When executives of Mathias Technology, a UK-US customer management software company, breezed into town a week ago, they effortlessly got the attention of the IT press with their story of establishing an Auckland development centre.
It’s easy to understand why. It was a good news story, an antidote to the current climate of hand-wringing over the so-called brain drain. A company with offices in Arizona and London and links to global high finance had been lured downunder by the quality and flexibility of New Zealand programmers. It wasn’t just the cost — rates were comparable to Spain, Ireland and the Netherlands — or the time difference, though these helped. It was local code-cutters’ keenness to innovate paired with innate pragmatism. Mathias intends to employ 30 staff by the end of the year — 10 are contracted so far — and the company blue-skies this to 100 by four years if things go well.
Mathias isn’t the first company that has seen untapped depths in the New Zealand IT talent pool. But we thought it worth seeing how realistic its aims of pulling in top staff and cracking the top tier of the CRM software market are.
Mathias wants half its people to be what it called “black belts” — those with 10 years of experience, big guns in Java, object orientation and presumably CRM technologies. Nick Cardwell, of recruitment firm ITEC, says there are “people around” with such skills but finding 20 by the end of the year may be “difficult”. Top programmers can choose where they want to work, he says, and if Mathias can produce an environment attractive enough, it may be successful. If it offers salaries of $100,000 it is more likely to be more successful than if it offers $60,000, he says.
Robert Walters team leader Lisa Williams says finding such high-calibre developers will require some searching. Recruiters will need to do some “networking” in the market for candidates, she says. “They wouldn’t reply to an ad.” They will be easier to locate in Auckland, and recruiters with overseas connections could be better placed to shoulder-tap returning Kiwis, she says. She would not speculate on likely salaries.
Gartner, meanwhile, has had a look at Mathias’s product range and talked to executives about their aims. Connecticut-based CRM strategies research director Michael Maoz says Mathias CRM is in a class of CRM vendors whose goal is to enable financial services organisations to create an accurate and real-time view of the customer or client.
“Generally, a customer view is difficult to present to the broker or agent because of the multiple and non-integrated data sources. DWL in the insurance industry, Chordiant and WebTone in retail banking, and Mathias for investment banking, are all niche CRM vendors that allow businesses to preserve legacy investments and quickly arrive at a more complete view of the customer.”
Maoz says Mathias’s ability to win customers will be limited by the competition from newer consultancies such as Headstrong and the large CRM integrator/consultancy practices such as those at PwC, Andersen, Accenture and CGEY going after the consulting business on the one hand, and the packaged application vendors in ERP, such as JD Edwards, and in CRM, such as Siebel, on the other.
While much of Mathias’s customer base is likely to be offshore, in the financial services hubs of London and New York, its executives have stated that they would like to win over regional banks by offering the product “at cost”. Chief executive Peter Mathias says the product would ordinarily cost only 10% to 15% of a Siebel/consultancy implementation — at about $US2 million.
Mathias is aiming at a 5% market in CRM, looking to “overlay” existing CRM applications within customers rather than displace them, using existing email systems and XML to tie customer data together. It is starting from a small base. Mathias named one client, Deutsche Bank; and the company doesn’t even feature among research company IDC’s top 130-odd CRM vendors by revenue.
Says Moaz: “Five percent is ambitious as a market share objective, but there is certainly a market for professionals who talk the talk to come in and walk the walk.” However, because the product won’t be used widely in the “multiple touchpoints” like kiosks, call centres, customer-facing web or retail outlets, Mathias’s ability to expand more broadly within any company will be limited, he says. While the company is unlikely to have general appeal as a CRM apps vendor, the weaker climate for “big ticket” software purchases in the CRM market benefits Mathias, he says, “as its approach allows businesses to do more with what they have”.
Locally represented CRM specialists are unlikely to stand still while Mathias wins a market, and doubtless many would claim such a software overlay is not needed.
Traditional ERP vendors are already seizing the CRM opportunity. JD Edwards recently announced that it was buying Java-based CRM vendor YOUcentric. Forrester Research notes that there is plenty of room for growth in JDE’s “midmarket” ($US250m to $US1b): only 3% of its 6000 customers globally have CRM systems and a low proportion of manufacturers. Other ERP heavyweights like SAP, Oracle and PeopleSoft have bought CRM specialists or are integrating features into their suites.
Last week SAP released mySAP CRM 3.0, which can function with back-office applications such as PeopleSoft’s ERP or human resources applications, or with Oracle applications. Sydney-based PeopleSoft marketing manager Ray Kloss told Computerworld that 50% of his company’s deals in the Asia-Pacific at present are standalone CRM purchases, the majority to call centres.
Analysts appear (as usual) cautiously optimistic for the enterprise applications market, including ERP and CRM. IDC Australia analyst Natasha David sees a “big hole to plug” in the midmarket, and more maintenance, efficiency and e-business projects, while IDC New Zealand analyst Mark Cribbens says when IDC asked New Zealand companies recently about what enterprise projects they were working on, ERP was the most popular category, followed by CRM.
Meanwhile, the CRM specialists will be giving no ground. Global market leader by revenue Siebel (23.4%) has no direct presence in New Zealand and Onyx recently closed its office. But Pivotal, through zestful local head Helen Robinson, is winning some big deals, and others, like SalesLogix, through implementation firms such as The Integrators and StayinFront (which took over local firm The Great Elk), aren’t idle.
Mathias Technology appears to have its basic strategy planks hammered into place, but in a highly competitive market and in the face of a global slowdown, it won’t be as easy to get journalists’ attention next time, unless it does indeed “walk the walk”.