While suffering among software vendors has been almost universal during the current downturn in IT spending, customer relationship management (CRM) suppliers have been hit harder than most. No more so than E.piphany. In its second quarter of 2002, the company – once tipped as a direct challenger to market leader Siebel Systems – managed to sign up just six new customers, triggering a plunge in software sales from $16.3 million to $6.8 million, marking its sixth consecutive quarters of revenue decline.

Many organisations looking at CRM purchases might find that too risky a profile, but analysts are adamant that E.piphany should not be written off – indeed some even

argue that it is well-positioned to reap the benefits of a predicted bounce-back in the CRM market.

Central to those suggestions is E.6, a re-working and extension of the company’s CRM suite that finally integrates the separate CRM applications that E.piphany has acquired during the past three years through a web services-based, componentised architecture. Released in August 2002, E.6 covers the core CRM triumvirate of marketing, sales and service applications and has drawn hearty applause from analysts.

The suite’s big selling point is that it is built on standards-based web services technology. This should enable specific modules in E.6 to be integrated, implemented and sold as separate components that can be closely integrated with enterprise resource planning and other applications – including CRM rival’s products. The upshot is that customers should be able to take a best-of-breed approach to their CRM roll outs without sacrificing tight integration.

Technology consultancy Patricia Seybold Group thinks E.6 has stolen a march on rivals here. In a recent evaluation of the CRM models of Oracle, PeopleSoft, SAP, Siebel and Epiphany, analysts from the group came to a stunning conclusion: “In all the framework-based comparisons that we’ve done over the past 11 years, we’ve always said, ‘There’s no best. We can’t say that any longer. Clearly, E.piphany E.6 is the best architecture in the group of five CRM [products] we evaluated. It’s open, flexible, easily customisable through metadata, and offers a broad range of approaches for integration of external applications.”

“We think [E.piphany’s] major R&D investment in E.6 architecture will pay off,” the group predicts. Analyst praise does not come better than that, but it is echoed elsewhere. Through its ability to offer a high level of integration with existing environments E.6 can pull in customer data from a wide range of systems to support individual transactions, says AMR Research analyst Kevin Scott.

“Instead of having to own all the data during a customer interaction, the tools provided are designed to reach out to data in other legacy applications and use it in the context of each individual interaction,” adds Scott.

This also works the other way: E.piphany’s customer analytics module can be integrated into other legacy, proprietary or non-CRM applications to provide real-time customer analytics to departments and employees outside of the CRM sphere, he adds.

The result is that E.6’s architecture makes it three times faster to implement and integrate than competing suite products, claims E.piphany’s European product marketing manager Soren Pallesen.

The big question now is: can E.piphany take advantage of that? First, potential customers should not be put off by the fall in sales in reason quarters, says CEO Roger Siboni. That performance stemmed directly from purchases being put on hold as customers awaited the release of E.6, he says.

E.piphany is also not going to run out of cash. “We have $300 million in the bank and our cash burn is insignificant,” says Chris Slade, E.piphany’s UK managing director.

But, says Giga Information Group analyst Erin Kinikin, E.piphany must quickly secure bluechip reference customers for E.6. “People who are choosing componentised CRM will be doing so this year,” she says. After the failure of so many pan-enterprise CRM implementations, there is significant demand for componentised CRM, especially within the financial services, telecommunications and high-tech sectors, she says.

But the company will have to contend with a glut of uninstalled traditional CRM software that customers have yet to roll out, says Forrester Research analyst Bob Chatham. This glut will not significantly dissipated until 2004, he says, and will mean the overall CRM market will shrink by 5% in 2002.

Having seemingly got its technology right, E.piphany now needs to show its strategy will buck some of those negative trends.