InformationWeek

March 1, 1999

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Closeness Counts

Smaller businesses rely on technology to maintain close customer relations

By Jeff Sweat

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merging enterprises need to focus on customer-relationship management as much as their larger counterparts do, but their smaller size, limited resources, and rapid growth mean that these businesses are confronted with customer-relationship management issues that big companies rarely see.

"Small and midsize businesses tend to have closer relationships with customers, and they need to replicate that closeness with technology," says Joshua Greenbaum, president of Enterprise Applications Consulting.

Emerging enterprises are buying customer-relationship management products in earnest because they have to do a better job of reaching out to their customers than the larger com- panies with which they compete. That means having better sales, better marketing, and better customer service--in short, better relationship management.

Interest in the products that enhance relationships is growing faster among small and midsize companies than among larger companies. Demand at companies with $50 million to $250 million in revenue jumped 113% between 1996 and 1997, says AMR Research, while the mid-market--companies with $250 million to $1 billion in revenue--grew 55%. That compares with 52% for $1 billion-plus companies.

The fast growth that marks emerging enterprises makes it difficult for smaller companies without customer-relationship management systems in place to continue to treat their customers with the personal touch they've come to expect. When Tony Wong, director of customer service for Printrak International Inc., an Anaheim, Calif., company that develops fingerprint tracking technology for law enforcement agencies, arrived at Printrak, the company had 30 customers, and everyone knew each one by name. But that number mushroomed in just a few years to 700, and the older customers weren't pleased. "If you add new customers when you're that size, [existing] customers realize they're the old girlfriend. They notice the change real fast," says Wong. Printrak was able to restore its personal touch with Applix Inc.'s Applix Enterprise customer-relationship management software.

The automation that comes with customer-relationship management applications helps small companies act bigger than they are. For instance, a self-service Web application can let a small company provide attentive support without having to operate a huge call center.

Terry Hinge and Hardware Co., a 125-person furniture hardware manufacturer, is using iMarket's Marketplace to gather market research; if done manually, that task would require a marketing department of dozens. "Smaller companies have one or two people to do all their marketing. If we want research, we have to get it all ourselves," says marketing manager Dena Zeller, Terry Hinge's one-person marketing department.

But emerging enterprises face one major barrier when it comes to implementing customer-relationship management software: cost. A company with total revenue of $250 million and an IT budget of just a few million can't afford a multimillion-dollar implementation, which is what a top-shelf product such as Siebel 99, from Siebel Software Inc., is likely to cost. "You don't have the budget to buy these things, or wouldn't want to spend the money if you did," says Laura Kiernan, a marketing associate at BlackRock Financial, a New York financial services firm that's using Saratoga Software's Avenue software for contact management, sales, and marketing. "It's tough to go from $3,000 to $300,000."

Easy Implementation Needed
Enterprise-application vendors are paying more attention to smaller businesses, but they're finding they can't simply pitch a scaled-down version of a larger product. Small and midsize businesses demand products that are simple, agile, powerful, and painless.

Implementations must be easier. Many small and midsize businesses don't have large IT organizations with experience in implementing and managing enterprise applications. An implementation can tie up a smaller company's IT staff, forcing it to hire more employees or consultants. "We don't want to bring in a full-time, dedicated staff for administering these products," says Lisa Rogovin, the sole application administrator at Bowne Business Solutions in New York City, which outsources administrative and IT services for legal organizations.