On the SaaS trail

CRM can be viewed both a business strategy and as a technology. It is a strategy that tunes an organization’s focus on being customer centric; it is also a technology that provides valuable information which a company can use to deliver more value to its customers. A company needs to imbibe the philosophy of being customer centric before it can hope to gain from the technology.

The two together will help to retain old customers and make new ones. A focus on CRM also helps companies to increase their competitive advantage and reduce marketing costs. The past couple of years have seen some major consolidations in the CRM industry. Oracle has been in the forefront of the acquisition race, going on a buying spree and acquiring PeopleSoft, Retek, ProfitLogic, and Siebel. Its acquisition of Portal, which provides billing solutions, has given the company a vehicle to make its presence felt in that market as well. Oracle has a well thought out plan to strengthen its product depth in select verticals.

As it continues its non-organic growth, Oracle is keen to ensure that the existing customers of its buyouts are not affected in any way. It has extended indefinite lifetime support for all its CRM product suites. Oracle’s bête noire SAP too is strengthening its portfolio by acquiring a presence in chosen niches. They count Virsa Systems and Frictionless Commerce Inc amongst their purchases. Virsa, which is an enterprise risk management company, should help SAP in gaining traction in this field. Frictionless is an on-demand CRM company. SAP is also busy offering a “safe passage” to Siebel customers and bringing them to the mySAP CRM platform.

Like all technology, CRM too goes through upgrade cycles and the periodicity is usually seven to ten years. The next upgrade is nearly on us as the last one was around 2001. It’s that time of the year when CRM companies try to poach customers while trying to keep their own. The SAP-Oracle battle and the SaaS wave are going to be important factors that enterprises and SMBs will consider when evaluating the long term prospects of a vendor.

On-demand CRM, which started off facilitating the testing of CRM waters then moved to becoming a less costly alternative for SMBs, has now attained a fair level of maturity and offers functionality that matches that provided by enterprise CRM. The fact that the big players are entering the SaaS arena is proof that SaaS CRM has arrived and could well be the future of software.

On-demand CRM is particularly attractive for SFA where it offers the same functionalities at almost 20% the cost as compared to on-premise CRM. SMBs can reduce their dependence on a skilled IT staff by opting for SaaS CRM. SaaS players are aware of the importance of being present in the SFA segment. Keeping its SFA objectives in mind, RightNow has acquired Salesnet. Salesforce.com which is a purely on-premise player and Siebel which offers on-premise and hosted CRM are trying to create an environment that will suit their business models the best.

The AppsExchange platform of Salesforce.com uses independent software vendors to broaden its base with SMBs. The Siebel OnDemand CRM product which is an offshoot of its on-premise model, offers customers new functionalities as they are released. Siebel is progressing toward a hybrid model that will support on-demand and on-premise customers. The big advantage of SaaS is the low cost barriers to an entry into CRM so much so that according to Gartner by 2010, SaaS could account for around 10% of the business applications.