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Mid-Market CRM… the Choices

Why ASP is the way forward for the mid-market

One of the most telling reasons is that ASP does not need internal IT support either to implement or maintain. So where a company has no internal IT or its internal IT is too highly stretched ASP may be the only route. ASP's involve no software installation and upgrades and support are included in their licence fee.

Most ASP CRM solutions are modular in construction form. That means that they are comprised of a range of different functionalities that interact seamlessly. So the core of the system may be data warehouse, and querying is an additional function, the Campaign Manager runs off the Query Manager and the Contact Management system runs off the data warehouse. This means that smaller companies with more limited staff and capital resources can bring only that functionality to bear that they really need. This increases internal acceptance and usage and reduces both costs and implementation risk. An important consideration here is that smaller companies are often less complex, having fewer customers with fewer opportunities to interact with the company. Therefore full service on-site packages are probably unnecessary.

By the same token the modular nature of the majority of ASP's means that the system can grow in both size and complexity either as the company grows, its needs grow or greater internal process integration takes place.

Many smaller companies out there, far from having any CRM system in place, may have no Marketing or Sales system either! What's more they probably don't have SOP or ERP systems and while this is not something to be criticised, it has to be accepted that those outside the top flight often have no internal perceived need for this type of integration. Not only will an expensive on-site implementation probably not work because of the cost and culture change required, it is precisely in this type of firm the maximum benefits of ASP can be felt. Let's face it – not everyone wants or needs all the bells and whistles!

Implementation is also becoming easier

Where mid-market firms have existing internal systems the integration of ASP's with these will be simpler and cheaper than on-site. It is estimated that up to 70% of the cost of on-site implementation is in porting legacy data to the system. Recent technology improvements in the form of more open architectures and communications such as XML mean that on-site systems are prisoners of their past. Therefore ASP's have real advantages to exploit in these areas.

One final and specific area is the ease with which hosted applications can bring suppliers / dealers / customers / partners, etc. into the CRM process. MarketDeveloper can be used for Strategic Marketing Planning and Task Allocation / Management both internally and with the pivotal suppliers. Therefore the Advertising Agency knows, in advance through its interface, when material is required or when media needs to be bought. The mailing house can have a schedule of campaigns available months in advance and the briefing document for each created within its interface. Then, when the campaign is due it can download the selected list straight from the site.

So what are the pitfalls and misconceptions?

The reality still is that the technology represents only one element of any CRM initiative. The truth is that any significant organisational change requires a combination of people, process and technology. Change can fail for the same reasons with a hosted application as they can with on site. Having said that, extended implementations of on site, enterprise software possess their own execution risks as the 'honeymoon' period of high expectations exceeds the time taken to bring into use.

One of the myths surrounding hosted is that it cannot be customised. This is not the case but customisation happens at two specific levels dependant on the system option taken. In the case of Salesforce.com the customisation options are 'on board' so can be done by the user. The weakness here is that very few Marketers and even fewer sales staff are going to want to do their own customisation. Budget must be allowed for bringing in third party support. In the second option systems like MarketDeveloper are customisable to the client requirements before delivery. You pay for anything non-standard. The moral is – they are customisable, but it costs.

The internal 'owner' of a hosted application has to probably accept a higher level of commitment relative to on-site in order to make an implementation successful. Also the relationship with the provider needs to be carefully first investigated and then managed after delivery. This happens at a number of levels;

The Support Level Agreement (SLA) should define system access and support availability. If you are running across country boundaries the help desks need to be available in different time zones.
You should gain structural guarantees relating to physical data, system security and outages.
The software and the management systems implemented by your provider must provide you with a means to be fully compliant with the relevant data protection legislation in the countries you operate. The software provider must be cognisant of the Law as it applies and the hosting arrangements must allow compliance at the point at which the data is accessed. This is particularly the case where system usage crosses national boundaries.
Certain software providers do not provide implementation, customisation and services to add functionality. It is important that they have appointed third party vendors in your geographical area to provide these.

Conclusion

The future lies with ASP in the same way client/server took the place of mainframe and it will do it in the same way, i.e. in the most appropriate places. Client/server and mainframes will not disappear but the way all the major integrators have or will have hosted applications available shows the way. Aberdeen Group suggested recently that licensed software revenues will decline at an average annual rate of 4.8% by 2006 while IDC recently suggested a 6-fold growth in ASP to 2008. Gartner expect that by 2006 25% of SME's that use CRM technology will be using hosted ASP's.

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