Forget ASPs; BSPs are the New Way of Implementing CRM
One presenter at a recent eCRM trade show joked that the job of an analyst is to invent new acronyms- -the more numerous and confusing the better. In the hosting field, he may be right. In the September 1999 issue of CRM Magazine
, we reported on the then-novel Application Service Provider (ASP) model, in which end users access applications over the Web. The software vendor, or a third-party data center, manages and maintains the application and related infrastructure. Now, nine months later, ASPs are already becoming old hat. "ASPs will fade unless they can add value such as consulting and integration," says Christopher Selland of the Yankee Group.
So, enter the BSPs--Business Solution Providers--a term coined by one of the early players in the space, eConvergent. eLoyalty is another recent entrant in this nascent market. BSPs not only offer hosted solutions, they also provide integration and consulting services.
BSPs represent the new way CRM solutions will be delivered, according to Clyde Foster, CEO of eConvergent. "In the old model you had to go around and pick products and then integrate them yourself or find an integrator," says Foster. "That model will die." The BSP model provides one point of contact for managing the many vendors in an eCRM solution, according to Foster.
David Caruso of AMR Research agrees that ASPs don't offer a comprehensive enough service. Running a CRM application is not enough, he says. Integrating that technology into a company's business process is essential.
"I am jaded about the potential of ASPs," says Caruso. A recent AMR report shows that for every dollar a company spends on CRM software, it must spend $2.50 to $5 on integration and implementation. So, Caruso says, he lauds the efforts of eConvergent and eLoyalty to roll integration into their services.
EConvergent's hosted eCRM offering, called CRMS, blends 12 of what the company terms "best-of-breed" applications from partners like Octane Software, E.piphany, Kana Communications, Interactive Intelligence and Cisco Systems to run as one, preconfigured CRM system. The system purports to offer all the applications necessary to deliver customer interaction over multiple channels- -voice, the Web, chat, e-mail and fax.
Although having your software choices made for you might seem limiting, AMR's Caruso attests to the quality of eConvergent's selections. "These are state-of-the-art, second-generation applications that are very desirable," he says. Prices vary from $995 per seat per month for the basic service to $2,500 per seat, per month for the full-featured option, with one-time setup fees of $35,000 to $150,000.
ELoyalty calls its hosted offering the Loyalty Foundation. The solution integrates Clarify's support, sales and service products and Genesys' channel management offerings with eLoyalty's own Loyalty Suite to form the core functionality. Broadwing hosts the infrastructure and Lucent manages the network. The one-time setup fee for Loyalty Foundation is $250,000 to $400,000, with a subsequent fee of $25,000 per user, per year.
Where these two vendors differentiate themselves most, however, is in the consulting services they offer bundled with the software solutions. eConvergent calls its approach the "Converge Methodology," with which it develops, implements, maintains, supports and evolves the solutions. eLoyalty has a similar process, which includes initial set-up and conversion, 24 x 7 support, a monthly evaluation and technology upgrades.
eConvergent assigns each of its clients an individual client manager- -most of whom, by the way, have long experience implementing CRM solutions at one of the big five consulting companies, says Foster- -whose job it is to advise clients on market trends and technologies as well as business issues. Converge includes strategic consulting to refine business objectives, and then operational consulting and integration services to make sure the solution is adopted according to the client's needs and runs smoothly.
eConvergent maintains a knowledge laboratory called the eCenter that keeps track of client implementation and consulting experiences to develop better solutions. The center also tests and evaluates new technology. The company has a 24x7 customer support service center.
eLoyalty claims a more distinguished CRM consulting pedigree than eConvergent. While eConvergent is a start-up, eLoyalty has been in the business of helping global companies implement CRM for over seven years, says Kevin Kraft, eLoyalty senior vice president. "As we developed solutions for our clients over the years, we began to see that we were doing the same things over and over again," says Kraft. "So we decided to develop our own already-integrated system."
Kraft claims another differentiator between his company and eConvergent is that eLoyalty's solution is aimed at larger companies, while eConvergent is targeting start-ups. "We've already built systems for clients like Allstate and Montgomery Ward," says Kraft. "Those systems are scalable. Our technology is proven for the big boys."
David Caruso gives the nod to eLoyalty for having more depth of experience than eConvergent in CRM consulting. And he agrees that eConvergent's solution is best for small to mid-sized companies that are starting fresh with their CRM solution. "That's where the lure of the pre-integrated solutions is the strongest," he says.
As it was with ASPs, time to deployment is a key factor in opting for a hosted solution with a BSP. eConvergent says its solution can be up and running in 60 days. The company is so confident of this it even offers a deployment guarantee. eloyalty says deployment will take four to six months, though a simple hosting setup can be accomplished in just 60 days. But, says Caruso, make sure you ask what comes in 60 days. BSPs may limit what functionality they can offer in that time period.
Ultimately, Caruso says the main driver in a company choosing a hosted solution from a BSP is that hosting puts companies on a much faster track to getting a usable CRM solution. But, he says, be aware that the solution provider will be the final arbiter in what software you use, not you. "Access to new releases may be slower, for example," he says. "Big companies with adequate financial and IT resources will still be willing to do the work necessary to integrate the system and own it in-house."