CRM Software: No Free Lunch

There's no such thing as a free lunch and the same goes for most software. Several developers this week announced they are giving away software, but users will still end up opening their wallets to pay required licensing or maintenance fees. In move to pump up brand recognition, G2X Inc. is offering for free an unlimited number of licenses for its Agility Web-based contact management application to those that purchase a minimum of 100 user licenses. First Choice Software Inc., which provides add-ons and tools that work with the Clarify CRM suite of products, is also giving away software. For the duration of its offer, the Austin, Texas-based developer is giving away any of its more than 50 products, which include applications and development tools, to anyone committing to three years' worth of maintenance fees. Kelly Spang, an analyst with Current Analysis, says she does not see companies giving software away as a growing trend. "CRM data is mission critical, and giving things away is not going to make users jump from system to system." Spang notes that back in 2000, Oracle Corp. had some success in giving away an online sales management module from its expensive CRM application, but the buzz about the program died down shortly after the initial announcement. Oracle officials claim the program--called sales.oracle.com--is still going strong, with more than 18,000 registered companies in 140 countries, and call it a success. Still, Spang says there is much more value in giving away support rather than products. Regardless, G2X officials think the offer will help gain some recognition for Agility, which started shipping last April, says Dave Glucksman, director of marketing for the New York--based company. To participate in the G2X special offer, users are required to pay an 18 percent annual maintenance fee based on the total number of users. Users are also required to make a minimum purchase of the company's Level 1 Service package, which is priced at $25,000 for 100 users. The company claims that getting the software for free is a savings of $50,000 off the regular purchase price of $500 per license for 100 users. The special offer, which started November 8, 2002, will run until the end of the year and maybe longer, according to Glucksman, who says no end date has been set. The offer is valid throughout the United States; however, the company is only actively running the marketing promotion in Texas. For its part First Choice Software is leveraging maintenance costs, but not charging a licensing fee, according to David Sirkin, director of marketing. First Choice's product line, which typically ranges from $10,000 to $50,000 per application, will be free from November 11, 2002, through December 31, 2002, to those who commit to three years of maintenance at $33,000 per year. After the terms of the special offer are complete, users can opt to extend the lease or to convert 50 percent of the price to purchase rather than lease. Sirkin says the move is an attempt to jumpstart some sales in the Clarify space, which has experienced some turbulent times in the past several years. Three years ago Nortel Networks purchased Clarify for $2.3 billion, then sold Clarify to AmDocs Limited last year for $200 million. Although Clarify has an impressive roster of customers, including Microsoft Corp., General Electric Co., and Hewlett-Packard Co., many users have been hesitant to invest more money in the solution due to a perceived level of uncertainty. Tightened IT budgets are also to blame, according to industry watchers. Officials at First Choice, which has been developing products for Clarify since 1997, are confident the Clarify space will rebound, and say they are just attempting to give it a shot in the arm. "We see a lot of interest in Clarify and we are still selling products at a steady pace," Sirkin says. "But we think there is more value in getting the products into the hands of more customers. And while many of them don't have money to spend on new products, most of them have huge maintenance budgets." Sirkin says the privately held company is expecting a good response to this special offer, but he also anticipates it will result in a "zero net for the bottom line" as the volume of new sales makes up for the loss of revenue. "I have mixed feelings," Spang says. "This might work for business productivity applications, but I'm not so sure about how well it will go over the CRM space."