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The 2011 CRM Market Leaders
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SMALL-BUSINESS SUITE CRM

The Market
Small and midsized businesses (SMBs) continue to grab their share of CRM market attention. More than the functionality of an application, it’s price that will continue to influence buying decisions. According to Forrester, because of the economic climate, CRM will evolve and software-as-a-service (SaaS) will become the default choice.

However, for all the gains, just 30 percent of small businesses have CRM systems in place, and 19 percent of the businesses that do have such a system plan to upgrade the application, AMI Partners says. Among the small companies that either have or are likely to buy CRM systems, those delivered through the SaaS model probably will see the strongest growth during the next five years. In fact, Forrester Research called SaaS-based CRM deployments “a slam dunk” for businesses with 50 to 100 users.

The Leaders
Cost is critical to SMB clients, and this is one area where Microsoft has shined. The software behemoth hasn’t appeared on the leaderboard since 2007, but its return this year is precipitated largely by its January launch of Dynamics CRM 2011 Online. The product suite comes with lots of new functionality, pushing aside rumors that it was little more than a second-rate or watered-down version of Microsoft’s on-premises CRM suite. In fact, some analysts concluded that Microsoft’s depth of functionality is coming close to rivaling Salesforce.com but at a much lower price. “The obvious winners from the functionality arms race are users that get more innovation at lower cost” with Microsoft, says Rebecca Wettemann, vice president at Nucleus Research. Furthermore, the company’s “aggressive pricing and switching bonus plan will make things more interesting,” she adds.

Sage, which has bounced between the leaderboard and the One to Watch during the past few years, often gets overlooked, but not this year. The company settled in far above the industry average in all categories. Indeed, Sage “continues to make big investments in integration and usability, which are attractive to customers,” Wettemann says. She points to its integration with Microsoft Outlook and its delivery model, where most applications are sent through partners, as signs that it is “likely to strengthen its usability position over time.”

SugarCRM, which has made the leaderboard twice before in the past five years, continues to shine in the SMB space because of its open-source application suite, which makes it a strong value overall, according to Michael Fauscette, group vice president for software business solutions at IDC. “It’s also added a lot of functionality within the past two or three years,” he says.

Zoho, another repeat performer on the leaderboard, finished strong in cost with an industry-leading 4.5, a score that put it far ahead of the rest of the field. It is in this area where the company excels, so much so that analyst Steve King, a partner at Emergent Research, described the company as “great for smaller small businesses.” In addition, Zoho was lifted to the top tier in SMB by a solid showing in company direction.

The Winner
The clear winner, with a total score of 4.3 and scores of 4.6 and 4.7 in depth of functionality and company direction, respectively, is Salesforce.com. Having held the top spot for four of the past five years, the vendor “is aggressively competing in all market segments,” Wettemann says. However, of particular interest to SMB clients, Salesforce.com “has continued to expand on its core CRM functionality while also expanding its ecosystem of value-added CRM add-ons through the AppExchange marketplace,” Wettemann adds.

One to Watch
NetSuite, which scored very high (4.1) in depth of functionality and company direction (3.9), faltered this year on cost (2.7).
In fact, the company’s solutions are “better for mid-market or larger smaller businesses,” King says. Still, other analysts singled out the company’s out-of-the-box integration with other systems and unified system architecture as delivering real productivity gains for end users.

SALES FORCE AUTOMATION

The Market
What’s the hottest trend in sales force automation (SFA)? “Social media,” says Denis Pombriant, managing principal at Beagle Research. And nearly every expert with whom we spoke agreed. As the prevalence of social networking grows, nimble SFA vendors are experimenting with ways to leverage this power to help sales teams sell. Star performers are creating new avenues to help reps become smarter and faster, both internally and externally.

Raj Agnihotri, coauthor of Effective Sales Force Automation and Customer Relationship Management, explains that with advancements may come growing pains, noting that motivating user adoption of “multidimensional SFA” may be difficult. To ease those aches, analysts believe that the most successful vendors will develop products that are easy to use, focusing on mobile device support, embedded analytics, and intraorganizational collaboration.

The Leaders
Microsoft stormed out of the gate this year by releasing Dynamics CRM 2011 in mid-February. The move was big enough to raise all of the software giant’s scores into the 4- to 5-point range, an accomplishment Microsoft shares only with the category’s winner. Analysts praise the 2011 release’s value pricing, intuitive interface, and deployment flexibility. Interoperability with Microsoft Office has long been an advantage for Microsoft. Now, Brent Leary, partner and cofounder of CRM Essentials, speculates that Dynamics CRM Online may be “brought under the Office 365 umbrella or integrated with Skype at some point.”

Both of those moves, he says, “could really be a game-changer for Microsoft in terms of CRM.”

After breaking into the category as a One to Watch in 2009, NetSuite has been on the leaderboard for two years in a row. While NetSuite maintains the budget-friendly, easy-to-integrate equation that helped it gain popularity, the vendor hopes to increase market share by targeting larger enterprises. To succeed, the SaaS vendor must first “enhance brand awareness,” says Cater Lusher, chief analyst at Ovum. However, other analysts argue that recent social media and mobile developments, including a partnership with Yammer and the release of the SuitePhone, will help NetSuite gain mindshare and snag a spot on the short list for companies of all sizes looking to invest.

With one of the industry’s largest revenue streams, Oracle was a leader for the third straight year. The past 12 months have marked a transition for the vendor as it migrates to its Fusion platform. While this move didn’t hurt Oracle in company direction (3.9, up from 3.7 the prior year), some think it may slow adoption. “A lot of customers are taking a wait-and-see approach to Oracle CRM as the promise of Fusion looms on the horizon,” says Rebecca Wettemann, vice president at Nucleus Research.

Service whiz RightNow Technologies landed on the leaderboard again this year, largely because of its strong social media strategy. Integration with Twitter, YouTube, and Facebook, combined with the February purchase of natural language search provider Q-go, demonstrates that this vendor has its finger on the pulse of the industry. Jim Dickie, managing partner at CSO Insights, also credits RightNow’s success to its internal offerings integration. But Wettemann warns, “RightNow may face limited opportunities if it can’t evangelize beyond service.”

The Winner
Our perennial prom queen, Salesforce.com, maintained its popularity to earn the crown for a sixth straight year. With scores head and shoulders above those of other vendors, Benioff’s baby saw little competition. The release of Chatter.com in January set the tone for innovation, thereby changing the way companies think about information distribution within sales teams. “[Salesforce.com’s] ability to embrace social media and social business processes exceeds anything else on the market,” says Pombriant, who believes that Sales Cloud will be “for a next generation of users who need mobility and hybrid sales solutions.”

Analysts also lauded the vendor’s sharing story in terms of AppExchange, which increases functionality and value for Salesforce.com’s users. Leary sums it up: “[Salesforce.com] moves the needle.”

One to Watch
Life is sweet for SugarCRM, which debuts in our SFA category as the One to Watch. In the first quarter of 2011, the vendor announced 43 percent growth over the year-ago quarter, proving to the naysayers that an open-source structure can provide big payoffs. Pombriant calls the California-based company an “out-of-the-box thinker,” praising its “continually improving. . .solution set.” Pombriant believes that in the near future, “[SugarCRM] should be able to maintain a position as the number three or number four vendor.” Watch out, leaderboard!

(PAGE TWO OF FIVE)


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