Like IT executives at small and midsized businesses everywhere, Jonathan Dambrot hears plenty of pitches on customer relationship management (CRM) software offerings for smaller organizations.
The managing partner at Prevalent Networks, a 10-person IT security consulting firm in Bedminster, N.J., Dambrot recently found a CRM vendor that could help his firm keep track its growing list of customers and sales leads.
Dambrot looked at SMB CRM applications from Microsoft, IBM, Oracle and a host of smaller software providers, and found that with most, the implementation costs were more than his small company could afford.
Ultimately, Prevalent decided to go with open source CRM application provider, SugarCRM Inc. of Cupertino, Calif. Dambrot said he has been pleased with SugarCRM's browser-based CRM suite because it is affordable and flexible.
"When you start looking at some of the enterprise solutions out there that give you a great deal of functionality, the implementation costs alone are probably more than a lot of SMB customers are willing to spend," Dambrot said.
According to New York-based market researcher Datamonitor America, the SMB market for CRM applications is expected to more than double by 2008. With major-league vendors such as Microsoft, Oracle and SAP ramping up their attack on the coveted SMB market, IT executives like Dambrot are being courted by CRM providers of all sizes.
Microsoft seen as a wildcard
So where does Microsoft fit in? According to analysts, it's too early to tell which large vendor is leading the way in providing CRM apps to SMBs, but many said Microsoft is the wildcard.
Microsoft has an obvious leg up in the SMB pase. Most small businesses already run on a Microsoft infrastructure, which could make Windows CRM a natural fit for them.
According to a 2004 Yankee Group survey of 500 SMB decision makers, 86% use Microsoft Small Business Server 2003, and many are beginning to take advantage of special deals Microsoft is offering for MSBS users.
"The Microsoft Small Business Server 2003 product is a huge runaway hit with SMBs," said Laura DiDio, a senior analyst with Boston-based Yankee Group. "And SMBs are really beginning to gobble up Microsoft's [Windows CRM] application en masse, because it works very well with that."
But with fierce competition for the highly sought after SMB space growing, along with some lingering doubts about the overall robustness of Microsoft's CRM suite, it's not at all clear that Microsoft can rise to the top of the heap of CRM applications.
"If you think about the promise of integration alone, Microsoft sounds pretty good," said Dambrot, who decided to pass on Windows CRM. "But we wanted something really Web based. Microsoft's CRM offering has a Web piece, but it just wasn't what we were looking for."
If you're looking to get started with CRM -- stop!
Analysts warn that SMBs looking to purchase and deploy CRM applications should take a step back and clearly define the business problems they're trying to solve. Failing that, companies could be doomed to repeat the mistakes that large enterprises made when they hastily jumped head first into CRM about 10 years ago.
"Don't get started with CRM. CRM is not a stovepipe application," said Joshua Greenbaum, principal consultant at Enterprise Applications Consulting, Berkeley, Calif. "Let's get started with your business process first."
For instance, Greenbaum said, if a company defines its goal as selling more widgets, than they should probably look at packages that offer sales force, logistics and marketing management functionality.
"It's shortsighted to say, 'I have a CRM problem and I need a fix,'" Greenbaum said. "No. You have an enterprise-wide problem around doing a better job for your customers, and CRM is a component of that, but it's not the only one."
Know thy vendor?
SMBs can be glad there are so many vendors looking for their business, Greenbaum said.
"Every vendor now has a fair amount of functionality in both high-end and low-end CRM products," Greenbaum said. "It's pretty much a checklist item -- in the enterprise software market -- that you've got a midmarket CRM offering."
Last December, Siebel Systems unveiled a plan to target the SMB market with its hosted and on-site CRM software by using channel partners and ramping up its regional marketing efforts.
Last October, SAP announced an updated version of its Business One suite for SMB customers. The product allows CRM customers to access a fully integrated calendar to schedule sales and service for tasks and meetings.
This year, Oracle will ship a version of its E-Business Suite programs, which feature CRM functionality, targeted at companies with fewer than 500 employees. Of course, Oracle now also boasts several SMB CRM offerings that it acquired in its recent takeover of PeopleSoft Inc.
Other companies making a play for the SMB market include IBM and smaller organizations like Intellibank, Selectica and NetSuite Inc.
But larger vendors such as Microsoft, SAP, Oracle and IBM have their work cut out for them when it comes to convincing SMBs to choose them.
Many smaller organizations still aren't convinced that big enterprise software vendors could ever come up with a CRM offering that meets their price/performance needs.
"We have a quasi-CRM, but it's an internal thing," said Larry Davis, CIO of Sterne, Agee & Leach Group Inc., a medium-sized retail brokerage house based in Birmingham, Ala. The large vendors "tend to be way, way out of our price range," he said.