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Rating a host of SFA options

Forrester's latest report rates a variety of hosted sales force automation providers and indicates the competition is heating up.

These are heady days in the hosted sales force automation (SFA) market.

Between rapid growth in the customer base of both and Siebel OnDemand, and the arrival of new players in the market like RightNow Technologies Inc., SalesCenter and Entellium, 2004 was a busy year.

In fact, software as a service is the next major trend in sales applications despite a slower adoption rate of the hosted model for other types of applications, according to a recent analysis from Cambridge, Mass.-based Forrester Inc.

Much of the interest has come from small and midsized businesses (SMBs) that are looking for quick deployment and lower initial investments in their SFA technology.

"There are a lot of companies that are just getting up and running on their first CRM system, particularly in small businesses," said Liz Herbert, an analyst with Forrester. "A lot were running off of Outlook, ACT or spreadsheets. A lot of the growth is driven by the fact that it's easy to get up and running."

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Pricing has been a prime motivator for SMB investment in hosted SFA and vendors are responding.

"We're definitely seeing more price battles as these solutions are making their way in the market," Herbert said.

For example, San Mateo, Calif.-based NetSuite Inc., recently announced  a program to discount rival's product by 50%. Seattle-based Entellium Corp. offers customers the option of purchasing modular components, and Siebel and RightNow offer customers the capability to move from hosted to on-premise. RightNow even mixes its pricing modules, allowing on-premise customers to pay by subscription and hosted customers to buy on a perpetual license basis, Herbert said.

Forrester evaluated eight vendors in the hosted SFA market based on setup and configuration, sales management, sales analysis, usability, offline and wireless access, integration, vendor strategy and market presence. Siebel OnDemand and were identified as leaders  as they were last year. RightNow, NetSuite, Salesnet Inc. and Entellium each ranked as a "strong performer" in the study, and NextSale and SalesCenter were each named a "strong contender."

The emerging trends in hosted SFA over the past year have been a move toward verticalization and the resurgence of interest in wireless options.

"Even Salesforce, which has always said, 'We don't do verticals,' if you look closely, they kind of do," Herbert said. "Look at the recent announcement [of an original equipment manufacturing agreement with Thomson Financial]. We're really seeing that across all the vendors. That's not something we were seeing a year ago."

Established on-premise vendors are also rushing to offer hosting services if not necessarily rearchitecting their product. ACCPAC International, the Pleasanton, Calif.-based subsidiary of the Sage Group, offers, and FrontRange Solutions Inc., also in Pleasanton, has said it plans to release a hosted version of its GoldMine product.

"Customers are increasingly demanding the flexibility of paying as you go and not worrying about the infrastructure," Herbert said. "We expect SAP and PeopleSoft to offer their solutions hosted as well."

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