The next step in the evolution of hosted CRM is having less and less to do with CRM, judging by an announcement today from NetSuite and one expected next week from Salesforce.com.
Trailblazers like San Francisco's Salesforce.com, Boston's Salesnet Inc., San Mateo, Calif.'s NetSuite Inc. and Bozeman, Mont.'s RightNow Technologies have paved the way for companies to house their CRM applications and data in a vendor's off-site data center. In fact, the hosted model -- also known as on-demand or Software as a Service (SaaS) -- has been steadily gaining momentum, and SaaS CRM vendors are already looking to extend beyond CRM.
Salesforce.com is scheduled to launch an upgrade next week that will reportedly include enhancements to AppExchange, a directory of applications developed by Salesforce.com and its partners that add functionality the company doesn't provide. For example, Salesforce.com is relying on partners to provide sales compensation tools. Today, NetSuite unveiled its new NetFlex Applications Program. NetSuite already includes back-office and ERP functionality in its suite of applications, and the new program will help extend it further, according to Mini Peris, senior director of product management.
"That's one of the main differences [from the competition]," Peris said. "It isn't the same as integrating with a CRM vendor. We have a single point of integration for [our partners] instead of having to tap into multiple systems."
For example, a telephony vendor building an application on NetSuite's NetFlex development platform can provide traditional call center agent software but also enable orders via touch tone, or integrate with non-call center staff making collection calls. Additionally, the NetFlex platform preserves all modifications in future upgrades.
NetSuite currently has more than 30 partners lined up to be part of the program, with 20 applications now available. Applications will be offered not just on demand, but also via on-premise (server-based) and desktop (client-based) delivery. Partners include companies like Five9 for contact center functionality, Xspansion for mobile wireless tools and CGI for payroll services.
"The program makes sense for NetSuite," said Martin Schneider, analyst with the New York-based 451 Group. "They can add to their core ERP and CRM stuff with some pretty small point products that are integral to certain verticals. That single integration point makes it easier for front and back integration."
The program is a part of a new vertical initiative that NetSuite intends to roll out throughout the year. The NetFlex partner program will help the company gain access to vertical markets, Peris said. For example, retail businesses want a point-of-sale tool that can integrate with both the CRM and ERP systems.
However, while companies are extending their SaaS footprint beyond CRM functionality, don't expect the whole world to turn to on-demand, said Schneider. Some companies remain concerned about security and system uptime. CRM uptime is important, but some businesses don't consider their sales force automation (SFA) as critical as something like their e-commerce engine.
"You saw the fallout from the Salesforce.com downtime," Schneider said. "It's an evolution but I don't think it's a revolution. You're going to see these hybrid approaches. Not everybody can afford to -- or wants to -- have all their applications in someone else's hands."
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