/
Sales job
Subscribe to the ASP newsletter
Using CRM, banks can segment depositors based on their profitability, and retailers can acquire new data and better use information to boost revenue. Even business-to-business operations are adopting CRM as a way to raise efficiency and make sales and service functions more effective. With the rush by many organizations to adopt or expand CRM functionality, there's been a surge of interest in the ASP deployment model. U.S. spending on hosted CRM services will increase tenfold from $40 million in 1999 to more than $400 million in 2004, according to estimates from Framingham, Mass., market research firm IDC. To help you sort out the variety of players, Sheryl Kingstone, an analyst with The Yankee Group in Boston, says ASPs that offer CRM can be classified into four major types:
Web hosting powerhouse Exodus Communications is also testing the waters of CRM via an ASP. Arif Razvi, director of worldwide alliance programs at Exodus, hosts a partner relationship management (PRM) system through Allegis. The Allegis Market Partner software consists of a set of integrated modules that support e-commerce through an indirect channel or marketplace.
Exodus had been looking for a PRM system that would help enhance relationships with its business partners. The goal was to give its partners' sales staff access to information about Exodus and direct connections to an account team. After reviewing the range of traditional software and the choices offered by ASPs, Exodus settled on Allegis in late last year.
"We went live with the partner site internally in February, and we spent the next three months generating feedback so when we launched externally in June, there would be no catastrophes," Razvi says. The phased deployment went well.
Like Oki, Exodus recognized that one of the greatest benefits of the ASP approach was speed and ease of implementation. Traditional PRM software would have required partners to load and use a separate application to connect with Exodus data. With the hosted Allegis system, partners interact with Exodus through a standard browser.
"If we had tried to build something ourselves there was no chance of rolling it out this year," Razvi says. Moreover, using an ASP makes it easier to scale and upgrade the PRM system. "We are a growing company. We have gone from 150 partners two years ago to 1,000 today, and we are still growing," he says.
Razvi considers using an ASP for CRM to be a money-saver, at least in terms of initial rollout costs because the monthly fee is tied to the number of users. "As we scale the business and the number of partners grows, we won't be hit with a huge fee until we actually have the demand," he says. "And as a recurring cost, if it isn't working in six months, we can simply cancel."
Planetfeedback.com was able to get up and running with an ASP-hosted CRM application from Synchrony in only 30 days, according to Charisse Luckey, vice president of operations at Planetfeedback.com in Cincinnati. "We expected it to take a full year if we had implemented it in-house," she says. What's more, the rollout costs were lower too.
What makes a good candidate for CRM? The companies that can benefit from an ASP are those that need to roll out CRM quickly or have limited development and maintenance resources. However, renting your CRM system from an ASP won't be an ideal choice if you have extensive integration with other systems or require lots of customization, says Peter Perrera, a CRM consultant in Andover, Mass.
From a strategic standpoint, Perrera says relying on an ASP may undermine some of the potential benefits of CRM. "ASPs are more of an obstacle to creating tightly interoperable systems that are customized to a company's specific requirements," he says.
For example, such customization might include the ability to connect in real time with a production system at a manufacturing plant on the other side of the world running a nonstandard operating system such as VMS. Or it could be something as simple as conforming to geographic anomalies - customers in one region might like a first-name-basis approach to doing business, while others might prefer to be addressed more formally. Still, Perrera says he often recommends the ASP model to clients after pointing out the limitations.
Bill Martorelli, vice president of e-services and sourcing strategies at Hurwitz Group in Framingham, Mass., shares Perrera's caution. Whether using an ASP for CRM is a sound decision somewhat depends on what kind of CRM your company is seeking, he says.
"If you're just talking about a narrow focus like call center or sales force automation it may work very well, but with a broader approach to CRM, an ASP arrangement does pose challenges," he says.
Martorelli notes that elaborate, enterprisewide CRM applications that tie together all aspects of the business usually need to integrate fully with legacy systems, and this isn't the strength of the ASP model.
However, Martorelli notes that ASPs may make sense for start-ups or companies going through substantial re-engineering. "When you don't have complex integration issues, the ASP approach to CRM can work very well," he says.
Related links
All about CRM
Catch our Buzz issue coverage. Free newsletter
Keep up on the ASPs. More stories on CRM
from Network World
CRM: Implement In-house or outsource
The application service provider approach to deploying customer relationship management systems offers a speed advantage, but this option is only suited to those with straightforward needs.
 
|
|||
 | |||
|
Sales job
Subscribe to the ASP newsletter
Using CRM, banks can segment depositors based on their profitability, and retailers can acquire new data and better use information to boost revenue. Even business-to-business operations are adopting CRM as a way to raise efficiency and make sales and service functions more effective. With the rush by many organizations to adopt or expand CRM functionality, there's been a surge of interest in the ASP deployment model. U.S. spending on hosted CRM services will increase tenfold from $40 million in 1999 to more than $400 million in 2004, according to estimates from Framingham, Mass., market research firm IDC. To help you sort out the variety of players, Sheryl Kingstone, an analyst with The Yankee Group in Boston, says ASPs that offer CRM can be classified into four major types:
- Traditional ASPs. Companies such as Corio or USinternetworking host applications developed by leading CRM software vendors such as Siebel or Clarify. "What they are doing is acting like a subcontractor - renting the use of a license," Kingstone says.
- Self-hosting. With this model, a software vendor such as Allegis hosts its own CRM application as an alternative means of product distribution. Some vendors may use a third party to provide hosting, but the arrangement is transparent to the end user.
- Service provider. Firms such as eAssist and eConvergent are part software vendor, part systems integrator.
- Dot-com subscription. Firms such as Software911.com let you subscribe to their CRM system through a Web site.
Getting close to the customer
ASP-delivered CRM has caught the attention of voice-over-IP gateway vendor Oki Network Technologies, for one. The vendor was getting the attention of a lot of prospective customers via its Web site, but it wasn't converting those relationships into sales, says Mike Rosenbaum, marketing manager for Oki in Milpitas, Calif. The firm stumbled on its choice of hosted CRM while looking for a way to automate technical support. Oki considered using Software911.com's customizable interface for interacting with customers, but later determined that the technical support staff didn't need the Web-based product. However, the company realized that Software911.com offered potential benefits as a sales force automation tool. "We do not have the ample sales staff needed to handle the numerous calls and e-mails that we receive on a daily basis," Rosenbaum says. An ASP implementation was appealing because Oki wouldn't have to spend time or money setting up the CRM system. Rosenbaum says Software911.com's deployment was almost instantaneous, and the rollout only required about two days of work. "If we had considered implementing this functionality in-house, I'm not sure we would have even begun because it would have taken many months, and we just don't have the resources," he says. Software911.com charges for CRM on a per-seat basis. Although Oki hasn't done a formal analysis of return on investment, Rosenbaum notes that using an ASP's CRM system provided a ready and simple extension of its sales team - with practically no complexity. "By saving a salesperson's time in handling routine inquiries, you expect to save money," he says.Web hosting powerhouse Exodus Communications is also testing the waters of CRM via an ASP. Arif Razvi, director of worldwide alliance programs at Exodus, hosts a partner relationship management (PRM) system through Allegis. The Allegis Market Partner software consists of a set of integrated modules that support e-commerce through an indirect channel or marketplace.
Exodus had been looking for a PRM system that would help enhance relationships with its business partners. The goal was to give its partners' sales staff access to information about Exodus and direct connections to an account team. After reviewing the range of traditional software and the choices offered by ASPs, Exodus settled on Allegis in late last year.
"We went live with the partner site internally in February, and we spent the next three months generating feedback so when we launched externally in June, there would be no catastrophes," Razvi says. The phased deployment went well.
Like Oki, Exodus recognized that one of the greatest benefits of the ASP approach was speed and ease of implementation. Traditional PRM software would have required partners to load and use a separate application to connect with Exodus data. With the hosted Allegis system, partners interact with Exodus through a standard browser.
"If we had tried to build something ourselves there was no chance of rolling it out this year," Razvi says. Moreover, using an ASP makes it easier to scale and upgrade the PRM system. "We are a growing company. We have gone from 150 partners two years ago to 1,000 today, and we are still growing," he says.
Razvi considers using an ASP for CRM to be a money-saver, at least in terms of initial rollout costs because the monthly fee is tied to the number of users. "As we scale the business and the number of partners grows, we won't be hit with a huge fee until we actually have the demand," he says. "And as a recurring cost, if it isn't working in six months, we can simply cancel."
Is the ASP option for you?
To be sure, CRM via ASPs is big. Art Williams, an analyst for Giga Information Group in Cambridge, Mass., says he's amazed by the variety among players in the fast-evolving niche. "You have a spread in customer size, and the players serving them from Agillion, which usually plays on the low end with small and midsize businesses; midrange firms like Surebridge; and companies like Eonline and Cyber Solutions at the top," he says. There's one delimiter: few ASP CRM customers are larger than a billion dollars in annual revenue. Williams says the biggest IT shops usually have the capabilities to deploy CRM, and integrating a hosted application with complex and mature back-office systems is too difficult. As such, the primary target customers are midsize firms that don't have the staff or skills to maintain CRM internally, and those that haven't yet made a significant investment in a customized, high-end CRM system. Speaking of investments, comparing the overall costs of implementing a CRM package on your own to outsourcing the job is a tricky endeavor. Williams says return-on-investment calculations are complex because most companies never really know what internal systems are costing them. Rather, the key comparison points are the hassle factor and deployment time frame. Yankee Group's Kingstone agrees, noting that the market remains immature, so actual fee structures are all over the map. "You can find some ASPs charging $29.95 or $50 per month per user and others charging a flat $5,000 fee for an entry-level campaign on up to $50,000 per month or more if you add in staffing capability," she says. When it comes to speedy rollouts, ASPs generally win hands down. ASP CRM implementations are typically accomplished in as little as six to 12 weeks, according to Lisa McClintock, marketing products manager for ASP Interliant in Purchase, N.Y. By contrast, rolling out a traditional CRM package on your own could take several months.Planetfeedback.com was able to get up and running with an ASP-hosted CRM application from Synchrony in only 30 days, according to Charisse Luckey, vice president of operations at Planetfeedback.com in Cincinnati. "We expected it to take a full year if we had implemented it in-house," she says. What's more, the rollout costs were lower too.
What makes a good candidate for CRM? The companies that can benefit from an ASP are those that need to roll out CRM quickly or have limited development and maintenance resources. However, renting your CRM system from an ASP won't be an ideal choice if you have extensive integration with other systems or require lots of customization, says Peter Perrera, a CRM consultant in Andover, Mass.
From a strategic standpoint, Perrera says relying on an ASP may undermine some of the potential benefits of CRM. "ASPs are more of an obstacle to creating tightly interoperable systems that are customized to a company's specific requirements," he says.
For example, such customization might include the ability to connect in real time with a production system at a manufacturing plant on the other side of the world running a nonstandard operating system such as VMS. Or it could be something as simple as conforming to geographic anomalies - customers in one region might like a first-name-basis approach to doing business, while others might prefer to be addressed more formally. Still, Perrera says he often recommends the ASP model to clients after pointing out the limitations.
Bill Martorelli, vice president of e-services and sourcing strategies at Hurwitz Group in Framingham, Mass., shares Perrera's caution. Whether using an ASP for CRM is a sound decision somewhat depends on what kind of CRM your company is seeking, he says.
"If you're just talking about a narrow focus like call center or sales force automation it may work very well, but with a broader approach to CRM, an ASP arrangement does pose challenges," he says.
Martorelli notes that elaborate, enterprisewide CRM applications that tie together all aspects of the business usually need to integrate fully with legacy systems, and this isn't the strength of the ASP model.
However, Martorelli notes that ASPs may make sense for start-ups or companies going through substantial re-engineering. "When you don't have complex integration issues, the ASP approach to CRM can work very well," he says.
Related linksEarls is a freelance writer in Franklin, Mass. He can be reached at earls_a@hotmail.com.
Sales job:All about CRM
Catch our Buzz issue coverage. Free newsletter
Keep up on the ASPs. More stories on CRM
from Network World
