VARs key to cultivating CRM sector
Resellers vital to vendors targeting the SME market for CRM sales
Resellers are the key for customer relationship management (CRM) vendors looking to target the SME market for CRM sales, according to analysts.
Market watcher Datamonitor has predicted that after a slump in 2002, CRM spending will not meet 2001 levels for at least four years. The firm added that SMEs would be virtually the only businesses buying the software.
Typically, smaller firms lag behind large enterprise in adoption of technology, but currently they are the only ones likely to be buying CRM software, said Evan Kirschhiemer, lead technology analyst at Datamonitor.
"The only way to make sales in the lower end is by having a sophisticated indirect channel, where resellers have the relationships with buyers," he said.
Smaller firms approach CRM implementations from a fairly simple perspective, said Matt Dolton, business development manager at Microsoft Gold partner Kynetix.
Customers usually want something to address a specific problem, such as contact management, he added.
"But CRM is not like an account ledger sale. Once you do one part, you realise how it links to others, and needs to grow. This is why it's important for customers to have an ongoing relationship with the VAR," Dolton said.
The changes in the market are likely to affect vendors, and competition is heating up, Kirschhiemer said.
Many of the enterprise-class vendors such as SAP, Oracle and PeopleSoft have reacted by pushing out versions of their software aimed at SMEs.
But these only appeal to higher-end SMEs that have enough IT staff to run the systems and like the idea of fixed prices for consulting, said Kirschhiemer.
"The ones that will win out are firms such as Sage, which offer basic CRM functionality at low cost. Firms such as Onyx and Pivotal may suffer," he said.
Microsoft's entry into the market later this year will intensify competition, Dolton said.
"Its brand will be a big influence. But integration costs are also key. Customers will like the idea that Microsoft CRM will integrate easily with their existing infrastructure," he said.