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Mid-market jumps onto bandwagon

Time was when dot-coms were the main application service provider (ASP) customers. But is extending the ASP model's reach in the CRM arena.

Anyone who's ever heard CEO Marc Benioff espouse his vision of "putting an end to software" might wonder if the firm is still flying high on residual vapors left from the salad days of application service provider (ASP) fever.

Back then dot-coms were the ASP bread and butter. However, these days some of the San Francisco-based company's mid-sized customers are sharing positive views of the effect using CRM as a service is having on their operations.

Two companies clearly impressed with their use of's eCRM products are a division of technology conglomerate Fujitsu America Inc. and thin-client hardware vendor Wyse Technology Inc, both based in San Jose, Calif.

For the Fujitsu Technology Solutions unit, part of the company's IT services division, the mandate for CRM was simple: Replace a proprietary customer database with a more powerful application that could better enable employees to keep track of existing customers and new sales leads. After looking at some of the other offerings on the market, including software from market leader Siebel Systems Inc., Fujitsu decided on's online offering over more conventional client-server-based systems.

"We were able to get the system up and running very quickly and almost immediately begin tracking returns," said Mary Jo Rudney, business operations manager at Fujitsu Services. "This was part of the attraction compared to other products we considered. Customization could be done on the fly."

In fact, Fujitsu estimates it had's Professional Edition, a step down from the company's recently released flagship Enterprise Edition, up and running in less than 30 days. While the firm didn't build in specific guidelines for measuring return on investment, Rudney said the soft ROI achieved through better-informed sales and service workers has improved the unit's overall performance since first using in mid-2001.

Another factor that drove Fujitsu to is the ASP's relative low pricing compared to larger enterprise systems. The company currently maintains 159 users on the Web-based service, which sells for $65 per user, each month.

Meantime, officials at client/server terminal manufacturer Wyse are convinced that leasing CRM as a service is the only way for them to go.

In late 2000, Wyse began looking at mid-tier CRM vendors including Applix Inc., Epicor Software Corp. and Pivotal Corp., in addition to, to refine its European marketing strategy. According to officials at the company, the simplicity of the Professional product led it to invest in the package.

"It's a different situation than many companies are in but after looking at a number of vendors, we felt the company would have spent more time and money removing functionality from one of the other alternatives," said Stephen Yeo, European marketing director at Wyse. "There was some great functionality elsewhere but in our case it would have been overkill."

Yeo said Wyse liked the idea of being able to utilize only the portions of the package the company felt it would need to rapidly become more effective.

Originally designed for small to mid-sized businesses and organizations, the Professional Edition is aimed squarely at customers that do not require the same level of integration with existing applications that many enterprises demand. The package contains an array of traditional CRM tools aimed at sales force automation (SFA), customer service and support, marketing automation, and basic analysis and reporting.

The executive said the popularity of the tool grew so quickly in Europe that members of the company's marketing team were soon utilizing the software around the globe, with 125 users now working with the software.

Wyse was also sold on's pricing model. Not having to make a huge investment upfront allowed Yeo to bring his project in under budget from day one. He also said Wyse was never forced to use any outside consultants to get the applications in place and customized, another major area for savings.

One issue often pointed to by detractors of's ASP model is the inherent risk of allowing a large amount of critical, competitive data to flow out onto the Internet. In fact, some would argue security fears are the ASP model's biggest hurdle.

However, Yeo isn't concerned.

"I'm honestly a lot more comfortable with [] watching over my data than having it sit on some [Windows] NT server in the corner of our offices," he said. "You need to be stricter in the way you manage administration issues like password protection, but if there's a fire at your offices guess where your data is sitting? [It's] safe and sound." Market watchers agree that there is growing optimism around the outsourced model for some applications and that eCRM may be one of those. "[ has] proven that the managed service provider approach works, they're making money at it and they're broadening their functional footprint," said Steve Bonadio, senior program director at researchers Meta Group, Stamford, Conn. "They're trying to carve out a niche and could do well in the mid-market, especially if the companies that are there continue to struggle."

Some customers and analysts have publicly wished that stronger analytical capabilities could be built onto the tools. Still, at the end of 2001, a research report published by investment house Morgan Stanley indicated the ASP has attracted more individual customers than any other CRM player over the last two years.

"They've definitely raised a lot of eyebrows in the market," said Bonadio,. "What remains to be seen is what kind of customers the ASP model can continue to attract."


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