It pays to go to the host with the most

Even though research from Computer Weekly in association with BT says SMEs are indifferent towards hosted services, there is...

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Even though research from Computer Weekly in association with BT says SMEs are indifferent towards hosted services, there is increased activity towards providing CRM functions using these services. James Rogers assess how attractive hosted services could be for your company.


Managing relationships with your customers has never been more important. With the economic slowdown of the past few years, it is vital you to meet the needs of your customers and clients more speedily and more efficiently. If you can’t answer their queries quickly enough, one of your competitors will.

But responding efficiently and rapidly to customers’ demands is only part of the story. With businesses generating vast amounts of data every year, firms need a clear idea about how this is going to drive sales and marketing efforts.

Such is the business potential of the technology that will collate and manage business data that analyst firm Ovum estimates virtually all firms will have customer relationship management (CRM) systems in place in the near future.

Fundamentally, CRM technology will enable your businesses to build a complete picture of your customers. Potentially, you will be able to build customer profiles encompassing a wide range of attributes, from customers’ ages and sex through to their all-important buying habits. As David Bradshaw, principal consultant at analyst firm Ovum explains in the Ovum Evaluates: CRM report: “The more precisely you know your customer, the more precisely you can target your products, sales efforts, service provision and marketing efforts.”

A typical problem facing companies of all sizes has been the cost involved in deploying an expensive, off-the-shelf CRM software package, not to mention the hassle of implementing it. The good news is that suppliers have identified this gap in the market and are now offering more and more hosted CRM services.

Neil Morgan, vice president of European marketing at e-business giant Siebel Systems, explains what the financial benefits could be: “In a smaller business you are more focused on a quick return on your investment and you have less access to capital, so you don’t want to make a major capital outlay like the major enterprises do when they invest in software and hardware.”

Siebel Systems has recently been attracting attention with the launch of a hosted CRM service with IBM, called Siebel CRM OnDemand. Essentially, this provides you with access to specialist CRM software for SMEs over a network connection. This could remove the need to install any additional server hardware or software to implement CRM technology. Instead, you access the CRM application via a web browser and the whole application is managed remotely.

Morgan says: “This is a sophisticated offering – it covers sales, marketing and service. It also has a set of analytics dashboards for business intelligence as well.” In plain English, analytics dashboards are effectively screens that give analysis of key performance indicators such as sales forecasts, marketing campaigns and service performance.

Untapped opportunity

CRM OnDemand is browser-based service, running on Java 2 Enterprise Edition and IBM Websphere technology, for which Siebel charges around £42 per user per month. Assessing the system, Andrew Ball, industry analyst for enterprise applications at analyst firm Frost & Sullivan, says: “Siebel’s recent announcement of CRM OnDemand is an attempt to get a share of the CRM market for SMEs – there is a feeling that this is an untapped business opportunity.”

But this is not the first time that Siebel has tried to tap it. Back in 1999, the company launched, an information portal for sales people. The service didn’t take off and was scrapped. Like Morgan, Ball feels that hosted CRM services are particularly well suited to the needs of SMEs. “The hosted model avoids the complexity involved in the CRM installation process and the initial cost of the CRM licence,” he adds.

Another major supplier of hosted CRM services for SMEs is, which boasts an impressive list of customers, from UK-based recruitment website to AOL and Time Warner. One of’s key offerings is its S3 product, which it describes as a “CRM ecosystem without software”.

The product, which costs around £38 per user per month, is available on a free 30-day trial. Phil Robinson, vice president of European marketing at, explains why: “This allows SMEs to try the service before they make a financial commitment.”

A managed service such as S3 can remove a major financial and technical headache, according to Robinson. He says: “The alternative is to buy the software yourself and typically the cost of the software is prohibitive – you also need to buy the hardware to run it, and the networking.”

On the issue of the in-house IT skills required to get the CRM package up and running, Robinson says: “Most importantly, you need the expertise within the business to manage, integrate and configure the CRM, and most SMEs don’t have that.”

The S3 product deals with areas such as sales force automation, customer service support, marketing automation and finance and operations. The product’s sales force application could be of particular interest due to the fact that it will enable you to forecast revenues and, crucially, track leads.

On the customer service side, S3 allows tracking of enquiries with a complete case history, and can also provide a self-service portal for customers. is also keen to market S3’s ability to track enquiries across multiple channels. This could prove key to many SMEs, given that both consumers and businesses are increasingly looking to the internet and text messaging to contact suppliers.

However, you should not see CRM as the panacea to solve all your business problems. After all, if your core business process is flawed, then no amount of technology will turn it around. Marianne Kolding, European services director of analyst firm IDC, agrees that users have to be realistic about their needs. She says: “Some of the CRM projects that have failed were partly because the customers had not done a serious analysis of what they were trying to achieve and what they needed.” Even though hosted CRM may not be a cure for all a company’s problems, it can certainly be a helpful tool if you know how to get the best from it.

Critical factor

But there are key themes that your company should be aware of if you decide to go down the hosted route. For example, Morgan believes that ease of use is a critical factor. He says: “SMEs should look for something that is extremely easy to use – if they are going to have, say, 50 users, they will only get a return on investment if everyone uses it.”

Kolding, on the other hand, cautions that you should also consider very seriously issues such as security and availability. She warns: “The important things [SMEs] need to look for from a supplier are security and availability – they should find out what the supplier’s back-up systems are like and also get guarantees about availability.” These are usually worked into service level agreements, she adds.

The good news is that this is as good a time as any for your company to get involved in hosted CRM. The fact that there is so much activity in the CRM market at the moment should work in your favour, according to Ball. He says: “It’s definitely a good time to buy – suppliers are under pressure because enterprise CRM sales are still thin on the ground. It’s difficult to think of a better time to buy.”

Ovum evaluation

The Ovum Evaluates: CRM report lists the following reasons why companies need CRM

  • To face a turbulent market.

  • To know your customer.

  • To stop treating your customers as an undifferentiated mass.

  • To operate effectively.

  • To manage multiple channels.

  • To cope with multiple contact media.

Case study: Innovex

Pharmaceutical outsourcing company Innovex is just one organisation making use of hosted CRM services. The company, which is based in Marlow, provides medical representatives, nurses and clinical research staff assistants to the pharmaceutical sector. As a result, Innovex relies heavily on effective customer information.

Richard Purchase, director of service development at Innovex, says: “The pharmaceutical sector is very dynamic – if a customer is launching a new product, then it may need to source additional sales teams to get the product to market quickly.”

Although not strictly an SME, the company provides a good example of how hosted CRM can impact on an organisation’s business. When it became evident that the company’s previous sales force automation system was struggling to keep pace with customers’ needs, the decision was taken to opt for one of’s hosted CRM offerings.

Ease of implementation and the fact that provides its CRM service to Innovex as an online utility, meant that up-front costs were kept low.

The required level of flexibility was also met, with the hosted CRM service being adapt to specific projects. Purchase adds: “We don’t need an army of consultants every time we need to tailor the system or tweak it for a new customer.”

Another major benefit is the fact that the hosted CRM service enables Innovex to share information easily. Purchase says: “This has allowed us to better partner some of our customers by allowing representatives in the field to more effectively plan and co-ordinate their sales efforts.”

Click here for SME supplement homepage Part Two >>

Click here for SME supplement homepage Part One >>

Click here for Part Two of the SME supplement >>

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