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Measuring Up

Small to midsized businesses (SMBs) are living a golden age as new technology options give them the stuff to compete -- or at least partner more effectively -- with the largest organizations. But SMBs have to be smart; even in an on-demand world IT infrastructure is critical to flexible growth.

Rodney Dangerfield, may he rest in peace, could have been speaking for many SMBs shopping for strategic business applications and software tools when he uttered his famous line, "I can't get no respect!" Adjusting his tie and bugging out his eyes, he surely would've let us in on a few stinging asides directed at the industry's behemoth vendors as they geared their products, sales, and service toward the bigger game found in the Fortune 500 companies.

That is, until recently: In fact, it wouldn't be too much of an overstatement to say that 2004 has been the year of the SMB. In many industries, the fastest economic growth is occurring in the SMB sector. Controlling costs is always important for any organization, no matter what size: but right now, growth is top of mind. From infrastructure to middleware to enterprise applications and business intelligence (BI), vendors are now competing fiercely to package technology solutions and service to meet the needs of businesses reporting under $1 billion in revenues — or under $500 million, depending on which market analyst is defining SMB.

With smaller IT resources and less capital to risk on technology that may or may not pan out, SMBs have traditionally kept well back of the bleeding edge. To excite demand in the SMB market, however, established enterprise application vendors have had to step out of their comfort zone — or watch upstarts succeed with business models that take advantage of the Internet and better meet the needs of SMB customers. No better example exists than, which upended the sales force automation (SFA) market by offering real on-demand applications while more established competitors were still talking about them. Marc Benioff, the company's chairman and CEO, calls it "the end of software."

CRM On Demand

A key step for most SMBs intent on growth is getting sales processes under control — and gaining visibility into those processes so that the organization can grow its intelligence about markets and customers. This transition can be tough, especially for organizations built around the production of perhaps one brilliant product or service. Another factor is that CRM's reputation for high cost and high risk gives many SMBs pause — often sending them chasing after low-cost, one-off solutions written by outside consultants, who may be off to the next job as fast as they can get there. IT veterans can see the stovepipes rising right along with the SMB organization's good fortunes. Today's quick fix rapidly becomes tomorrow's expensive integration headache.

In late September, made a major play to complete its customer relationship management (CRM) portfolio by launching, aimed at delivering hosted customer service and support over the Internet. Key partners in the announcement were Avaya, Cisco Systems, Alcatel, Aspect Communications, and Genesys — companies that make up "over 70 percent of the global contact center marketplace," according to the Yankee Group's Sheryl Kingstone, quoted in's press materials. SMB companies, as well as departments within larger organizations that can't wait for IT to buy or build resident applications, are fueling's tremendous growth.

Siebel Systems, working quickly under new CEO Mike Lawrie, touted Siebel CRM OnDemand at the company's user conference in the beginning of October. Like, Siebel offers OnDemand at a fixed price per user, per month. Of course, these two vendors aren't alone. Surgient offers Internet access to distributed CRM applications. SAP's marketing resource management and mySAP CRM offerings are experiencing growing demand.

Other important vendors addressing on-demand CRM for SMBs include Manticore Technology, which focuses on marketing optimization and Web analytics; and StreetSmarts, which offers a hosted SFA solution. Manticore's Virtual Commerce Master 4.0 integrates BI functionality with a rules engine, which brings companies nearer to the closed-loop ideal of "actionable" intelligence. WebSideStory has also been rising rapidly as a provider of on-demand, "real-time" Web analytics.

The potential of hosted, on-demand arrangements is bringing new players into the market; several are focused primarily on SMB organizations. In September, Robert Gryphon and Olivier Delerm, both veterans of enterprise applications development and marketing, launched Airframe Business Software.

Gryphon previously founded Octane Software, which E.piphany acquired; before that, he was a major developer at Scopus, which was acquired by Siebel. Delerm was a key senior manager at Siebel. Airframe's competitive differentiator may be its integrated internal structure, which allows "off the rack" applications to grow incrementally. "While some companies will spend 12 months and pay top dollar for a 100 percent solution with forced customization, many others prefer an immediate-use solution that can grow with their needs," Gryphon said. "We estimate there are some four million of these forward-thinking organizations in the U.S. alone."

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