With the market for enterprise CRM applications seeing a year of vendor consolidation, activity in the small and midsized businesses (SMBs) CRM market is now ramping up.
In just the last month, companies like Maximizer Software, Sage Group plc and FrontRange Solutions Inc. have released upgrades to their products, all of which will be followed by the long-anticipated upgrade to Microsoft CRM 3.0 next month.
"That's where the growth is," said Liz Herbert, analyst with Cambridge, Mass.-based Forrester Research Inc. "We're seeing more in the midmarket. It's the sweet spot for spending."
In fact, in a survey of technology buyers, Forrester found that 30% of midmarket companies planned to purchase sales force automation (SFA) software in 2005, compared to 23% in the enterprise market, and 20% in the small businesss market. Forrester defines a small business as between six and 99 employees and midmarket as 100 to 999 employees.
With the renewed focus on midmarket CRM, Herbert and a group of other analysts at Forrester evaluated eight of the leading on-premise midmarket SFA vendors based on Forrester's Wave methodology. They were FrontRange's Goldmine, Maximizer Enterprise, Microsoft CRM, Onyx, Pivotal, Sage CRM (formerly ACPAC), Sage CRM SalesLogix and Siebel Professional Edition.
Forrester distinguishes between on-premise and software as a service providers in the report. Hosted applications have garnered much of the press in recent months with pay-as-you-go pricing, quicker deployments and easier upgrades because the software is hosted in a vendor's data center. Yet many companies are still not considering it as a deployment option, according to the report. While Forrester evaluated only on-premise in this most recent report, future evaluations will likely combine the two as they reach functional parity, Herbert said. Additionally, next year's Wave report will probably extend beyond SFA into other CRM areas like marketing and customer service.
"Deployment options will always be a key criteria," Herbert said. "But increasingly with these options -- like RightNow and Sage -- you can really get the same tools both on-premise and on-demand."
Forrester found Siebel System's Professional Edition, Sage CRM's Saleslogix and Pivotal's applications best suited for midmarket firms, while FrontRange and Maximizer Software best fit the needs of small businesses.
Microsoft was a victim of timing, Herbert said, as Forrester evaluated its 1.2 CRM product and not the upcoming 3.0 version.
"I think we can expect significant enhancements in the 3.0 release," Herbert said. "I think they would have fared much more strongly if we could evaluate 3.0."
Microsoft, along with Sage, was identified as the company best positioned to offer an all-in-one solution. Both companies were the only ones evaluated to have ERP applications in their product portfolios.
Forrester offered some advice to SMBs purchasing SFA applications. Companies can cut down on the length of implementation and on costs by finding industry-specific applications, which come with objects, fields and reports preconfigured for the processes and terms in their markets. Siebel, Onyx and Pivotal best suit the financial services and healthcare verticals. Media, energy and communications firms should consider Siebel and government sectors should consider Onyx, according to the report.
Additionally, Forrester recommends SMBs take advantage of partner add-ons and third-party services. For example, iAnywhere offers mobile CRM access and Avaya offers computer telephony integration in the market. Microsoft and Sage have a wide variety of resellers that provide additional functionality.
Finally, Forrester suggests SMBs keep it simple. Too often SFA implementations get bogged down or fail outright because applications are overly customized and businesses often buy more than they need, ending up with shelfware. SMBs should work with key users from every division of the company when considering vendors and determining integration needs. Implementation fees should not exceed license fees. SMBs typically see a one-to-one ratio of consulting to license fees, according to the report.