Alliance with IBM Global Services to bring CRM to mid-market; 75 new customers in Q2 as company claims interest outside installed base
Posted Aug 26, 2002
Enterprise application vendor PeopleSoft has launched its annual Connect conference in New Orleans with the usual basket of product and strategy-related announcements. Among them, there is a decided push downstream in the application area, notably in customer relationship management (CRM).
Two announcements address what PeopleSoft defines as the mid-market, companies with $300 million or less in annual revenues. PeopleSoft's mid-market division, which began as a US-only program, is launching to the UK, France, the Netherlands, Australia, New Zealand, and Canada. Furthermore, PeopleSoft has partnered with IBM to go after the mid-market across verticals and geographies.
The initial focus of the PeopleSoft-IBM alliance will be CRM, with PeopleSoft's Accelerated CRM bundled with IBM infrastructure (essentially, an xSeries or pSeries eServer and DB2 database software). Of course, the relationship goes beyond infrastructure, with PeopleSoft taking advantage of IBM Global Services to get its solutions deeper into the mid-market.
There is some continuity in this alliance, as PeopleSoft had a relationship with IBM Global Services acquisition target PwC Consulting. PeopleSoft and PwC have worked together on 500 implementations.
Even with the assistance of IBM Global Services, PeopleSoft has a case to make that CRM is a must-have component for its mid-market customers. Jeff Read, VP of PeopleSoft Mid-Market, concedes that smaller companies are still a little behind on the adoption curve. "Financials are the core of what most organizations look for in this space, but we've seen some changes in the last year. The mid-market focus is shifting away from pure cost containment and control towards interest in improving revenue streams."
While this may be true, mid-market companies don't have the luxury of pursuing a best-of-breed strategy in expanding their technology stack, Read says. "The emphasis is shifting away from best-of-breed. It's just too expensive for smaller companies."
Price is a big consideration, confirms Aberdeen analyst Denis Pombriant. "Companies in that size range will be choosy about what they buy. They aren't willing to pay a lot for CRM."
Will they go for CRM at all? Pombriant says yes. "Aberdeen's surveys indicate that the mid-market is poised to go for CRM." In making their buying decisions, mid-market companies will favor the vendors they already know, Pombriant believes. "If the incumbent ERP vendor has a reasonable CRM story, they're likely to become the incumbent CRM vendor."
However, that doesn't mean ERP vendors can go on cruise control when selling to their installed base. Partner relationships remain important. "Even a company like Siebel doesn't do all its own implementations," Pombriant says. "You need to keep overhead manageable, it's hard to staff up for software implementations."
While PeopleSoft has devoted much effort to promoting its mid-market CRM initiatives, the reality on the ground is that most CRM revenue still comes from larger customers. For example, of PeopleSoft's 75 new CRM customers in Q2, "the majority are enterprises," confirms Brad Wilson, PeopleSoft's VP of CRM marketing.
In what he takes as proof of PeopleSoft's increasing credibility as a CRM vendor, Wilson says that many of these accounts have no previous experience with PeopleSoft on the ERP side.
Since PeopleSoft's CRM push began last year, it has acquired a total of 300 CRM customers.
Demir Barlas also writes for Line56.com
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