Driven by end-user demand, mid-market CRM applications, such as those offered by Maximizer Software Inc., NetSuite Inc., Sage Software Inc., Salesforce.com and SAP America, are gaining in sophistication. (Click here to read about NetSuite's new release, and here to learn about SAP's on-demand initiaitive.)
While virtually all on-demand CRM vendors provide features to support sales force automation, marketing campaign management and/or customer service, providing front-to-back office integration has become a clear differentiator in vendor selection.
On-demand CRM solutions have been around since the mid-nineties. In fact, my third CRM implementation, (for a 125-person start-up) was an on-demand application which went out of business in 2002. Since then, acceptance of Software as a Service (SaaS) CRM has reached a point where the delivery model is no longer an issue. Competition for market-share in the mid-market CRM space has sizzled of late, with each vendor articulating their unique business value.
In general, on-demand / SaaS delivery models will deliver quick ROI in terms of:
- Ease of use
- Rapid deployment
- Simplified configuration & customization tools
- Low cost of entry & ownership
However, these models are at risk of becoming another commodity. End-users quickly realize that business needs of growing organizations cannot be met without significant custom integration services that enable:
- Visibility across customers, products, partners & channels
- Front-to-back office integration for operational decision-support
- Multi-channel customer interactions
- Pricing & availability
- Order management & transaction processing
Aberdeen believes early adopters will soon find they have outgrown their sales-focused CRM applications and will require more robust solutions to fully integrate customer data contained in their transactional (ERP) systems. This evolution towards building a culture of customer-centricity is driven by customer expectations for a more
personalized purchasing experience. Companies focused on retaining their most profitable customers will be the first to invest in resources, services and technologies that support customer-centric initiatives.
Integrating customer data to provide both operational and strategic decision-support to those in customer-facing roles has been shown to
positively impact performance in key metrics: annual revenues, customer retention and customer acquisition rates.
Where's the Business Value?
SAP and Sage CRM solutions both offer hybrid mid-market CRM models, providing customers freedom of choice as well as a clear migration path. End-users that require a rapid initial deployment, and intend to migrate to an on-premise CRM solution to manage the customer lifecycle comprehensively -- from contact to lead to order through delivery -- will find value in this delivery model. Although both companies offer similar migration options,
SAP will continue to focus its CRM efforts on the MME and large enterprise markets.
While Maximizer and Sage CRM Solutions both offer stand-alone CRM applications, the companies rely on a network of indirect channel partners to configure, integrate, and deploy the software. Sage offers rapid CRM integration (less than three days) through its Accpac Pro and Advantage Series ERP systems. Conversely, Maximizer's Enterprise Edition provides a toolkit for integration with standard ERP/Financial applications such as Great Plains as well as out-of-the-box integration with QuickBooks.
Beyond the easy to use features and intuitive user interface, significant value in the form of business process workflow is provided through the companies' value-added resellers (VARs). (Maximizer and Sage each have a solid track record of satisfied customers in the SME and MME markets.
NetSuite offers a fully integrated suite of functionality that includes: CRM, Accounting/ERP, and E-commerce. Product-based companies in wholesale/distribution, online retail, business services, and hi-tech industries, have adopted NetSuite for its robust functionality and tight integration of customer transaction data with:
- Order Management
- Multi-product inventory management
- Demand planning / Safety Stock
- Partner relationship management
NetSuite's strength is in front office features to support sales force automation, marketing campaign planning and execution, and customer service processes. Growing organizations that seek one-stop shopping and low cost of ownership for an on-demand solution should evaluate NetSuite.
Salesforce.com, an early success story in the SME and MME space may have reached a market maturation / saturation point.
In relying on AppExchange partners to provide functionality the company does not plan to develop in-house, Salesforce has created unnecessary complexity and a certain amount of instability in its go-to-market strategy. For example, in providing integration between Salesforce.com and SAP's ERP applications through AppExchange partners -- Above All Software, Bluewolf, Bridgewerx, CastIron Systems, Integration Technologies and Pervasive Software -- Salesforce.com maintains it will provide business value.
However, not all this business value will necessarily benefit end-users. Our assessment is that this will:
- Allow current SAP ERP customers the option to select Salesforce.com over SAP
- Increase customer confusion regarding benefits and drawbacks of AppExchange
- Provide AppExchange vendors with new customers
- Generate additional OEM platform license revenues for SFDC through its AppExchange partner channel
A standard SFDC license is $65 per user monthly. Each ISV generated license will be based on a per monthly user fee on top of the SFDC fee. End-users should evaluate their total cost of ownership based on bundled license models.
Leslie Ament is Director of Customer Intelligence Research at Aberdeen Group in Boston. This commentary was adapted from a research brief. Leslie can be reached at Leslie.Ament@aberdeen.com.