SaaS CRM software takes vertical approach

By Barney Beal, News Director 03 Apr 2007 | SearchCRM.com

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Last week, Bozeman, Mont.-based RightNow Technologies Inc. released a higher-education version of its CRM software, the first of what it says will be many vertical editions. That came on the heels of last month's release of San Francisco-based Salesforce.com's own financial services vertical.

It's not a new development. SaaS CRM software vendors have been touting their industry expertise for years. In 2004, Siebel released vertical editions for Siebel OnDemand for automotive, high tech, insurance and communications and media. Before RightNow bought Salesnet, the SFA specialist had released vertical editions for telecommunications, commercial lending and advertising media in 2004. And San Mateo, Calif.-based NetSuite Inc., starting with what it knows best, released a vertical edition for software companies last year.

The path toward vertical functionality is a familiar one not just for SaaS vendors but for CRM as a whole -- one SAP, PeopleSoft, Siebel and Oracle have already trodden with their on-premise versions -- yet, according to some, there are simply never enough industry-specific processes.

"We've never, from a CRM perspective, done that great when you're talking about verticals," said Sheryl Kingstone, analyst with Boston-based Yankee Group. "Even businesses within a vertical still have specific business process. It's usually only getting you 50% of the way."

For the University of Houston, a vendor's experience with similar customers in higher education is a major attraction.

For more on vertical CRM See why companies are more focused on SAP's and Oracle's verticals than their fight with each other Learn how consolidation is affecting vertical CRM development

The university has been using RightNow's e-service system for about five years with its Ask Shasta program, an online self-help service named for the school mascot. The university was pleased with its performance -- the system helped deflect 90% of emails from current and prospective students within months of its deployment – but it's also looking to other vendors for a full CRM suite. RightNow's higher-education release holds some attraction, but a major PeopleSoft implementation is making the choice more difficult. The main campus is going live with PeopleSoft in July, and Oracle's plans for the product have convinced the university to wait on CRM, according to Jeff Fuller, executive associate director of admissions. Oracle bought PeopleSoft two years ago and -- under a program called Fusion -- intends to marry the functionality of PeopleSoft's products with the best functionality of its recent acquisitions.

"We really want to get live with PeopleSoft first, and then look at our choices," Fuller said. "We really want to wait and see what the Fusion product may look like. Currently, we plan to continue doing business with PeopleSoft and build a ton of modules to make it specific to our needs. We want to see how we're using it, what we're using it for, and what third-party bolt-ons there are."

According to Julia Kosatka, administrator of Ask Shasta, the university did very little customization of RightNow's e-service application.

"We consider our students our customers," she said. "Calling a student a contact or a customer, that's fine. That follows along with our organizational culture."

However, that's not always the case, according to David Vap, vice president of products for RightNow.

"With Higher Ed, they're looking for CRM applications, but they don't talk about it like that, they talk about recruiting and informing the student base," Vap said. "Our packaging helps connect those dots between sales, service and marketing and what they do on a daily basis."

RightNow will continue to build out on-demand verticals and plans to release versions for government, retail and telecommunications in the second quarter, he said. It's taken a while for RightNow to embark on the vertical path, and for good reason.

"The company has intentionally stayed horizontal since we began," Vap said. "Vertical takes a lot of resources to do right. You can get easily derailed by focusing on verticals too early."

That's a sentiment echoed by Denis Pombriant, managing principal with Stoughton, Mass.-based Beagle Research.

"Vertical functionality matters just as much as in the traditional, on-premise world," Pombriant said. "Somebody has to plant the seeds and build the first few applications. It takes a little priming of the pump and to go from concept to reality."

While the University of Houston has been running e-service for years and takes a CRM approach to its student body, it's still looking for CRM tailored for education.

"Wherever we go with a CRM product, it will be something where we don't have to reinvent the wheel," Kosatka said. "And we'll look at other institutions like us -- we don't want to be the guinea pigs."

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