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Hosted CRM grows up

Hosted CRM vendors are branching out beyond traditional sales force automation tools, as a flurry of e-mail marketing announcements this month showed.

When Gerry Morton took over as CEO of a small nutrition company in Hermosa Beach, Calif., he knew he'd need a new IT system to run his books and customer interactions.

He also knew he liked the idea of NutriScience Corp. running a hosted application. He looked at San Francisco's Salesforce.com, Microsoft's CRM and Best Software Inc.'s Saleslogix before eventually deciding on NetSuite's application. NetSuite caught his fancy because not only was it built as an on-demand application for CRM, but it offered ERP capabilities as well.

It's clear that many customers now expect far more out of their hosted CRM applications than just sales force automation (SFA) tools. And hosted vendors are responding, adding CRM functionality beyond just sales.

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"It's been moving that way for a while," said Sheryl Kingston, CRM program manager for the Boston-based Yankee Group. "The low-hanging fruit was always the SFA due to the complexity and the lack of solutions that were there."

The battle to expand beyond the sales side of CRM and into service and marketing has been made abundantly clear in the past month. Salesforce.com, a pioneer in hosted SFA, recently added a support tool with Supportforce.com. RightNow Technologies Inc., in Bozeman, Mont., which through its history has focused on call centers and service, recently expanded its offerings into sales and marketing. Two weeks ago, Boston-based Salesnet Inc., signed a partnership with UniPress Software Inc. of Edison, N.J., to bring service desk together with its sales application.

And then there was the flurry of e-mail marketing announcements. NetSuite has unveiled Mass E-Mail Marketing to help companies send hundreds of thousands of e-mails a month from the NetSuite and NetCRM applications. Last week, RightNow announced partnerships with Quris Inc., of Denver, and The Aaronson Group, in New York, to deliver e-mail marketing. And Salesforce.com, at its user conference two weeks ago, released an integrated offering with Responsys Inc., of Redwood City, Calif., to allow users to run Responsys e-mail campaigns from Salesforce.com.

NetSuite's e-mail application is working just fine for NutriScience, which uses e-mail as its primary communication tool with customers, Morton said. The application ties back into customer records, and NutriScience knows which customers have received which e-mails. It performs similarly to the company's NetCommerce application, which can show where customers went on a Web site, he added.

The move into hosted marketing applications from established hosted vendors is due partly to the success of hosted SFA.

"We've kind of gone pretty far down the line with sales [applications]," said Denis Pombriant, managing principal for Stoughton, Mass.-based Beagle Research Group. "We have technology that really does a good job of automating sales process and methodology, whether with Salesforce or Salesnet. You've got this well-oiled machine; you've got to have something to feed it."

Pombriant did some research recently, surveying small businesses and found that 82% said they had some type of SFA already, but only 49% said they had a marketing application.

E-mail marketing is a natural progression for Web-based software because e-mail itself depends on the Internet, said Laurie McCabe, vice president of small business solutions for New York-based Access Markets International.

"Hosted CRM is growing up," McCabe said. "The vendors built up capabilities in whatever core area they started with, and now they're not only deepening the applications, but they're also looking toward these adjacent areas."

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