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PeopleSoft Dives Into the Mid-Market
For the rest of the June 2003 issue of CRM magazine please click here
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PeopleSoft Inc. is aggressively courting mid-market companies with its recent announcement of 13 new products aimed at businesses with annual revenue between $50 million and $500 million. PeopleSoft is targeting more than 62,000 mid-market companies with its new offerings. Although PeopleSoft has had a division devoted to midsize customers for six years, its focus on that growing market is expanding and is now one of the company's top three initiatives, according to Jeffrey Read, vice president and general manager for PeopleSoft Mid-Market. In 2002, 25 percent of the company's total sales were to medium-size companies and 40 percent of all new sales in 2002 were to mid-market firms, Read says. PeopleSoft is not alone is moving downward to tap the lucrative mid-market. The company will face stiff competition from other enterprise players. Siebel Systems, SAP, and Oracle have also started to wade in the mid-market pool. That's because research also shows that while enterprises are tightening belts and trimming IT spending, the mid-market is underserved and ripe with opportunities. Market-Partners, an independent research firm, surveyed more than 700 top decision-makers at companies with annual revenue between $50 million and $500 million and concluded that 41 percent of mid-market customers plan to increase spending on applications in 2003. The survey also states that 46 percent of mid-market organizations demand solutions that are built to support business processes; 48 percent of mid-market companies require a complete suite of applications from one vendor, allowing them to implement the functionality they need, when they need it; and 34 percent of respondents identified integration as the largest hidden cost for mid-market organizations, closely followed by unpredictable number of user licenses and training fees. Read says all that bodes well for PeopleSoft, which offers a suite of applications for human resources, supply chain management, and CRM. Mitch Kramer, an analyst with the Patricia Seybold Group, a Boston-based consultancy, says that making the products easy to implement will appeal to mid-market users. He also thinks that the mid-market companies at the upper end of the scale will find it appealing to be able to say they purchased PeopleSoft. There is a certain cache and confidence associated with the enterprise players."
"Mid-market companies face the same business challenges as Fortune 2000 businesses," Read says. "But they have smaller budgets, smaller technical teams, want faster implementations, and have a much higher aversion to risk." To satisfy those needs, Read says, PeopleSoft's new products will sell for a set price, including installation and maintenance, and PeopleSoft will allow customers to buy individual software functions separately as their needs grow. Price will be based on number of employees or annual revenue. Environmental Systems Products Holdings Inc. (ESPH), a manufacturer of auto emissions testing equipment in East Granby, CT, with approximately 3,000 employees, is moving off its old mainframe system and wanted a system that could deal with production, materials management, procurement, accounting and billing, service, and CRM. ESPH was looking "for a single point solution," says Al Jones, IT business manager for the privately held company. "We started out with 12 companies and then decided on PeopleSoft's mid-market solutions because it has the functionality, ease of use, and fits our business," Jones says. Jones claims that because the solutions are preconfigured it will take about seven months to implement the complete CRM suite, the human resources suite, the supply chain suite, and the enterprise portal. "It just made good business sense to start with the pieces we need and be able to build out more as needed," he says. Mid-Market Snapshot 41 percent of mid-market customers plan to increase spending on applications in 2003. 46 percent of mid-market organizations want solutions built to support business processes. 48 percent of mid-market companies say they require a complete suite of applications from a single vendor, allowing them to implement functionality when they need it. 34 percent identified integration as the largest hidden cost for mid-market organizations. Source: Market-Partners
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