What do you anticipate will be the key functional enhancements over which the SMB vendors will duke it out in 2004?
There is no doubt that some of the trends like Web, like mobility, like multi-currency [support] are going to be crucial. The other trend we're seeing is the ability to integrate with the back office. We believe strongly that the day of considering front versus back office is going away rapidly. One of your competitors, FrontRange, has said it's impossible to survive in the SMB space without offering a hosted solution. Do you have any plans to add one?
The marketplace is breaking up like an ice pack. There is a large demand for hosted solutions in this space, and we want to look at where appropriately we can play in that [arena]. I don't think it's impossible to survive [without a hosted solution]. That may be a problem for other competitors. I do think there is a large segment that is growing and is looking at hosted solutions.
One of the interesting perspectives we have is that many [businesses] going for hosted solutions will not remain in that marketplace long term. In many places, hosted solutions are adopted because of price or ease of implementation. We're already seeing users, who perhaps have been in the market for 12 months prior, who say there's a ceiling on what they can do with their hosted solutions. We have clients coming to us looking for richer functionality.
Last year, Best Software established the goal of trying to get ACT customers to migrate to the more robust SalesLogix. How successful have you been?
It's interesting you should ask that. We just kicked off a campaign about three or four weeks ago and are already getting leads ... that are giving us the opportunity to expand our SalesLogix business. One of the benefits is the ACT customer doesn't have to be convinced of the need for CRM. For them this is extended functionality. That's one of our fertile areas for growth. Are there any plans to establish a more clear migration path between the two applications?
We are working closely with our colleagues in the ACT organization and are aggressively testing different vehicles, [like] direct mail [and] outbound telesales, to develop leads and turn them over to our business partners. We have an active program in place. Research shows that 98% of U.S. businesses still haven't invested in CRM. Assuming that executives at some of those companies will read this, make your pitch for them to put away the spreadsheets and make a software purchase.
Successful adoption of a CRM system, combined with effective sales and marketing processes, leads to increased business and increased productivity. And we've seen a number of studies that show [that], increasingly, customers in the SMB space are very satisfied with their CRM solutions and are realizing true business gains as a result of them. Nearly one year after the arrival of Microsoft in this market, what impact have you seen?
The interesting thing is we've viewed Microsoft as an opportunity as opposed to a threat. Microsoft's arrival in this space legitimized the category for SMBs. We've viewed it as a fact that Microsoft would expand the market, and this was a great opportunity for us to gain additional business. We have seen more people accepting CRM as a part of everyday business. As a result, this has been a great benefit to us. Siebel has said it will make it easy for customers to move from its new hosted offering to its on-premise software. It sounds like you think Siebel is getting it right?
I wouldn't comment on whether Siebel is getting it right or not. Their capital structure is still based on a machine that grinds out large deals. SalesLogix fared well in a recent CRM customer satisfaction survey, getting the top score. What's the key to making CRM successful in the SMB space?
A large part of it revolves around the attributes of the product. SalesLogix's strength is its customizability and scalability. Our product is able to be adopted to processes easier than other offerings in the marketplace. Reflecting process is very important in the SMB sector because [processes] tend to be different from company to company. The second [key] is having a good partner channel. A number of our partners have been around for years and know their customers very well.
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Are there signs that Microsoft isn't content to play in this space and is looking upstream?
The reality is Microsoft and [its] business solutions division have very aggressive growth targets. They're more likely to hit those goals if they sign bigger deals and go upstream.