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Net-Native CRM: Cheap, fast and easy alternative to traditional CRM applications?

Kate Claus, Summit Strategies


Sales-force automation and CRM vendors have promised companies solutions to the age-old problem of getting and keeping customers. Unfortunately, many of these solutions have had much-publicized downfalls -- from out-of-control costs to never-ending implementations and low user-adoption rates.

Amidst the backdrop of CRM solutions gone wrong, a new group of vendors -- Net-native, software-as-services providers -- has cropped up, promising to solve customer relationship problems minus the pitfalls. Offering Web-based services, three companies in particular -- Salesforce.com, Salesnet and UpShot -- have attracted customer attention and made inroads in the SFA market, often against more entrenched, better-funded rivals. As detailed in Summit Strategies' October 2002 report, Net-Native Software-as-Services CRM Vendors' Rx for CRM Blues, Salesforce.com, Salesnet and Upshot have built on their SFA successes and have now begun to offer both more advanced SFA products as well as additional CRM functionality -- either on their own or in conjunction with partners.

The three vendors started with the same basic Net-native software-as-services formula, and each recite a refreshing message of solutions that are "cheap, fast and easy." All tout benefits that include the following:

-- Faster deployment. Instead of taking the time to purchase, customize and implement the hardware and software required for a traditional

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CRM solution, Net-native customers simply log into the application via the Web
-- Cheaper implementation. Companies pay a monthly, per-user subscription fee to access the Net-native application -- a cost that is both predictable and typically lower than the cost of traditional software. With a traditional solution, customers pay for the CRM application, the hardware to support the application, and IT staff to manage the application and customer support contracts; they also face future upgrade costs
-- Lower risk. With no overhead investments, and a faster time to implement, customers can afford to try a Net-native application
-- Ease of use. Net-native vendors relieve IT staff of having to learn and manage another complex application, and Net-native vendors stress that their Web interfaces are easy for end users to navigate and require little training; and
-- Real-time, synchronized data roll-up. Because the data in Net-native applications is always synchronized and available in real time, customers can more quickly manipulate the data to generate accurate reports.

Although Net-native companies are quick to evangelize the benefits of the Net-native model, potential customers may perceive some drawbacks, including lack of customization; lack of integration with other systems; data-ownership issues; security and privacy concerns; connectivity and performance issues; and lack of offline data synchronization. Some of these issues, such as security, are more perceived than real. Because Net-native vendors have built their services to run over the Internet, their reputation is tied to providing a secure infrastructure. If they couldn't guarantee a secure service, the vendors would quickly be out of business. The three vendors have also worked to negate some of customers' other issues with Net-native solutions. For example, all three have recently introduced offline data-synchronization functions, as well as enterprise editions with integration and customization capabilities.

In addition to sharing common Net-native traits, Salesforce.com, Salesnet and UpShot have other notable similarities:

-- All entered the market targeting a specific part of the CRM puzzle -- sales-force automation -- and promising that their services would efficiently zero-in on sales-management issues;
-- By emphasizing how quick and easy their solutions are to deploy and use, these vendors threw their approach into sharp contrast with many traditional CRM applications that required expensive, time-consuming installations -- and often were overkill, as far as corporate sales executives were concerned;
-- After launching basic SFA products, these vendors have added more robust SFA services and, in some cases, additional CRM capabilities; and
-- After successful initial forays into large corporations via departmental sales, vendors are setting their sights on expanding their footprints to encompass wider-ranging implementations in large accounts.

When it comes to adding additional CRM functionality to their original SFA services and developing a CRM strategy, each of these vendors, however, has a different vision:
-- Salesforce.com believes that companies want more than just a standalone SFA application, and is developing a one-stop CRM suite;
-- Salesnet believes the best-of-breed strategy is the best route to CRM success, and has concentrated its energies on an SFA application that fits into a best-of-breed CRM solution; and
-- UpShot falls somewhere in between the other two. Although the company espouses a best-of-breed philosophy with plans to partner outside its core competencies, it has actually developed some CRM functionality in-house.

Despite their differing CRM strategies, Salesforce.com, Salesnet and UpShot offer similar services and remarkably similar pricing, and all three promise fairly comparable benefits. The area in which they diverge the most is in whether they want to follow the best-of-breed route or the integrated suite route. In one category -- brand awareness -- Salesforce.com is far ahead of the other two. In most other ways, however, it's difficult to determine a clear leader. All three vendors deserve kudos as pioneers in the Web-based CRM service category. They've given companies that want to improve their relationships with customers a true alternative that offers tangible benefits over traditional packaged CRM solutions.

Kate Claus is an Associate Analyst at Summit Strategies.

This was first published in November 2002

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