Midsize Businesses Are Fueling CRM's SMB Growth

SMBs are on track to spend $2.2 billion on software this year, a 10 percent jump from last year, according to a report from AMI-Partners. Fueling this growth will be the continued demand for ERP and CRM solutions, especially from medium businesses, or those with 100 to 999 employees, the report states. ERP continues to gain momentum among SMBs, with 23 percent of medium businesses indicating they have already deployed an ERP solution and another 31 percent planning to deploy one in 2006. The pressure to streamline processes, improve links with suppliers and distributors, and comply with regulatory requirements like Sarbanes-Oxley and HIPAA, are forcing more SMBs to consider ERP, according to the research firm's "2005-2006 U.S. SMB Applications and Solutions Market Overview and Assessment." The study cites Microsoft Great Plains, Best Software (now Sage Software), and Oracle as being among the top ERP vendors. "ERP is increasingly becoming mainstream for medium-sized businesses," says Laurie McCabe, vice president of SMB insight and business solutions at AMI-Partners. "They [midsize businesses] are looking toward ERP solutions to gain parity with the large companies that they compete with." While ERP is gaining popularity, CRM is still the sweet spot for software vendors and continues to grow faster than ERP. Once again, this growth is being driven by the mid-market: over half of midsize businesses are currently using or plan to use CRM solutions in the next 12 months, compared to 23 percent of small businesses. Sage and Salesforce.com were listed as some of the leading vendors among SMBs. The higher deployment rate of CRM is related to the greater number of deployment models and solutions available to companies, McCabe says. "There are more point products, such as marketing automation or SFA. Also, unlike ERP, CRM is easier to deploy, with hosted and on-demand solutions out there. With CRM, it's easier to get what you need and simply put a [bandage] on that one knee." According to McCabe, small businesses have been slow to adopt, but are warming up, though the on-demand model will help. The study states that easier and cheaper high-speed Internet access, coupled with growing awareness and availability of products, will fuel the growth of on-demand applications in many areas. Currently, fewer than 20 percent of small businesses and 27 percent of medium businesses use or plan to adopt an on-demand or hosted application. Related articles: SMBs Take Advantage of the Web Calling on Convergence