The
proof of the midmarket's power is how focused enterprise giants like
Siebel Systems have been on introducing new or improved midmarket
solutions to expand their market share. For midmarket users that means
the cream of the CRM software crop is working hard to cater to their
special business needs and desires.
Last fall CRM market leader Siebel launched CRM for Everyone, its
strategy to deliver CRM applications to enterprises and medium-size
businesses in both hosted and traditional client/ server options.
Part of its approach is to offer products that support a variety of
standards and open source protocols, including J2EE, .NET, and Web
services.
Integral to the CRM for Everyone strategy is Siebel CRM OnDemand.
Also launched last fall, OnDemand is Siebel's reentry into the hosted
space. (The company pulled its initial foray into hosting, sales.com,
two years ago.) Hosted in partnership with IBM, OnDemand offers customers
sales, marketing, and service functionality.
With the goal of gaining a "commanding lead" in the midmarket, shortly
after launching OnDemand, Siebel acquired CRM application service
provider (ASP) Upshot. Siebel plans to integrate the Upshot and OnDemand
offerings.
According to CEO Tom Siebel, this demonstrates the company's commitment
"to provide CRM solutions for every segment of the market."
"CRM for Everyone is about letting companies of all sizes and industries
decide what's best for them," says Keith Raffel, Siebel's vice president,
CRM OnDemand. "We don't presume to decide whether an on-premise solution
or a hosted one or a mixture of the two is best for the customer.
Siebel offers them all and lets the customer choose."
In 2003 Oracle released its Oracle E-Business Suite Special Edition,
a midmarket solution comprising 15 of Oracle's most popular applications,
including financial, order management, purchasing, and inventory.
Sold in a way that many midsize companies prefer to buy technology,
the Special Edition includes software, hardware, support, and implementation--and
is sold through a distribution channel rather than directly through
Oracle.
"Oracle continues to hear from its small and medium-size customers
that what they really need from enterprise software vendors isn't
slimmed down versions of core products marketed to the midmarket,"
says Robb Eklund, Oracle's vice president of CRM marketing. "Instead,
SMEs are telling us that they need the same scalable, secure, functionally
rich solutions that larger companies use, delivered to them in cost-effective
packages."
Recognizing the varying needs of the midmarket, SAP is aiming its
SAP All-in-One product at companies at the higher end of the midmarket,
while its Business One solution targets smaller midmarket firms. In
addition, SAP is offering 23 vertical versions of its midmarket solutions.
"We have really focused on rapid implementation of the type of capabilities
found in mySAP, and [have] a strong focus on microvertical approaches,"
says Bill Wohl, vice president of product public relations at SAP
America. "These smaller businesses need solutions specifically tailored
to their operations, but need them up and running within weeks."
SAP has teamed with more than 300 channel partners to reach the midmarket.
According to Wohl, SAP expects 15 percent of its overall licensing
revenue will come from the midmarket by 2005.
PeopleSoft has placed reaching the midmarket among its top three initiatives.
Although the company has been serving the midmarket for more than
six years, it wasn't until spring 2003 that the company began a series
of aggressive moves to get the attention of users. The first push
was PeopleSoft Mid-Market, 13 new products aimed at businesses with
annual revenue between $50 million and $500 million. The products,
specially designed for the midmarket, focus on CRM, finance, human
resources, and procurement, and most of the processes are more than
70 percent preconfigured.
Shortly after launching PeopleSoft Mid-Market the company acquired
midmarket vendor J.D. Edwards. PeopleSoft has integrated its original
offering with J.D. Edwards' applications under the new PeopleSoft
EnterpriseOne umbrella. "We are taking certain functionalities, like
PeopleSoft's call center solutions, and building that out on the EnterpriseOne
line," says Les Wyatt, vice president and general manager of EnterpriseOne.
This past January PeopleSoft released a hosted, full-suite solution
built from the ground up for the midmarket, according to Bill Henry,
vice president of marketing and strategy, PeopleSoft Global Services.
The offering includes hosting and application-management services
for all of its front- and back-office applications, as well as database,
storage, and hardware solutions. The company has partnered with application
provider Surebridge to deliver the hosting service.
"About one half of our customers are midmarket companies, and we recognized
that these firms have very unique needs," Henry says. "They have all
the complexity of an enterprise-level organization, but with limited
IT staff. Now, with our midmarket hosted offering, these companies
can devote their IT resources to projects that drive growth, not to
maintaining software."
Hosting Vendors Serve Up Hot Solutions
Some industry watchers claim that the action in the midmarket is being
fueled by hosted CRM solutions. "Siebel would not be interested in
that space if it were just small business or stagnant," says Ian Jacobs,
principal analyst for CRM with Current Analysis. "Hosted solutions
are where the midmarket growth is real. In other areas of the midmarket,
enterprise vendors use those sales as replacement for high-end sales
that are not happening. It makes sense, but it's not the huge sales
that were expected. That is coming."
Gartner CRM Research Director Wendy Close predicts that by year-end
2004, online CRM application service revenue will account for more
than 25 percent of the CRM application market for SMBs. Most industry
watchers attribute the boom to the lower cost, decreased maintenance,
and quicker deployment of hosted offerings.
Salesforce.com paved the way for much of the ASP market via its evangelical
approach to marketing. Over the past few months the company has been
very busy with product upgrades. This past fall Salesforce.com unveiled
major upgrades to its hosted CRM service (Winter '04) and its on-demand
application server (sforce 2.0). The company also recently released
a version of its product that integrates with Microsoft Office.
In addition, Salesforce.com has continued its rapid growth. The company
has about 9,000 customers and at press time was finalizing its initial
public offering, valued at $115 million.
Even rival Mike Doyle, chairman and CEO of Salesnet, cheers the IPO,
noting that it is further validation of the ASP market. But Salesnet
has its own plans.
Last fall Salesnet began offering a private-label edition of its application,
which can be fully preconfigured to meet the needs of its OEM customers.
Through the application syndication model, Salesnet's online CRM solutions
can be rapidly deployed by partners and bundled into their own offerings.
In March Salesnet announced Guided Performance Selling, a hosted solution
that includes three components: software-as-a-service (its delivery
model), configuration-as-a-service (preconfigured sales solutions),
and integration-as-a-service (more than 200 prebuilt application connections).
"Better salespeople equal better sales, so everything we do is to
help salespeople," Doyle says.
NetSuite has also been busy. The company changed its name (it was
NetLedger) to reflect its fully integrated front- and back-office
applications. "Midsize companies are moving beyond internally focused
CRM features like tracking forecasts to implementing advanced features
like order management so they can more effectively sell and service
customers," NetSuite President and COO Zach Nelson says.
In January the company launched version 9.5, which has a heavy emphasis
on embedded real-time analytics, and is preparing for its major 10.0
release. The company also added customization capabilities, including
NetSuite Custom Records and NetSuite Custom Code. Custom Records allows
users to manage complex data relationships; Custom Code allows users
to define business logic that is industry and process specific. Not
only is this a boon to users but it also quiets skeptics who have
long criticized ASP solutions as too generic.
Although Salesforce.com also offers customization, NetSuite is taking
a slightly different tack by requiring code changes to be done inside
the NetSuite application using JavaScript. This makes the NetSuite
code changes platform agnostic.
Midmarket Mainstays--and Microsoft Mania
Sales, support, and distribution of CRM products into midmarket firms
are very different from enterprise companies. Midmarket companies
are often looking for more training, complete product sets, and vendors
that can hit time and delivery objectives. So, incumbent midmarket
CRM vendors like Onyx, Pivotal, and SalesLogix may be better positioned
to take advantage of the boom. But the increased competition makes
it harder to get noticed and easier to be squeezed out by vendors
that have more money and resources.
That may have more midmarket players merging, according to Sheryl
Kingstone, CRM program manager at the Yankee Group. She predicts that
larger firms may eat up point solution vendors, and midmarket vendors
may merge to expand their opportunities.
One of Pivotal's moves is to merge: In February the company was acquired
by CDC Software, a wholly owned subsidiary of chinadotcom. The deal,
valued at nearly $57 million, will give Pivotal increased R&D, tech
support, and marketing resources. The company is also looking to simplify
customers' initial implementations. Pivotal launched its FastPath
services program, which is designed to help users deploy Pivotal in
as few as 20 days. The company has also released enhancements to its
vertical offerings, like new lead and marketing management capabilities
within its Pivotal Healthcare Insurance offering. And it plans to
release two major upgrades this year.
While Pivotal is in a state of flux, Onyx officials say the company
intends to woo Pivotal customers. Onyx has put in place a formal program
to help Pivotal users migrate to the Onyx solution.
Onyx also introduced its own quick-start option, called CRMExpress,
which is a fixed-price, out-of-the-box application. It is designed
to be up and running in under 90 days. Customers that prefer a hosted
model can select the IBM eBOD CRM On Demand solution, which delivers
Onyx enterprise CRM functionality via ASP.
Onyx is not without its own uncertainty. Brent Frei, the company cofounder,
chairman, and CEO, announced earlier this year that he plans to step
down as CEO. Frei will remain chairman of the board. The company is
currently in the process of a CEO search.
Meanwhile, SalesLogix continues to add to its partner channel. This
allows the company to have a network of resellers and third-party
add-ons to help strengthen its position and reach. To support both
partners and customers, SalesLogix's parent company, Best Software,
has launched the QuickStart program, which bundles software, support,
services, and training into one solution that has been designed around
best practices.
QuickStart allows users to implement SalesLogix in 30 days, and comes
with a guaranteed upfront, fixed price.
To give customers more choice, this past December Best Software's
parent company, Sage, reached an agreement with Computer Associates
to purchase ACCPAC. According to Best CEO Ron Verni, the acquisition
will enable the company to offer CRM via an ASP option, and will increase
its reach through the ACCPAC reseller channel. At press time the companies
were still awaiting regulatory approval to close the deal.
FrontRange has been quietly planning big changes the company will
launch later this year. Its GoldMine and Heat products will move to
one platform, and the company will introduce additional products,
functionality, and delivery channels.
Many observers claimed that Microsoft's reputation as the 800-pound
gorilla sparked the shake up of the CRM space. The software giant
announced its entry in 2002 and over the next 12 months rivals scrambled
for position while they waited for Microsoft's product to be released
in February 2003. Although Microsoft's MS CRM caters to the lower
end of the midmarket, many competitors still fear Microsoft will move
up into their territory. However, while Microsoft's channel partners
are diligently selling and promoting MS CRM, the company itself has
been relatively quiet.
"Regardless of what Microsoft says, everyone is concerned [it] will
make a big push up into the higher end of the midmarket," Current
Analysis' Jacobs says. "That, coupled with Siebel and others coming
down, has most true midmarket players, including SalesLogix, Onyx,
and Pivotal, pondering their ultimate fate. The question is, will
they just get squeezed until they pop?"
Midsize Companies, Giant Opportunities
Definitions of the midmarket vary widely. Some say it comprises companies
with less than $1 billion in annual revenues, while others use employees
as the yardstick and say midmarket companies have between 25 and 500
employees. Regardless of how it is defined, analysts agree that the
midmarket is the CRM sweet spot.
Andy Bose, CEO of research firm AMI Partners, estimates that there
are 100,000 midmarket companies, with fewer than 20 percent already
having CRM solutions.
Karen Smith, research director of CRM at market research firm Aberdeen
Group, estimates that there are almost six million companies needing
CRM in the SMB and midmarket segments.
Jupiter Media Metrix estimates that the purchases of CRM, e-commerce,
and financial management applications by small to medium-size businesses
in North America will grow to $3.4 billion in 2006, up from $971 million
in 2001.
AMR Research says the midmarket, combined with divisions of enterprises,
is a $44.1 billion CRM opportunity over the next 10 years.
The sharpest increase in CRM deployments will occur in companies with
revenues ranging from $500 million to $1 billion, according to Gartner
Dataquest.
*Originally published at destinationCRM.com/CRM
magazine
About the Author:
Lisa Picarille is a 14 year veteran high tech journalist, who started
out as beat reporter with PC Week. She has also been a Senior Editor
at InfoWorld, MacWeek and ComputerWorld. Lisa also has extensive experience
running online high tech new sites. She was the managing editor of
CRN.com., the online site for Computer
Reseller News, before becoming the executive editor of TechWeb.com
and the night news editor for Wired.com. Most recently she was the
executive producer of TechTV.com.
In addition, Lisa has freelanced for many print and online publications
including Iconocast.com, Wired,
Rolling Stone Magazine, CNN.com, Schwab.com. A graduate of Northeastern
University, Lisa began her career as a sports writer and working as
a producer and voice over artist in Boston radio. Picarille can be
contacted at 415-642-1863 or lpicarille@destinationcrm.com
Read this newsletter at:
http://www.crmnewz.com/2004/0617.html |
|
|
By
Lisa Picarille
