• March 1, 2004

Hot Seat: The Demand for On-Demand CRM

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Hosted CRM is hot, hot, hot. Salesforce.com has topped 8,400 customers and 120,000 subscribers, NetSuite is doubling its sales team and expanding abroad, and RightNow Technologies has achieved 20 quarters of consecutive growth. So CRM magazine posed the question, "Will hosted CRM ever eclipse on-site CRM in terms of popularity?" John Ragsdale, research director, CRM practice, Forrester Research: There's no answer. In the midmarket it's possible, but in the enterprise space the depth of integration needed will call for very complex hosted solutions. Some large enterprises really need tight integration between the front and back office, so their CRM will always be on site. But in the midmarket, hosted CRM functionality is improving to the point where companies are not losing any features by going with a hosted solution. Mike Doyle, chairman and CEO, Salesnet:
The shift from last generation's CRM systems to the software-as-a-service model has been under way for the past few years. The recent backpedaling of the client/server CRM vendors is proof of this. I believe that as more and more companies experience the advantages of the hosted model, such as affordability, ease of use, high accessibility, and tangible ROI, the total number of hosted solution deployments will eclipse the number of premise-based implementations. It will take time for enterprises to deprogram from the old way of thinking, but I predict that within the next three to five years online CRM will be the default choice for aspiring organizations, from small to large companies, everywhere. John Grozier, vice president, solution marketing, SAP AG: This question highlights the current confusion in the marketplace. Vendors like SAP have long offered licensed CRM in a hosted format. The true issue is whether the limited point solutions currently gaining attention under the rental model can truly be considered CRM, or ever satisfy the needs of companies looking to address more than just a tiny piece of the customer relationship. For companies that can settle for an isolated way to manage a partial area of CRM like sales force automation, the hosted offerings that have gained attention could be an attractive entry point. But for companies with more than limited needs that want the true value of CRM--the kind that connects all parts of your business around your customers--these offerings fall short. At the end of the day CRM is about connecting the entire customer touch points across the entire company, and this can only be achieved with a fully integrated solution as your foundation. Peter Boni, chairman and CEO, Surebridge: We do believe that hosted CRM applications will outnumber traditional CRM systems, very possibly in the next two years. Driving this trend will be small/midmarket business needs and the overall acceleration of hosting adoption. In fact, we have seen in our own business that hosting is becoming more mainstream. The hosting value proposition has proved to be a viable alternative for resource- and budget-constrained companies that need fast and reliable deployment and management of their CRM solutions, but at predictable low costs. Is Your Marketing Customer Focused?
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