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Midmarket CRM Grows
SaaS and open-source CRM offerings are replacing contact managers and spreadsheets as the systems of record for medium businesses.
Posted Feb 23, 2007
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RightNow Technologies, Oracle, Salesforce.com, and Microsoft are the leading vendors of CRM technology for midmarket companies, according to the recently released Forrester Research first quarter Wave report. It adds that the CRM midmarket is increasingly dominated by SaaS options from the above vendors, as well as from Entellium and NetSuite. While some of the vendors and products have been included in earlier Forrester Waves, the current research is the first time that the Microsoft Dynamics CRM product is ranked as a market leader. It's also the first year for the inclusion of an open source offering, SugarCRM's Sugar Enterprise. "Forrester expects the small and medium-sized business share of vendor revenues will expand from today's 33 percent to 38 percent of the total market by 2010, reaching $4.2 billion as firms seek to drive growth, profitability, and better customer experience," says report author Liz Herbert. The sales of products designed for the midmarket will also benefit from divisions of larger companies that are looking to midmarket solutions for their CRM needs, according to Herbert. These firms and divisions of larger companies are finding that contact managers or spreadsheets are no longer sophisticated enough to meet their customer relationship management needs, Herbert says. According to the report, vendors servicing the midmarket are doing far better than their large-industry peers, who are experiencing flat growth. Notably, Microsoft signed 7,000 customers since its entry into the market in late 2003, while Salesforce.com nearly doubled its customer base during that same time period. The Microsoft brand name is helping the sales of the company's CRM entry, according to Herbert. Yet SMBs don't have the financial wherewithal of larger companies, so SaaS, which enables firms to pay for software as they use it rather than to buy, install and own it, continues to gain favor. "The midmarket continues to be the sweet spot for SaaS purchases, and CRM is one of the hottest areas of activity," Herbert says. "Vendors like Entellium, NetSuite, RightNow, and Salesforce.com continue to build out functionality without losing their focus on ease of use, point-and-click customization, as well as quick and incremental deployments."
The incremental deployments mean that the SaaS customers can get new features more quickly and don't have to wait for larger, more involved product upgrades, according to Herbert. The cost issue is also helping the providers of Open Source CRM solutions, Herbert adds, citing vendors like CentraView, SugarCRM, and vtiger. Related articles: Enterprise CRM Is Three Sheets to the Wind Don't Forget the Little Guy
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