In the battle between vendors of on-premise customer-relationship management (CRM) products and those offering CRM software as a service, on-premises purveyor Maximizer Software this week added one to the win column.
TigerStop LLC, a manufacturer of stop/gauge and pusher systems for various industries, has jettisoned its Saleforce.com CRM system in favor of Maximizer Enterprise, which it has installed on premises at its main facility in Vancouver, WA.
TigerStop is a small firm with fewer than 100 employees across its offices and assembly plants in Washington state, the Netherlands, and India. The company's eponymous main product acts as an automated feeding/stop system that can be integrated into cutting machinery for industries from woodworking to plastics to metals. TigerStop markets its products through a vast global network of dealers.
About four years ago, according to TigerStop's IT Manager Ed Scott, the company contracted with Salesforce.com to use the vendor's service-based CRM software. TigerStop needed a system that would help manage its vast network of sales channel partners and distributors, a network that is spread out across six continents, with most of those sales representatives situated close to local customers.
When the Salesforce application was originally deployed, the IT staff at TigerStop who configured it had little experience with CRM systems, Scott told Managing Automation. By the time the company began to reevaluate its CRM system toward the middle of last year, it was out of touch with the company's business processes, Scott said.
Another consideration in TigerStop's CRM deployment was its need for that system to interact with the company's backbone Macola ERP product from Exact Software, which governed all of the manufacturer's back-end transactions.
The cost and time involved in integrating Macola with the Salesforce on-demand system was prohibitive for the small company, Scott said.
TigerStop could have stayed with Salesforce and gotten its internal processes back into synch with the system, Scott said, but the cost factor sealed the deal. The company was able to purchase and implement the Maximizer product for the cost of a year's worth of service from Salesforce, Scott said. Over the lifetime of the product, that would have amounted to an extra expenditure of about $250,000, he noted.
Through Maximizer Enterprise (eCRM), Scott said, the company tracks all of the machines it manufactures, allowing TigerStop to manage its support services directly with customers.
The company purchased a 40-seat license for eCRM, added an application server on premises, and integrated the system with its ERP platform and an e-learning program that tracks classes employees have taken.
Another pivotal aspect of the product, Scott said, is that it is configured to automatically feed sales leads to dealers based on their location. In turn, the dealers can access the eCRM system through a Web-based portal that allows them to interact with sales data.
Maximizer claims 7,500 customers of its CRM products worldwide. Among its manufacturing customers are Daktronics, a maker of electronic displays; steel company S&L Fabricating; and Martack Specialties, a manufacturer of presentation boards. Maximizer ended its latest fiscal year with $17.5 million in revenues, and recorded profitability for the third consecutive year (earnings hover under $500,000).
A spokesperson for Salesforce.com was not available for comment by press time. The on-demand CRM pioneer has not seen as much success in expanding into manufacturing as it has in sectors such as business services, financial services, and technology software and services, whose customers form the vendor's base, according to a recent report on the SaaS market by investment banking firm Boston Corporate Finance.
But neither have other CRM vendors, hosted or not, noted Robert Bois, a CRM analyst with AMR Research. "Overall, manufacturing has been relatively late to adopt CRM in general," he said. "If you look at most CRM vendors, with few exceptions, manufacturing is by no means the bulk of their business."
And the preferences of different sectors and demographics for one model over the other are far from clear, he said. "The vendors in particular would like to paint a very black and white picture around this," Bois said. "Especially the traditional CRM vendors would like to paint the picture that software as a service is great for small deployments, for the mid-market, for low complexity. And the reality is, it's going to make sense for a lot of different organizations based on a lot of different characteristics."
Research indicates that the SaaS model is likely to grow roots in many industries. A recent report from research firm IDC augers a strong 18.4% compound annual growth rate for the SaaS market, an estimate that would mean a jump from $5.5 billion in spending in 2005 to $10.7 billion in 2009.
At the same time, experts also seem to agree that SaaS is unlikely to dislodge the more traditional delivery model. "I fully anticipate that we'll see large global 2000 companies that will continue with a blend" of hosted and on-premises software.
TigerStop's experience, for instance, points to the fact that companies are still wrestling with the issue of security in an SaaS model. "We have quite a bit of pretty sensitive information," Scott said, "and if it's locked down behind my firewall, I know where it is, and I don't have to worry."
When it comes to quantifying the use of software as a service versus that of on-premises packages, Bois said, the challenge is one of nomenclature. With the on-demand universe comprising everything from true software as a service to the more antiquated hosted software model, determining who is using what can be daunting.
That said, when the entirety of on-demand options is considered, Bois said, "services [industries] and manufacturing seem to be fairly similar in terms of their propensity to adopt hosted customer management software."