Mid-Market Madness

Call it mid-market madness. The giants of the CRM space -- Siebel, PeopleSoft, SAP and Oracle -- have shifted their gaze to the mid-market, hoping to seize new sales. Second-tier companies such as Pivotal and Onyx are jockeying for mid-market customers. Even mid-market ERP specialist J.D. Edwards plans to ride its acquisition of YOUCentric to beef up CRM sales. Meanwhile, smaller and more nimble companies such as FrontRange, Salesforce.com, Salesnet and Upshot are trying to carve out chunks of the mid-market. And then there's Microsoft waiting in the wings. The world's biggest software developer unveiled a low-end CRM product last month that industry watchers expect will eventually be tuned to move up market. Why all the hoopla? The small- to mid-sized business (SMB) market, combined with divisions of enterprises, represents a $44.1 billion CRM opportunity over the next 10 years, reports AMR Research. Companies that make up the SMB market have anywhere from 25 to 250 users, according to AMR's definition. In the larger view, SMBs accounted for 41 percent of e-business purchasing in 2000 but will account for 57 percent in 2005, predicts Gartner Dataquest. Retaining customers with an eye toward growing the top line this year is what's driving most CRM deals -- all of which points to sales force automation, lead management, call center and common customer-data repository as the hottest CRM applications in the mid-market. Moreover, the mid-market is virtually untapped when it comes to CRM. "Only about 10 percent of mid-market customers have a CRM solution," says Holly Holt, senior product manager of CRM at Microsoft. But the mid-market is also a fickle group. Companies are not tied to ERP vendors, preferring instead to go with the solution that gives them the most bang for the buck, says AMR. Many companies lack IT savvy and, more importantly, hearty IT budgets to embark on big CRM projects. This means an affordable solution that provides a quick return on investment has the best chance of winning. Here's how AMR defines SMB customers, in terms of their technology desires: • License-to-service budget will top out at about a 1-to-1 ratio. • Implementation needs must be less than three months. • There's no time for extended periods of training • Customization of fields needs to be simple and intuitive Consequently, AMR says CRM hosting providers such as Salesforce.com and Upshot, whose monthly service charges are a cheap alternative to pricey software licenses, are finding success in the mid-market. Indeed, for big ERP vendors, the road to the mid-market hasn't been easy. Many have struggled mightily re-tuning their software, pricing models, salespeople and distribution channels to this space, says Lance Travis, vice president of core research at AMR. PeopleSoft, though, claims mid-market companies are eager to buy its Accelerated CRM solution, which is tuned for businesses with less than $500 million in annual revenues. The software enables users to anticipate customer requirements, strengthen customer loyalty, drive profitability and, most importantly, can be deployed in 70 days or less, PeopleSoft executives say. Mid-market companies are "investing in solutions to improve customer service and maximize return on customer relationships," said Jeffrey Read, vice president and general manager of PeopleSoft Mid-Market, in a statement released today. Mid-market companies that have bought PeopleSoft CRM over the past six months include International Speedway; Aurum Technology; DataDirect Technologies; WFS Financial; among others. Earlier this week, SAP unveiled a new business unit and solutions aimed at the SMB market. On the low end, SAP offers a new application suite based on technology it acquired from TopManage Financial Solutions, an Israeli software company, that handles a boatload of operational functions, including CRM. On the high-end, SAP continues to offer products based on mySAP.com. And market leader Siebel Systems offers a mid-market edition of its flagship Siebel 7 CRM software. "We are totally committed to this market," says George Ahn, general manager of mid-market at Siebel. Tom Kaneshige also writes for Line56.com
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