way. But in the public sector, it's much harder to keep them quiet.