The right contacts
CRM and contact management vendors are turning to SMEs as their corporate sales falter. This leaves choices for VARs, writes Bob Tarzey.
Supplying contact management solutions to SMEs and to the departments of enterprises used to be a simple process.
There were a handful of well-established suppliers, providing workaday products through resellers certified to sell and support them.
But in the past few years a number of things have happened to make the market more complicated for resellers and SMEs alike.
A collapse in the corporate market for business applications has left enterprise vendors looking for new markets, and they have increased their focus on SMEs.
Also, after earlier failures, a viable market for hosted business applications is emerging; SMEs are an attractive target for these services too.
Now Microsoft has turned its guns on its own ISVs and released a CRM product.
In such a stormy market, which vendors should resellers work with and what advice should they be giving SMEs?
Contact management applications can be considered at three levels. The simplest does just that: contact management.
The most basic way of doing this is using the contacts facility in products such as Microsoft Outlook/Exchange and Lotus Domino/Notes.
Moving up a gear there is salesforce automation, which speaks for itself. And then there is full-blown CRM, which moves beyond the salesforce to encompass support teams, call centres and marketing.
The vendors already entrenched in the SME market are facing up to the challenges. They have two clear advantages: currently they own the market and they have the reseller relationships to access it.
These include Sage, FrontRange, Onyx, Maximizer and Pivotal. Their products are mature and they run mostly on a Microsoft platform.
Vendors that, in the past, have primarily sold their products to large enterprises are taking varied approaches as they turn to the SME market.
SAP has released two new products, to be sold as licensed software via resellers. Oracle has a new package that includes hardware, systems software and services, targeted at the mid-market.
PeopleSoft added mid-market solutions to its portfolio last year when it acquired JD Edwards. Siebel has a new version of its software to be sold as a hosted solution to SMEs in the UK by two partners, IBM and BT.
Siebel's decision to try a hosted solution for SMEs is in response to Salesforce.com, which set up in competition a few years ago.
Salesforce.com has made inroads into the UK market, selling its hosted solution directly to the mid-market and enterprises.
While Salesforce.com has a high profile it does not have the market to itself. RightNow has been selling a hosted service in the UK for a number a years, and in 2003 NetSuite, an Oracle partner, launched a hosted service.
Pivotal and Onyx also offer hosted solutions.
So which vendors will prevail? The enterprise vendors, trying to move down into the SME market, may give up if they do not see a quick return.
Their SME customers could find themselves high and dry as the enterprise market picks up again.
The pervasiveness of Microsoft as a deployment platform may worry SMEs, some of which rue their reliance on a single supplier. This could prove to be a barrier for Microsoft as a new entrant in the CRM market.
When an application is being run as a utility by a third party, the platform is irrelevant. In fact, most of the hosted CRM solutions available today are not running on a Microsoft platform.
But sensitivities around customer data and general suspicions about outsourcing applications make it unlikely that hosting will become the favoured mode of delivering contact management and CRM solutions overnight.
If the market for hosted solutions continues to expand, there is an interesting paradox: the vendors established in the SME market are selling mainly licensed solutions via the channel, while the newer, hosted solutions are being mostly sold direct to the mid-market and enterprises.
The channel is the key to the vast potential of the SME market.
If hosting is to become pervasive in the SME market, either the established vendors will have to come up with an offering for their resellers, or the hosted vendors will have to start working with the channel and offer their solutions to the same resellers.
The race is on.
Bob Tarzey is service director at Quocirca.
www.quocirca.com, (01753) 855 794.