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The Risk of Enterprise CRM
In the decade since customer relationship management (CRM) software first appeared on the market, implementation of the enterprise application suite that helps businesses find new customers, retain existing customers and otherwise increase revenues have gained a reputation as being risky ventures, subject to user rejection, cost overruns, and missed deadlines.
That bad reputation was substantiated in a Gartner Inc. survey of more than 600 enterprises that indicated that nearly half (42%) of all purchased CRM licenses are now "shelf ware"-that is, companies paid for them but never installed them. Maintenance fees associated with those fallow licenses drive up the wasted money even more. Gartner's March 2003 report, called "Unused CRM Software Increases TCO and Decreases ROI," estimates more than $1 billion has been spent on CRM software that is not being used.
A recent AMR Research Inc. study called "CRM: Inflicting Profit or Pain?" concurred with Gartner's findings. AMR surveyed 80 large CRM customers and found that 47% had difficulty with end-user adoption, leading to abandoned projects or unused software modules.
Mid-Market CRM - The Low Risk Alternative
However, the need for a low risk CRM approach, and the appearance of easier to install and use packages, has enabled many mid market businesses to enjoy the benefits of the software without the risk. Mid-market companies (defined as those with 50 to 1000 employees ) are even more wary of CRM risks since they do not have the resources of their larger corporate peers. Approximately 640,000 U.S. businesses--most of which have not yet invested in CRM-f all into this category. Today the mid-market CRM solution offers benefits that traditional, client/server-based CRM packages do not.
Tailored specifically for use by mid-size companies, mid-market CRM products are designed to be implemented quickly (generally no more than 90 days versus years), cost-effective (roughly $1,000 per user, rather than $5,000 to $10,000), and require less maintenance than traditional CRM. "Mid-Market CRM is gaining steam," says Kelly Spang Ferguson, principal analyst at Current Analysis Inc., in Sterling, VA.
Enterprise CRM doesn't cut it
Thanks to their distinct characteristics, Web-based mid-market CRM packages remove most of the risk, promise lower total cost of ownership, quicker payback, and easier maintenance. Traditional CRM vendors would like to have a share of the mid market, but their products are not exclusively tailored for mid-size companies' needs, says Karen Smith, Research Director, CRM, for Aberdeen Group Inc. of Boston. "A lot of the enterprise CRM vendors are just taking out functionality (of their larger products). But those products are not designed specifically for this space," she adds.
Although most CRM vendors offer Web-enabled products, companies must do their homework before making their choice. Many software companies are still selling heavyweight client/server CRM products with only limited Web capability, cautions Ferguson. This type of product does not offer the full benefits of a wholly Web-based solution. For example, non-Web-based products cannot create self-service portals for customers or partners, crucial functions for the mid-market companies. This misses the great potential of the Web to connect companies with their customers, deepening the relationship.
Quick to deploy, easy to use and maintain, Soffront CRM integrated suite meets mid-size companies' needs. Soffront CRM is 100% Web-based, accessible by Web browser from anywhere in the world. "It's a zero-footprint solution. There is nothing on the client machine," says Manu Das, founder & CEO of Soffront Software. The software resides on the server only, easing maintenance considerably.
Floating licenses can substantially reduce upfront costs.
The hosted software model is another option attractive to price-conscious companies. Under this scheme, the customer pays nothing upfront (but for a nominal set-up fee) and pays a monthly "rental" fee to access the application, which Soffront hosts on behalf of the customer. Soffront's ASP model is unique in that there is no restriction on the degree of customization that can be done. You work on a customized solution that is adapted to your business, as if it were in-house. When you are ready to move it in-house, you can switch to the perpetual licensing model and take the custom project to your servers.
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