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Hosted CRM is hot... and so is "dynamic" CRM, a service-oriented approach to improving customer service.

In this Issue:

  • Hosted CRM Game Heats Up
  • Life at the Edge
  • In Brief

    Hosted CRM Game Heats Up

    Siebel moves, other ASPs stand their ground.

    Salesforce.com, an application service provider, attracted some special new customers to its CRM service in January. These customers, such as ABP International, were won away from Siebel after it had entered the hosted CRM game itself.

    While it's true that Salesforce.com has a huge head start in the hosted market, Siebel is primed and ready to go head-to-head with Salesforce.com and other ASPs in the next year. The company rolled out its new CRM OnDemand solution at the end of 2003, which has comparable functionality with any other hosted CRM solution. Also, Siebel is offering a price promotion for new customers. Siebel and the others now must differentiate themselves to gain customers in a barely tapped CRM market.

    Wendy Close, research director at Gartner, believes Siebel, "will give Salesforce.com a run for its money." She cites Siebel's recent acquisition of Ineto Services, a hosted contact center services company, and Siebel's ability to offer an on-premises and hosted hybrid CRM model. Salesforce.com customers get their call center technology through Salesforce.com partners.

    "Siebel would love it to turn into a feature war, because they have all that functionality," comments Close. "Also, they have an edge because they offer both hosted and on-premises solutions. Siebel can use a hybrid model, where a company can start out using both types of solutions, but eventually buy the on-premise product. Siebel has a better long-term model for keeping clients."

    Although Siebel has no current plans to implement a lease-to-buy option, Close brings up an important point. It's, appropriately enough, a principle behind the CRM software these vendors sell: Gaining customers is important, but keeping them is even more so.

    Salesforce.com contends customer retention and satisfaction is exactly what sets it apart. A recent Gartner survey on hosted CRM that Close conducted had Salesforce.com scoring the highest in customer satisfaction. "They have a large client base that is more satisfied than those with Siebel mid-market," says Close.

    Kaiser Mulla-Feroze, Salesforce.com director of product marketing says, "Winter '04 is the 14th generation of Salesforce.com. We have a tremendous head start, not only in functionality, but also in understanding the customer that is looking for a hosted solution." At first that customer was mostly the small to midsized business, but Mulla-Feroze says now one-third of Salesforce.com customers are large enterprises.

    Close suggests that many large enterprises may see hosted CRM as a viable alternative whether deployed companywide or in smaller divisions. "I spoke with one CEO of a company with 3,000-plus seats who decided to go with Salesforce.com," says Close. "She believed it would actually be less risky to go with a smaller hosted solution than to spend the money on an large on-premises solution. So some large enterprises are going that [hosted] route."

    Ken Rudin, vice president and general manager of Siebel CRM OnDemand, believes that Siebel will eventually be a customer favorite because it offers CRM training and the hybrid model. Both Siebel's on-premises solution and OnDemand solution have identical back ends and therefore can work together as one system.

    Mulla-Feroze believes this model is unnecessary, and says hosted CRM is "eliminating the need for an on-premises solution."

    "The main battleground [in the hosted CRM market] won't be on features and functionality," says Rudin. "A major mistake of the market so far has been hosted CRM companies saying hosted CRM is simple. Sure you can get set up and enter a new contact, but how do you use that information? You need training, professional services, and customer support, so people can make hosted CRM part of their overall CRM strategy and overall view of the customer."

    Jeanette Perez is a freelance writer and former editor at Intelligent Enterprise.

    In this Issue:

  • Hosted CRM Game Heats Up
  • Life at the Edge
  • In Brief

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