Large companies have noticed the relative low cost, ease-of-use, and quick implementation.
Posted May 26, 2005
Enterprise companies are adopting hosted CRM applications at about the same rate as SMBs, according to a new study by AMR Research, "Customer Management Spending Report, 2004-2006." The study found that 40 percent of all companies are planning to deploy such solutions over the next year, including 28 percent of large companies (5,000+ employees), 39 percent of midtier businesses (1,000 to 4,999 employees), and 41 percent of SMBs. AMR surveyed executives at 200 companies for the report.
"In the past hosted CRM has been considered prevalent mostly in the SMB market," says Rob Bois, senior research analyst at AMR. "Our research has shown that companies of all sizes are now using hosted applications, especially when it comes to SFA implementations."
AMR's survey results indicate a robust growth in CRM investments next year. Fifty percent of companies surveyed plan to increase their CRM budgets in 2006, and total CRM budgets will increase by an average of 8.2 percent from 2005 to 2006. Accordingly, 49 percent of all companies will use hosted sales or e-commerce applications within the next 12 months, including 47 percent of large companies. The deployment of hosted SFA applications is more prevalent among larger organizations (31 percent) than SMB companies (22 percent)--SFA had the highest penetration rate among reasons to implement a hosted solution. The study found that functionality was the common response when executives were asked about operating hosted applications. Ease-of-use finished a close second.
SMBs have been the early adopters of hosted applications, with larger, enterprise-level companies following suit. This contradicts a long-standing trend within the industry, in which enterprises are traditionally at the forefront of implementing new CRM technology. "In the case of hosted applications, SMBs blazed the trail," Bois says. "This was driven by necessity and practicality. Hosted applications have all the traits that an SMB company is looking for: low cost, ease-of-use, quick implementation time. Larger companies haven taken note of that."
Revenue generation, coupled with the shorter implementation time associated with hosted applications, is what's driving the hosted CRM bonanza, according to Bois. With companies looking for faster returns from their IT investments, the quick turnaround time that these applications offer is tickling the buying bone of many potential customers. "Companies are looking at revenue generation, as opposed to cost cutting like they did a few years ago," Bois says. "Not having to wait for the application and being able to generate revenue quickly is important."
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