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Taking aim at, hosted CRM

The co-founder of Salesnet predicts a three- to five-year run of strong demand for on-demand CRM and is ready to challenge

The on-demand CRM market will see three to five years of steady growth before the client-server deployment model will make a comeback, predicts Jonathan Tang, president of Salesnet Inc.

It's not a statement one might expect from the co-founder of one of the early hosted CRM pioneers, but Tang believes his Boston-based company is prepared to capitalize on current surge.

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Salesnet turned a profit in the second half of last year and today is releasing its 25th anniversary product, which adds marketing to the company's traditional salesforce automation tools. Additionally, the market for Software as a Service (SaaS) CRM applications is in flux. Germany's SAP AG debuted SAP Sales On-Demand earlier this month. Meanwhile, Siebel, which jumped into the hosted CRM market two years ago with its Siebel OnDemand product, was just swallowed up by Oracle Corp. and has been dealing with a rash of outages of its service, the most recent of which was last week. It's that Salesnet is taking aim at. Roughly 95% of the competition Salesnet faces is from now.

"In the past we focused on niche areas, OEM, now we want to go head to head with Salesforce," Tang said. "This is a big foray into marketing automation lead management tools. We have the advantage of seeing what [] has done already and improving it."'s outages and response have also provided Salesnet with some ammunition.

"First of all, all on-demand companies operate out of data centers so in some respects, outages are inevitable," Tang said. "I think where [] faltered was in communicating to their customers."

Salesnet had just two incidents last year that added up to about an hour of intermittent access for its customers, Tang said. In such events, Salesnet's executive team calls its tier-one clients hourly with updates, its management team calls second tier clients and all other customers get e-mails informing customers of the problems.

While Tang sees three to five years of steady growth of the on-demand model, eventually people are going to want on-premise options. SAP, for example, touted a hybrid model with its on-demand release, giving customers options in deployment models.

"SAP's is a smart idea, I just don't know if the technology can support that," Tang said. "The leaders will need to have both [on demand and on premise] because customers will want to have both upfront and pay as you go."

As users continue to deploy on-demand CRM, some will balk at the continuing costs of the subscription model, Tang predicted. Salesnet offers only on-demand but expect changes down the line once the client-server model makes a comeback in five years.

"A larger client-server vendor may approach us or we may go the IPO route," Tang said.

Salesnet's 25th Anniversary Edition, launched today, offers new marketing functionality such as a lead management dashboard and reports, campaign management, html e-mail creation tools and new features that facilitate customization of the application.

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