Door To the Future

Once again, CRM is hot.

Exclusive CRN/Aberdeen Group Research Reveals Something Solution Providers Like Net@Work's Ed Solomon Have Known For A While: CRM Is Hot Again, And You Can Use It To Gain Access To The Entire Enterprise.

After years of bad press and slumping sales, solution providers are seeing customer relationship management software regaining momentum, with renewed customer interest and high satisfaction levels.

Net@Work, a $7 million solution provider in New York, has been ramping up its CRM business in a big way. Every Monday, Net@Work distributes an e-mail blast to existing and potential customers that results in 200 to 300 weekly downloads of a booklet explaining how to choose a CRM solution. In the past year, the company has beefed up its 50-person staff with three new salespeople hired specifically for their CRM backgrounds. And CRM has become Net@Work's primary focus,extending its reach beyond accounting, warehouse management, network infrastructure, e-commerce and custom business applications.

"It's getting us in to a lot of customers we never met before," said Ed Solomon, Net@Work co-founder and co-president with his brother Alex. "This past year, CRM has become 15 [percent] to 20 percent of our business."

Exclusive new research by CRN and the Aberdeen Group confirms what solution providers such as Net@Work are experiencing. Twenty-eight percent of the 741 respondents to the recent survey said they sell CRM now, and 19 percent more said they expect to offer it within the next 18 months. Forty percent of those that either sell CRM now or plan to within the next 12 months said they expect faster growth in CRM sales in the next six to 12 months (see charts at bottom of page).

That's not surprising to Solomon. "We expect half of our revenues will soon be associated with CRM," he said.

Keep in mind that phrase "associated with." That's because Net@Work doesn't sell CRM software from Accpac, Best Software and Microsoft as an island unto itself. Instead, it uses the software to pry open larger opportunities that span the enterprise.

And while the CRN/Aberdeen survey shows that many solution providers are now reappraising the software, those already offering it reveal something deeper: This isn't your father's CRM anymore. "CRM can help companies see customer and vendor information in unexpected ways when they tie that information back to accounting, to warehouse management and other business applications," said Solomon. "The sky's the limit in how you use the system and all the things you can tie into."

So forget about sales-force automation as the raison d'%EAtre for adopting CRM solutions, solution providers say. Instead, the power of CRM for customers, and its strength for those that sell it, lies in the way it can knit all relationship information across the company. Think of it as business relationship management,the tie that can bind the entire value chain. The key is in integrating the front-end software with an almost unending string of back-end applications, including accounting, workflow and supply chain management.

Such integration is vital. Research conducted by systems integrator Deloitte Touche shows that, across industries, manufacturing companies that add customer-centric information to their supply chain systems are 81 percent more profitable on average than their competitors that do not.

"Because it shows demand, having that customer-centric view drives better decisions around sourcing, distribution, R&D, capacity, production,even the kinds of options to offer customers in different parts of the world," said Peter Koudal, director of Deloitte Research. "We found that companies that can walk and chew gum at the same time found a lot of benefits."

With results like that, it's no small wonder that 41 percent of the CRN/Aberdeen survey respondents rated CRM as a valuable business tool for their customers. Another 30 percent said they thought "CRM can be valuable but is difficult to sell and successfully install."

According to Net@Work's Alex Solomon, those respondents are half right. "It's easy to sell. But implementing CRM software is a whole different story," he said. "You have to understand a customer's current processes and operations, and you have to fit in CRM with the other applications that handle those processes."

Mitchell Cannady couldn't agree more. As president and CEO of Spinnaker Network Solutions, Irvine, Calif., Cannady wanted to find new ways to boost sales. Already a provider of Best Software's CRM product, SalesLogix, Spinnaker could have added staff skilled in a variety of back-end systems, but that would have entailed a fairly hefty expense. Cannady's solution: He's formed a tight relationship with Blytheco, a Lake Forest, Calif., provider of Best Software's accounting and ERP applications.

"When you get into integration, it's important to know the nuances of every application that's involved," said Cannady. "Instead of learning about accounting or ERP, we decided to partner with a company where we could leverage each other's knowledge. Customers see us as one entity."

For the past year, the two solution providers have worked jointly on integration projects that insert front-end information into back-end systems. When Spinnaker finds an opportunity for Blytheco's expertise, Spinnaker manages the opportunity. If a Blytheco customer wants to add CRM capabilities, then someone from Blytheco oversees the deal.

"We're also going back to existing customers and offering solutions in accounting that we couldn't do before," said Cannady. "Today, 25 [percent] to 35 percent of my business comes from this relationship."

In fact, Accpac, Best Software and Microsoft have all been encouraging this kind of matchmaking among their solution providers. The results, say those who have found their match, have been encouraging. "The deals are larger than they otherwise would have been," said Wesley Snow, president and CEO of Ascendix Technologies, a Dallas-based solution provider that sells SalesLogix and has formed an alliance with Best Software partner Enterprise Resource Group, also of Dallas. "We have more than $1 million in the pipeline as a result of this alliance."

Clearly, few software categories have fired up the midmarket channel like CRM. The reason is the emergence of products sophisticated enough to handle the needs of companies with up to $250 million in revenue, according to solution providers.

Finally, solution providers say, they can offer their midsize customers a choice among products that are more capable than Act, from Best Software, and less complex to implement than even Siebel Systems' lower-end Siebel 7 MidMarket Edition. Solution providers consistently cite newer CRM offerings from such companies as Accpac, Best Software,even SAP,as a new generation that meets the needs of midsize companies.

But CRM specialists aren't the only vendors trying to benefit from this excitement in the midmarket. Vendors long-known for their business application suites, notably PeopleSoft, Oracle and SAP, also provide software that feeds customer- and supplier-centric information to their back-office ERP, manufacturing and supply chain applications. These vendors aim to compel customers to stick with their application suites as they extend their front-facing capabilities.

CRM is also among the first software categories to finally gain customer traction with software delivered as a service, thanks in large part to the success of NetSuite and Sales-force.com. But many credit Siebel, with its recent introduction of Siebel CRM OnDemand and its acquisition of ASP pioneer Upshot, for truly legitimizing this disparaged hosted model.

Another important boost to CRM this year was the release in January of Microsoft CRM, solution providers note, even though they rarely mention Microsoft CRM in the list of products that meet the needs of their midsize companies. The reason, everyone agrees, is that this first version of Microsoft's first CRM product released last January is a tad, well, shallow. Yet despite the universally acknowledged shortcomings of Microsoft CRM, VARs and resellers responding to the CRN/Aberdeen survey gave Microsoft top honors for its "ability to generate revenue from the sale and support of CRM." Why rate Microsoft so highly, given its software's limitations? "Contrary to prevailing wisdom, technology is not as important as marketing, vendor presence and viability, and a well-executed channel strategy," Aberdeen wrote about the survey results.

Overall, CRM's second act is proving to be a hit, said Manny Buigas, vice president of sales and marketing at NextLevel Information Solutions, Miami. "The truth is, this is the second attempt at CRM," Buigas said. "Before, it was limited to sales-force applications. Now, we're seeing it used to manage all of the relationships that are important to a business. That's why people are finding more value in it than they ever could, and why we're finding bigger opportunities with [it]. You can use CRM for so much more than just the obvious."

Yes, once again, CRM is hot. That heat has fired up the channel, too.

» Read the article at CRN.com