On-demand business applications are seeing increasing
adoption among business users large and small. These services have
become popular largely thanks to the internet and secure broadband
connections. Users are able to access their business applications
via a browser, and pay a per-month, per-user set fee to do
so.
As a result, on-demand services can offer users a predictable
cost, with fees typically being about £40 to £50 a month per
user.
Customer relationship management (CRM) software has been the
most successful application available on an on-demand basis, and
Salesforce.com has been the main proponent of on-demand CRM.
Salesforce.com specialises in CRM and sales force automation,
helping a sales force to record and manage their sales efforts.
Salesforce.com also offers marketing automation. The company dates
back to 1999 and now has 500,000 registered users.
Other companies offering on-demand CRM include Siebel, RightNow
Technologies and NetSuite. SAP has been offering on-demand CRM
since February, and Microsoft is expected to offer its on-demand
CRM service in the first half of next year.
Any company can use the service, whatever its size. Steve
Garnett, general manager EMEA, at Salesforce.com, said, "We see
customers with two or three users, with the attraction being you do
not have to own your own software, manage it and run it."
This approach is not confined to smaller businesses. The
Salesforce application is also used in some of the largest
companies, such as Merrill Lynch, ABN Amro, Cisco and Nortel.
The compelling argument for going to a hosted, on-demand model
is when IT is not regarded as core to the business. Traditionally,
companies had to build their own IT systems because they had no
alternative. That all changed with the web. In Garnett's view, IT
should be like utilities and sanitation, in that you should not
have to build your own systems.
However, one concern users have is what will happen to their
business if the service provider experiences downtime. This
happened to Salesforce.com last Christmas.
Salesforce.com suffered a major system outage in December. This
raised alarms among its users, who questioned whether they should
really trust an online system which holds their core customer
data.
As a result, Salesforce.com redeployed the applications running
on its main US server to three separate servers. Since then, it has
not experienced any major performance issues, but remains
chastened.
The company has spent more than £26m enhancing its datacentre
replication processes, security and reliability. It has a number of
big Sun Fire E25K servers running the Oracle database.
"We publish our availability. We will show you all of our
servers, when we had an outage and how long for. We also do some
service level agreements," said Garnett.
Salesforce.com has also developed an on-demand application
platform called Appexchange. This allows users to run the latest
version of Salesforce CRM and the other applications, and develop
and share their own on-demand applications.
Since it opened up the architecture to users, Salesforce.com now
hosts 300 applications, which range across the vertical industries
and cover areas such as project management, recruitment and
financial services. Because Salesforce.com hosts the software, it
can migrate its users onto the latest version.
Conversely, on-demand CRM supplier RightNow allows its users to
upgrade when they are ready to, and supports multiple versions of
the applications.
"That is very important if people use it for integration," said
Wayne Foncette, RightNow's vice-president for the UK and
Ireland.
Another differentiator for RightNow is that it will host the
software in-house for some customers - 10% at present.
"We give the option of going on-premise - we are not against it.
The commercial benefits and time to market sometimes make it a
better option," said Foncette.
As with the other on-demand CRM hosting firms, RightNow can get
a user up and running in about 30 days, which is shorter than if an
organisation had to test and implement its own CRM system.
Foncette added that taking the on-demand route allows users to
scale up their usage easily if they grow the business or hit a busy
period.
Education services company Edexcel is a RightNow user. It has
integrated the CRM front end into its own back-end applications and
Frontrange contact management system.
Marie Gower, head of customer services at Edexcel, said it was
easy to integrate RightNow into Edexcel's Frontrange contact
management system, which the company did itself. The integration
was done using open standards based on XML application programming
interfaces.
Edexcel's RightNow set-up took eight weeks to complete, and
included training two non-technical specialists to use the system.
Edexcel chose a perpetual licence with a tool to predict its usage
of the CRM service. It also pays an annual maintenance charge.
Siebel is one of the leading in-house CRM systems but there is
also an on-demand version, Siebel CRM On Demand. Siebel, which is
now owned by Oracle, is on version 10 of its hosted CRM sales and
marketing service, which was launched in 2003.
The service has a lot of customisation, and numerous vertical
industry features. For example, Custom Tabs allow the end-user to
embed information and screens from other web-based applications
into their CRM application, so they can perform multiple operations
from the same screen.
NetSuite's CRM service also features customisation capabilities,
and makes use of personalised dashboards. These online panels give
the user an aggregated view of information, such as new sales
orders, commissions and forecasts.
NetSuite's unique selling point is that it can integrate the
order management process into the CRM system to create a purchase
history and include channel partners into the mix.
CommNet, a European small and medium-sized enterprise business
network is offering a new hosted CRM service. It is partnering with
Really Simple Systems to offer the outsourced, web-hosted CRM
service to its 2.3 million global members, as well as new
users.
CommNet described the CRM system as "functional rather than
having the complex design of more expensive competitor
products".
For example, it uses elements like Google calendar to add tasks
to the user's existing diary. It is also cheaper than rivals,
costing £35 per user, per month.
In July, Microsoft gave details of its on-demand CRM suite,
Microsoft Dynamics CRM Live, for small and mid-sized businesses. It
is planning two products, Dynamics CRM and CRM Live.
Both are roles-based, and have a Microsoft Outlook look and
feel. Both will have standard CRM capabilities designed for small
and mid-sized firms respectively.
Oracle is also developing on-demand CRM software, separate from
the software available from its Siebel division.
In general, the CRM service providers make it easy for users to
move their data off their servers if they end the contract. Most of
the service providers said they will export it in an open standard
format, such as XML, which takes between two and seven days,
depending on the volume of CRM data. They can then deliver data via
a secure network link, if required.
However, while it is easy to move from one service provider to
another, there appears to be little user churn yet, mainly because
on-demand CRM is still an emerging area of technology. However, as
more suppliers come on board, users will undoubtedly face a wide
range of services and benefit from lower monthly prices.
All in all, on-demand does appear to give IT directors the
ability to implement business systems quickly. But the monthly
costs mount up over time, and will eventually exceed the cost of an
in-house system. Users need to balance this with the attraction of
getting up and running very quickly.
Case study: Ease of integration key to ITN source's
choice of on-demand CRM
One user of Salesforce.com’s on-demand CRM service is ITN
Source, which provides content for broadcast footage.
Sue Thexton, managing director for ITN Source, said that the
organisation worked with Salesforce.com’s professional services
team to write bespoke code that allowed it to hook the Salesforce
service into its back-end finance system.
However, this work has allowed ITN Source to generate and
deliver invoices as a result of a quote, and pull these back into
the Salesforce system. She added that such integration work is the
exception rather than the rule.
Prior to using Salesforce in March 2005, ITN Source used a
system with little scalability or flexibility. It did not have any
in-house CRM expertise, and used Deloittes to help it select a CRM
system.
The consultant’s report shortlisted one on-demand and one
in-house CRM system. Salesforce.com could deliver the system faster
and to budget, and also provide the integration, which is why it
was selected.
“We are a small company, and we have specific requirements. We
were not trying to replace our back-end systems,” said Thexton.
“For us, a benefit is that you can turn off Salesforce tomorrow
if you need to,” she added.
She said that ITN Source talked to Salesforce.com specifically
about data protection, because it was very concerned about it,
being a news organisation. However, Salesforce.com, like the other
hosted CRM suppliers, must adhere to the data requirements of the
countries in which they operate. They also argue that they meet the
security requirements of their largest customers.
“[The service] is as safe, if not safer than our own internal
security measures,” said Thexton.
CRM service providers maintain that their agents are unable to
see any customer data, although they can manage it. They tend to
know which users are logging in, and from which machine, but this
is all, according to the suppliers.
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