SaaS CRM Deployments Fuel Competition

Competition in the CRM marketplace is expected to continue as SaaS CRM vendors compete to lock in customers for long-term commitments, according to a recent report from Nucleus Research.

In addition, Nucleus found ongoing investments in CRM by both small and large organizations for the following reasons:

  • existing on-premises CRM deployments are reaching the end of their useful life;
  • the increased capabilities of SaaS CRM has made it more attractive to a broader market; and
  • price competition has made SaaS CRM a cost-effective option for more users.

"The CRM market, in particular CRM on-demand, is still a very dynamic marketplace," says Rebecca Wettemann, vice president at Nucleus Research. "I think these companies will continue to improve their usability by adding things like social, more integrated analytics, and more usable mobile access."

Researchers named Microsoft Dynamics CRM and Salesforce.com as "Leaders in the Value Matrix," based on their usability and core CRM functionality. "While we have seen Salesforce out ahead on its own for a very long time, Microsoft is making some significant advances in usability, which is, of course, Microsoft's core competency," Wettemann observes. "Some of the more traditional players are starting not to deliver on that level, and I think the matrix reflects that."

Microsoft Dynamics CRM's integration with Outlook and Office, role-based views, personalizable interfaces, and aggressive pricing strategy made it a stand out. While Salesforce.com is more than half the average per-user price of Microsoft, its add-ons through the AppExchange marketplace and investments in social CRM made it rise to a leadership role in the space.

But, "the more features and functions you add, the harder it is to keep it usable," Wettemann warns. "As Salesforce and Microsoft look to add features and functionality, they also have to make sure that usability doesn't suffer. That is true for all vendors, but particularly for those who have pretty advanced features sets right now."

According to Wettemann, Sage will most likely be a key player in the marketplace in the near future "given their investments in usability." "That is probably the most exciting stuff that we have seen any vendor talking about today," she says.

SAP is also another company to watch. "SAP has a lot of work to do but also has a lot of resources," Wettemann says. "So we can't underestimate their ability to improve their position if they put some effort and R&D behind it."


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