mid market crm - vendor strategies for a new frontier

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AMI-Partners 546 Fifth Avenue Suite 22 New York, NY 10036 1-212-944-5100 www.ami-partners.com

Mid-Market CRM: Vendor

Strategies for a New Frontier

Laurie McCabe, VP SMB Insights and Solutions

& Sau Lam, Industry Analyst

September 2006 _____________

AMI-Partners Market Trends Report

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Section Page

Report Highlights 3

Section 1: U.S. Medium Businesses: A Demographic Snapshot 5

Section 2: U.S. MB CRM Market Dynamics 8

Section 3: Key Differences between U.S. CRM and Non-CRM Medium Businesses 11

Section 4: Putting the Mid-Market CRM Playing Field in Context 12

Section 5: Core Product Offerings and Trends 15

Section 6: Beyond the Basics--Tapping into Specific Requirements 21

Figure 1: U.S. MB Revenues – Comparison Across Employee Size 6 Figure 2: U.S. MB Employee Demographics – Comparison Across Employee Size 6

Figure 3: U.S. MB Company Demographics – Comparison Across Employee Size 7

Figure 4: U.S. MB Total CRM Spending Growth 8

Figure 5: U.S. MB Total CRM Spending – Top Four Verticals 8

Figure 6: Types of CRM Solutions Implemented – By Employee Size 9

Figure 7: U.S. MB Total CRM Spend Forecasts 10

Figure 8: Key Differences between U.S. CRM and Non-CRM Medium Businesses 13

Figure 9: Use of Internet Applications Among U.S. CRM and Non-CRM Medium Businesses

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Table 1: CRM Vendors’ Definitions of Medium Business and “Sweet Spots” 13

Table 2: Comparison of CRM Vendors’ Market Positioning 14

Table 3: Comparison of CRM Products and Pricing 16-17

About AMI-Partners 48

Section 7: Channel Strategies 26

Section 8: Summary and Conclusions 29

Table 4: Comparison of CRM Vendor Service and Support Options 19-20

Table 6: Comparison of CRM Vendor Mobility Capabilities 23

Table 5: Comparison of CRM Vendors’ Industry Strategy 22

Table 7: CRM Vendors Integration Strategies/Capabilities 25

Table 8: Comparison of CRM Vendors Channel Approaches, Partners and Programs

28-29

Table 9: Comparison of MB CRM Brand Leaders 31

Table 10: Comparison of MB CRM Brand Challengers 32

Vendor Profiles 34-47


BUSINESS APPLICATIONS & Solutions

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Mid-Market CRM: Vendor Strategies for a New Frontier Report Highlights The medium business (MB) market is still under-penetrated in terms of CRM adoption, but MBs are increasingly recognizing that they need to improve and extend customer relationship management capabilities. AMI estimates that U.S. MB spending on CRM will grow at 9% over the next five years. Over the past few years, an increasing number of CRM solutions have come to market that fit MBs needs across the spectrum, from simple to more sophisticated. However, most companies will look first to brand name market leaders. salesforce.com, by virtue of its strong growth trajectory, comprehensive solution set and marketing mus-cle, is the biggest brand in the CRM space today, giving it an immediate edge in consideration. Microsoft CRM, Sage and RightNow are also enjoying strong growth. Their status as public companies with solid financials and greater name brand recognition gives them an advantage, although they tend to appeal to different types of cus-tomers, for different reasons. Challengers have a tougher time getting into consideration. However, Entellium, Maximizer, NetSuite and SugarCRM, often provide customers with very attractive alternatives, offering more aggressive pricing, extra ser-vices or other value-added differentiators to entice customers to their solutions. Although each vendor must tailor its approach to its current market position, offerings and strategic direction to accelerate market growth, and expand its own market share, but all vendors need to:

• Zero in on real MB product and service requirements. • Clearly communicate a unique value proposition, focusing on their best-fit MB segments. • Tune up channel initiatives to tune into market sweet spots and overcome product and/or go-to-market

deficiencies. • Make it easy for MBs to figure out total cost-of-ownership (TCO) to appeal to MBs’ pragmatic nature

with visible, transparent pricing and TCO data. • Strive for on demand integration, delivering with a crisp integration story that simply works, and works

simply. By staying focused on these objectives, vendors can continue to help MBs overcome many of the barriers that have stalled productive CRM adoption in the past, and differentiate their solutions in this very crowded market. Executive Summary The medium business (MB) market is still under-penetrated in terms of CRM adoption. Of the roughly 35% of MBs that use CRM solutions, about one-quarter use homegrown solutions; one-quarter use custom developed CRM solutions; and one-quarter use packaged CRM solutions. About one-quarter MBs currently use a patchwork quilt of homegrown solutions for CRM functions. Many MBs don’t see CRM as a strategic priority: 48% view CRM as not important or somewhat important--compared with 52% that view it as important or very important. However, MBs are increasingly recognizing that they need to improve and extend customer relationship manage-ment capabilities with IT-based solutions. AMI estimates that U.S. MBs will spend over $1.0 billion this year on CRM solutions, and that MB spending on CRM will grow at 9% over the next five years. However, one size does not fit all, and MB CRM requirements will fit somewhere along a spectrum from simple to more sophisticated, as follows: MBs with basic CRM needs: These customers are often deploying a true CRM solution for the first time. They have simpler CRM requirements, and tend to have less in-house CRM process expertise and technical proficiency. In most cases, the need to streamline the sales process—as opposed to marketing or service automation--is the primary driver for buying a CRM solution. As first time buyers, they are likely to be more cost-conscious and risk-adverse, and less tolerant of complexity, whether in products, pricing and packaging, or services. MBs with more complex CRM needs: These customers’ CRM requirements align more closely with those of large businesses. With more in-house CRM business process expertise and technical resources available, they engage



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in a more rigorous solution evaluation process. While some are first time CRM buyers, many are looking to replace an existing CRM system or contact management solution that has run out of horsepower with one that provides greater flexibility, scalability and functionality. Service and/or marketing automation capabilities are likely to be as or even more important than SFA. Their requirements for integration, mobility, vertical tailoring and other function-ality are specific and sophisticated. CRM vendors are making CRM solutions more accessible and affordable for MBs across this spectrum. Subscrip-tion-based software-as-a-service (SaaS) solutions reduce upfront costs, minimize maintenance, and provide famil-iar, Web-based interfaces. Other CRM entrants, such as Entellium, Maximizer, and SugarCRM, are targeting cost-conscious MBs with lower pricing than their rivals. However, most customers will look first at the obvious sus-pects—vendors with brand power and marketing clout. When all else is equal, all of these MB CRM leaders can leverage brand strength and marketing power to gain consideration in a greater percentage of deals, and often, when all is equal, to seal the deal against lesser-known challengers. salesforce.com, by virtue of its strong growth trajectory, comprehensive solution set and marketing muscle, is the biggest brand in the CRM space today, giving it an immediate edge in consideration. Though not as splashy as salesforce.com, Microsoft CRM, Sage and RightNow are also strong brands in the MB space. These vendors are enjoying strong growth, and their status as public companies with solid financials and greater name brand recogni-tion gives them an advantage. Microsoft and Sage also have large partner networks, providing another leg up onto MB short lists, although they tend to appeal to different types of customers, for different reasons. Because they’re not as well known as their rivals, MB CRM challengers have a tougher time getting into consid-eration. However, with all the attention that vendors and media are lavishing on the CRM space, MBs are becom-ing more educated about CRM and their choices. Challengers, including Entellium, Maximizer, NetSuite and Sug-arCRM, often provide customers with very attractive alternatives, offering more aggressive pricing, extra services or other value-added differentiators to entice customers to their solutions. If challengers’ strengths map closely to a given customer’s requirements, their solutions may provide a better fit than MB CRM leaders. While each vendor must tailor its approach to its current market position, offerings and strategic direction to accel-erate market growth, and expand its own market share, all vendors need to: • Zero in on real MB product and service requirements—as opposed to fancy bells and whistles--as they attempt

to differentiate against the competition. • Clearly communicate a unique value proposition. While a couple of vendors have a good shot at capturing a

broad swath of the volume MB CRM market, most will need to carefully position and focus their sales and mar-keting energies on their best-fit MB customer segments.

• Tune up channel initiatives. Vendors need to refresh channel program and partnerships, tapping into partner-

ships that will help them to best tune into their market sweet spots and overcome their own product and/or go-to-market deficiencies.

• Make it easy for MBs to figure out total cost-of-ownership (TCO). Sure, everyone has a sticker price, but with

multiple solutions and service options, and varying infrastructure, IT and consulting requirements (not to men-tion confusing Web sites), it can be tough to figure out what the true price tag is. Appeal to MBs’ pragmatic nature with visible, transparent pricing and TCO data.

• Strive for on demand integration. MBs are always going to need to integrate CRM with something else. All

vendors (even those that advocate a pre-integrated suite approach) need to pursue all routes that facilitate integration—pre-built connectors, open APIs, standards-based Web services--to ease integration obstacles. Vendors that identify, prioritize and develop the most valuable CRM integration points will have an edge. Those with a crisp integration story that simply works, and works simply, will win MB hearts and minds.

By staying focused on these objectives, vendors can continue to help MBs overcome many of the barriers that have stalled productive CRM adoption in the past, and differentiate their solutions in this very crowded market.



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Mid-Market CRM: Vendor Strategies for a New Frontier For many customer relationship management (CRM) vendors, the large enterprise market is too saturated, and the small business market is too dispersed and difficult to reach. However, these vendors view the medium business (MB) market as just right--for a few key reasons. For starters, although only 35% of MBs currently use CRM solutions, many are anxious to streamline CRM processes: AMI-Partners forecasts that MB spending on CRM will grow at a healthy pace of 9.0% over the next five years. MBs also have more potential CRM users—and typically, more technical and business savvy than small businesses—adding to their allure for vendors. But, while the mid-market holds common appeal, CRM vendors take different tacks in key areas, such as:

• SMB focus and positioning. Some vendors focus exclusively on the SMB space; others are oriented towards the upper mid-market and large business. Each vendor tailors its value proposition to align with its target customer segment(s).

• Core products, packaging and pricing: All vendors included in this report include the CRM staples—sales force, marketing and service management—in their offerings. But, pricing, packaging, delivery models and service and support offerings vary extensively from vendor to vendors.

• Beyond the basics: Vendors attempt to differentiate beyond core CRM by adding and enhancing capabilities in areas such as integration, mobility and industry-specific versions.

• Channels. Vendors such as Microsoft and Sage rely heavily on traditional IT channels partners to go-to-market, while others focus more on direct and/or non-traditional channels to generate demand and close business.

In this report, we begin with an overview of U.S. medium businesses, which AMI defines as companies with 100-999 employees, based on data from our 2005-2006 Medium Business Survey and most recent Global Model forecasts. We analyze MB demographics, and data and trends regarding MB adoption of CRM solutions. Then, we compare the mid-market strategies of the eight CRM vendors interviewed for this report: Entellium, Maximizer, Microsoft, NetSuite, RightNow, Sage, salesforce.com and SugarCRM. We examine commonalities and differences in product, marketing, and channels strategies, and conclude with our analysis of their capabilities and prospects. The appendix provides a detailed profile for each vendor featured in the report. Section 1: U.S. Medium Businesses: A Demographic Snapshot AMI estimates that that there are about 97,868 MBs in the U.S. As shown in Figure 1, U.S. MBs generate an average of $69.53 million in revenues annually for a total of $6.81 trillion across all MBs. Other revenue highlights include:

• While 73% of MBs report experiencing revenue growth over the last 12 months, only 13% of MBs report they are expecting a revenue increase within the next 12 months.

• Last year the average MB’s revenue grew by 8%, over the next 12 months; MBs expect revenues to grow by 10% in the upcoming year.

• Over half (57%) of all revenue MBs collect is derived from B2B sales.

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As indicated on Figure 2, U.S. MBs average 266 employees per business. In addition:

• 6% of MBs have employees abroad; larger MBs are more likely to have employees abroad. Among these firms, the average number of offshore employees is 12.3 per firm.

• 38% of MBs have telecommuting employees, and 79% have a mobile workforce. Overall, 2.6% of the PC MB workforce telecommutes, and 11% are mobile. Larger MBs—with 250 to 999 employees—are more likely to have both telecommuters and mobile workers than smaller MB counterparts.

• 74% of all MBs have multiple locations.




© AMI-PartnersSource: AMI-Partners (www.ami-partners.com) 2006

Figure 1U.S. MB Revenues – Comparison Across Employee Size

Revenue Growth

$209,485 $293,645 $271,300 $261,663 Revenue per Employee

Revenue Generation by Location

Revenue Generation by Customer Type

$156,569,426 $108,099,927 $47,341,806 $69,533,537 Average Annual Revenues per Biz

500500--999 999 EmployeesEmployees


100100--249 249 EmployeesEmployeesAll MBsAll MBs

2005 (U.S.) (MB) Slide Code (055)

73% 73% 70%80%

8% 8% 7% 8%13% 13% 11% 12%10% 10% 9% 10%% of Biz Experiencing GrowthAvg. LTM% of Biz Expecting 20+ GrowthAvg. NTM

22%

34%

9%

18%

17%

N = 352Base = 97,868 PC MBs

37% 39% 32% 30%

32% 34% 30% 23%

27% 24% 32% 39%

4%5% 6% 8%International/ ExportInterstateWithin same stateLocal

ConsumersSBs (1-9 Empls)MBs (100-999 Empls)LBs (1000+ Empls)Gov't & Edu. Institutions

24%

34%

9%

16%

17% 22%

32%

10%

18%

18%13%

27%

12%

30%

18%


Figure 2 U.S. MB Employee Demographics – Comparison Across Employee Size

69%53%50%52%% of Biz supplying computing or networking gear to employees

8%8%6%6%Businesses w/FT Employees located in other countries

47.21 22.59 4.92 12.34 Avg. # of Employees Located OffShore

93%83%76%79%% of Biz w/mobile employees

Telecommuting

53.37 28.04 22.44 26.10 Average Number of Planned Employees

13%13%11%11%% of Biz workforce that is mobile

Average # of Employees




2005 (U.S.) (MB) Slide Code (053)

265.7 174.5368.1

747.4

N = 352Base = 97,868 PC MBs

38% 36% 42% 50%

2.6% 2.5% 2.8% 3.4%

TelecommutingPenetration% of workforce thattelecommutes

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Almost three quarters of MBs have multiple locations, with an average of 6.7 sites each. An additional 33% of U.S. MBs are planning on opening additional sites next year, as shown on Figure 3.


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Figure 3 U.S. MB Company Demographics – Comparison Across Employee Size

13%15%8%10%% of Biz that are subsidiaries

17.82 17.43 16.51 16.81 Average Age of Business

Company Relocation

12.36 8.23 5.48 6.66 Current:

Avg. # of sites

Headquarters Location

1.11 0.61 0.41 0.51 Planned:

91%84%69%74%Businesses w/Multiple Locations




2005 (U.S.) (MB) Slide Code (054)

47% 50% 38% 46%10% 11%

7% 9%27% 24% 36% 23%

22%19%16% 14%Small Town/Rural (<50K)Small City/Town (50K-100K)Medium City (100K-1M)Major Metro (1M+)

N = 352Base = 97,868 PC MBs

33% 32% 33% 37%

1.3 1.21.5 1.5

% of BizRelocatedAvg. # of Yrs.Since Relocation

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Section 2: U.S. MB CRM Market Dynamics While MBs may not have millions of dollars to spend on CRM solutions, they are increasingly recognizing that they need to improve and extend customer relationship management capabilities with IT-based solutions. AMI estimates that U.S. MBs will spend over $1.0 billion this year on CRM solutions, and that MB spending on CRM will grow at 9% over the next five years, as shown in Figure 4. Professional services, healthcare, discrete manufacturing and retail sectors lead in CRM spending, as shown in Figure 5.





Figure 4U.S. MB Total CRM Spending Growth

$374

$1,109

$120

$865

$0

$500

$1,000

$1,500

2005 2010CRM as SaaS Spend ($M) CRM Spend ($M)

$M

Total = $985Total = $985

Total = $1,483Total = $1,483

2005

2010

CAGR = 5.1%

CAGR = 25.6%

CAGR = 8.5%


Figure 5U.S. MB Total CRM Spending – Top Four Verticals

$229$153

$0

$50

$100

$150

$200

$250

2005 2010

$243

$161

$0

$50

$100

$150

$200

$250

$300

2005 2010

$277

$180

$0

$50

$100

$150

$200

$250

$300

2005 2010

Professional Services Healthcare

$169

$123

$100

$110

$120

$130

$140

$150

$160

$170

$180

2005 2010

Discrete Manufacturing Retail

$M

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However, the MB market is still under-penetrated in terms of CRM adoption. Currently, only 35% of MBs use CRM solutions. Of these, about one-quarter use homegrown solutions; one-quarter use custom developed CRM solutions; and one-quarter use packaged CRM solutions, as indicated on Figure 6. About 8% of MBs now use on demand, SaaS CRM solutions. Interestingly, adoption of SaaS CRM is significantly higher in manufacturing and retail than in other industries. MBs that invest in CRM do so to increase sales and customer retention, and to operate more profitably. By streamlining and automating key customer interaction functions, they can more rapidly track changes in sales trends, and more quickly identify new customer demands and needs. On the supply side, software-as-a-service (SaaS) CRM solutions have made CRM more accessible. Subscription-based SaaS solutions decrease barriers to adoption, by reducing upfront costs, minimizing maintenance, and providing familiar, Web-based interfaces. Furthermore, newer CRM entrants, such as Entellium and SugarCRM, are targeting cost-conscious MBs with lower annual subscription fees than more well-known players, such as salesforce.com. Currently, CRM as SaaS spending accounts for only 14% of total CRM spending. But, by 2010, this will jump to 25%, dramatically outpacing packaged CRM software, as indicated on Figure 7.


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25% 24%30%

15%

14% 12%

17%

24%

25%26%

23%30%

8% 11%0%

7%

27% 27% 30%24%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Total 100-249 250-499 500-999Employees

Custom developed for us by ourISV/VAR/software developer

On demand, hosted software-as-service subscriptions suchas salesforce.com, RightNow,Siebel CRM On Demand, etc.

Internally deployed andmanaged server-basedsolutions such as SalesLogix,Microsoft CRM, Siebel, Oracle,etc.

Desktop contact managementsolutions such as ACT! orGoldMine

Homegrown solutions based onExcel, Access, Outlook, etc.

Figure 6Types of CRM Solutions Implemented – By Employee Size

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Other factors are also fueling adoption and spending, including:

• Increasing interest in using the Internet to improve operations and better serve customers. • Requirements to integrate customer relationship management across multiple locations, and/or across

multiple functions (such as sales, marketing and customer service) • Pressure to compete more effectively with larger companies. • Requirements to meet evolving business needs and regulatory requirements.

But barriers to CRM adoption still exist. A large percentage of MBs aren’t ready to relinquish older ways of tracking and storing customer information. About one-quarter MBs currently use a patchwork quilt of homegrown solutions (primarily personal productivity software such as Excel, Access and Outlook) for CRM functions. Many MBs simply don’t see CRM as a strategic priority: 48% view CRM as not important or somewhat important--compared with 52% that view it as important or very important. Lack of cross-organizational involvement in the solution evaluation process, and ensuing low user adoption rates can also stop a CRM deployment in it tracks. In some instances, MBs deploy a CRM solution only to find that sales and marketing personnel don’t use it because of cumbersome interfaces, poor training, lack of management support, or just resistance to learning something new. Additional obstacles include:

• Lack of in-house expertise to evaluate, implement and manage more comprehensive business software. The average medium business has just 3.6 IT staff in-house.

• More CRM solution choices also lead to more confusion about what the “right” solution is. • Limited in-house business process expertise and limited access/funding for external consultants to

ensure a smooth, productive deployment.


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Figure 7U.S. MB Total CRM Spend Forecasts

$120 $157 $203 $252 $309 $374

$865$935

$992$1,039

$1,078$1,109

$-

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

2005 2006 2007 2008 2009 2010

CRM as SaaS Spend CRM Spend

$1,483$1,388$1,291$1,194$1,091$985Total SpendingCAGR

8.5%

5.1%

25.6%

In $mils

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Section 3: Key Differences between U.S. CRM and Non-CRM Medium Businesses AMI-Partners survey findings reveal that CRM MBs distinguish themselves from non-CRM MBs in several significant ways, as shown on Figure 8. CRM MBs are considerably more likely to have a higher percentage of work at home employees and have more locations than non-CRM counterparts, suggesting that CRM MBs have more diverse operational requirements than non-CRM MBs. In addition, CRM MBs spend, on average, about 1 ½ times more than non-CRM MBs on Web site hosting, with CRM MBs spending about $561/month, versus $385/month for non-CRM MBs. CRM MBs are also more than twice as likely to use ERP solutions than non-CRM MBs (50% vs. 21%), and almost twice as likely to adopt on-demand/hosted applications as non-CRM MBs (28% vs. 15%). In fact, CRM MBs are more liable to use a range of Internet-based business applications than their non-CRM counterparts, as illustrated on Figure 9, implying that CRM MBs are more comfortable with, and more reliant on the Internet to support day-to-day business operations.


Figure 8Key Differences between U.S. CRM and Non-CRM Medium Businesses

68.0% 83.2%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

CRM MBs Non-CRM MBs

20.9%

50.4%

0.0%

10.6%

21.2%

31.8%

42.3%

52.9%

CRM MBs Non-CRM MBs

34.7%

45.8%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

CRM MBs Non-CRM MBs

Have WAH EmployeesHave WAH EmployeesHave WAH Employees Have Multiple LocationsHave Multiple LocationsHave Multiple Locations

ERP Use ERP Use ERP Use Hosted/SaaS Applications Use Hosted/Hosted/SaaSSaaS Applications Use Applications Use

15.2%

27.7%

0.0%

10.0%

20.0%

30.0%

CRM MBs Non-CRM MBs

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Section 4: Putting the Mid-Market CRM Playing Field in Context Over the last few years, the CRM playing field has expanded dramatically, as new vendors have entered the market, and existing players have launched new offerings formulated for MB requirements. In some ways, these vendors appear to have little in common beyond the fact that they want to sell CRM to MBs. Their definitions of MBs vary widely—and so do their market sweet spots, as indicated in Table 1. Most vendors focus their marketing efforts on SMBs, but a few, including Microsoft, Sage, salesforce.com and RightNow, also target large enterprises at the division or even corporate level. Of course, Oracle and SAP (who were not interviewed for this report) have historically served the large enterprise market, but have launched aggressive attempts to lure MBs to their solutions over the past few years as well.


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56.2%

49.7%

37.2%

40.8%

52.7%

57.2%

42.8%

41.1%

46.5%

73.5%

56.0%

24.7%

20.5%

27.7%

33.8%

25.2%

22.9%

40.9%

41.0%

38.0%

25.3%

22.2%

28.3%

51.7%

36.6%

13.1%

12.2%

11.0%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Order entry from remote locations/branch offices/customer sites

Manage sales leads and keep customer accounts updated

Provide customer service/support via FAQs, or account login, etc.

Instant Messaging ( Such as Yahoo, AOL, MSN)

Track Shipping, Order fulfillment and / or inverntory management

Recruit/hire employees online

Employee education and training/online classes

Accounting Services

HR Services

Banking/Billing Services, conduct monetary transactions with suppliers/clients

Online procurement

Back-up or store company data/files at service provider location

Make telephone calls over the Internet

Web casting (presentations) via the Internet to customers, etc.

CRM MBs

Non-CRM MBs

Figure 9Use of Internet Applications Among U.S. CRM and Non-CRM Medium Businesses

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Table 1: CRM Vendors’ Definitions of Medium Business and “Sweet Spots”

Each vendor tailors it value proposition and positioning to tune into targeted customer segments, and play on its strengths, as shown on Table 2. For example, appealing to the vast installed base of Office and Outlook users, Microsoft emphasizes integration capabilities and look-and-feel similarities between MS CRM and these solutions. NetSuite, meanwhile, underscores the fact that it provides a pre-integrated front and back office solution built on a common code base; and SugarCRM highlights open source community advantages. Of course, each vendor also differentiates its product, packaging and service strategies, as examined in Sections 5 and 6.

Vendor Medium Busi-ness Definition

Target Market Profile

Entellium 50-1000 employ-ees

• Primary target is businesses with 25 to 1,000 employees, espe-cially IT-resource constrained SMBs.

• 95% of customers are mid-market; rest are departments of large enterprises

Maximizer Soft-ware

100-1,000 em-ployees; compa-nies w/ $50M - $1B in annual revenues

• Primary targets are small offices/home offices (SOHO) and SMB. • Also targets and has customers in high tech, real estate, financial

services and professional services industries in larger businesses.

Microsoft 50-250 seats • SMBs and divisions of large enterprises NetSuite 250-1,000 em-

ployees • SMBs (60% of customers are small, 40% are medium). • Specifically targets wholesale/distribution, professional services

and software companies with industry-specific editions.

RightNow Less than $1B in revenue

• Large and medium businesses, government and education. • Approximately 45% of revenues are from mid-sized organizations.

Sage 100-999 employ-ees

• Sweet spot is companies with 1 to 1000 employees, but also has large enterprise customers, mostly at the divisional level.

Salesforce.com 100-999 employ-ees

• SMBs (66% of customers) to large enterprises, across all indus-tries.

SugarCRM 5-500 seats • 5 to 500 seats is the primary target. • Also targets and has customers in divisions of large companies

and government agencies.


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Table 2: Comparison of CRM Vendors’ Market Positioning

Vendors’ channel strategies span a range of approaches and partner types—from traditional resellers and systems integrators to the open source community to telcos and retail partners. Beyond these variations, however, we can group these CRM players into a few high-level categories, based on their heritage and direction: 1. Mid-market packaged CRM incumbents. After acquiring Great Plains (along with Solomon) and Navision to

build its mid-market financials and ERP portfolio, Microsoft built and launched Microsoft CRM in 2003, and recently announce plans to offer its own MS CRM Live on demand version of the software in 2007. Meanwhile, Sage Software acquired ACCPAC, netting ACCPAC’s online, software-as-services accounting and CRM offerings. Sage has also introduced offerings and migration programs to help ACT! customers move up to its mid-market CRM offerings, SalesLogix and ACCPAC CRM (which has since been renamed Sage CRM).

Vendor Market Positioning

Entellium Aims to deliver on the original promise of hosted CRM: affordability, simplicity, speed of deployment and service. Strong focus on user adoption, and workflow automation.

Maximizer Software Proven, adaptable and affordable CRM and Contact Management solutions to help SMBs improve sales, streamline marketing, and enhance customer service & support.

Microsoft Designed to partner with Outlook and Office, Microsoft CRM, and built on widely adopted Microsoft technologies, MS CRM delivers lower training costs, broader user adoption, less application-switching, higher productivity, rapid return on investment, low deployment and support costs; and easy scalability.

NetSuite Integrated front and back office suite: the first and only Web-based application to offer everything in a single, integrated solution. • NetSuite CRM provides CRM capabilities that companies need, with greater

power and ease than other solutions. • NetSuite CRM+: the only Web-based CRM system with a true 360-degree view of

all customer data and interactions. RightNow RightNow applies its depth in the customer service and call center areas to its com-

prehensive CRM suite, providing companies with best-practices expertise and inte-grated solutions. RightNow delivers customer experience breakthroughs by automati-cally and continuously developing relevant knowledge and delivering it at every point of action.

Sage The only family of CRM products designed specifically for the needs of SMBs. It in-cludes ACT! by Sage for individuals, small businesses and enterprise workgroups; Sage CRM that provides hosted and on-premise CRM for SMBs; and Sage CRM SalesLogix that which provides full suite, customizable CRM for mid-sized businesses and small enterprises.

Salesforce.com “The Leader in On-Demand Customer Relationship Management” because it delivers integrated, completely customizable enterprise applications for companies of all sizes; is easy to learn and use; can be up and running in weeks or days; provides customers with fast, tangible ROI.

SugarCRM The commercial open source CRM provider that leverages the strength of open source to for greater customization and economies whichever way the customer wants: on premise, SaaS or as an appliance.


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Maximzer, a 20-year veteran of the CRM industry, also provides packaged CRM, but has yet to announce plans for on demand offerings.

2. Incumbent subscription-based software-as-services (SaaS) vendors. The first wave of CRM-focused SaaS vendors, including salesforce.com, RightNow, UpShot and Salesnet, charted a new course in the late 1990s. Their goal was to upset the existing software applecart by promising customers faster, cheaper and easier to use business applications, built as multi-tenant, subscription-based services. Market demand for SaaS CRM has been growing ever since, propelling salesforce.com and RightNow to become public companies. As these two vendors grow, they’ve embarked on their own shopping sprees: this year, RightNow acquired Salesnet to enhance its sales force automation capabilities, and salesforce.com acquired Sendia to bolster its wireless capabilities. With no shortage of CRM “add-on” solutions (examples include Xactly, which provides sales force compensation, and RingLead Declone, a service that prevents duplicates by matching and updating existing contact lists), and competitive pressures mounting, these CRM vendors are likely to continue looking for acquisitions that yield competitive advantage.

3. Recent CRM arrivals. Entellium and SugarCRM are the newest kids on the CRM block. Entellium offers MBs refreshingly simple pricing, packaging and service, and concentrates on making its solutions as easy to use as possible. Meanwhile, SugarCRM has built its applications on Linux, Apache, mySQL, PHP (LAMP) stack, extending open source cost and flexibility benefits to MBs, via on-premise, SaaS and appliance options.

4. “Large enterprise” vendors with offerings designed for the mid-market. Though not a focus of this report, SAP and Oracle-Siebel are increasingly targeting medium businesses. In the dotcom glory days, these vendors stripped down their offerings, without real consideration to different midsize business requirements. Since then, these vendors have created second, third or even fourth iterations of their MB CRM campaigns and solutions. For instance, Siebel created Seibel CRM On Demand, and then acquired UpShot, to provide the mid-market with a SaaS offering. Oracle subsequently acquired Siebel, and is sorting through its now multiple CRM offerings (Oracle, Siebel, Siebel CRM On Demand and PeopleSoft) to rationalize positioning for the market. SAP acquired Business One to give smaller companies a less complex suite offering (including CRM) at a lower price point, and launched its hosted SAP CRM solution.

In the next few sections, we take a more detailed look at the strategies and tactics vendors are using to differentiate themselves in order to expand their share of MB business. Section 5: Core Product Offerings and Trends Not every vendor interviewed for this report began life with a full complement of CRM staples--sales, marketing and customer service. But, today, all provide an integrated CRM suite. By providing an integrated suite, vendors give customers an easier way to manage and collaborate across these different functions. An integrated suite also helps vendors to dig deeper into an account and gain a bigger share of spending. And, when customers rely on one vendor for integrated cross-functional CRM, the harder it is to make a switch to rival offerings. As discussed more fully in Section 6, NetSuite (along with SAP Business One) has taken the suite approach one step further, providing an integrated front and back office suites. And Microsoft and Sage offer a plethora of back office solutions to complement their CRM products; in addition, Sage ACCPAC and Sage CRM are built on the same code base, offering many integration advantages. On the flip side, however, many mid-market customers are just getting their feet wet in CRM waters. Most of these customers start with SFA, and many use standalone SFA products. Sage, with ACT!, and Maximizer, with Maximizer 9, have long offered MBs this option, along with their more comprehensive CRM suites. While a review of specific features is beyond the scope of this report, Table 3 compares vendors’ core product offerings, and below, we discuss some of the key tactics that vendors are employing to differentiate their CRM offerings.


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Vendor CRM Solutions and Pricing Entel-lium

Customer Premise: NA • SaaS: Suite includes sales force automation, customer service, marketing automation; workflow/

automation, embedded analytics: $60/user/month. • Individual modules: 50/user/month. • No contract, pay as you go policy with monthly billing after first 90 days of service; 5 seat mini-

mum. Maxi-mizer Software

Customer Premise: • Maximizer 9: for SOHO, small business. Includes contact and opportunity management; reporting;

Microsoft Office, Outlook integration, accounting link (QuickBooks) and eCommerce. $299/user. • Maximizer Enterprise 9: for SMBs and divisions of larger cos. Includes contact & account, lead,

sales force, marketing, customer service & support case and partner relationship management; business intelligence; workflow automation; Microsoft Office, Outlook, Exchange integrtration ac-counting link (QuickBooks) and eCommerce. From $499 to $799/user.

• Optional Partner Portal: $499. SaaS: NA

Micro-soft

Customer Premise: Sales force automation, marketing automation, customer service, Microsoft CRM for Outlook, workflow, integration, reporting, and analysis. Pricing (includes license + 1 year of soft-ware assurance support): • Small Business Edition (SBE): U.S. $440-499 per user; $528-599 per server • Professional Edition: U.S. $622-880 per user; $1,244-1761 per server • External Connector (for Professional Edition): U.S. $8,830-12,500 per server SaaS: Offers above as a hosted solution via partners. Wholesale price to partners: $24.95 per month per subscriber; partner marks up for customers. Flat rate and no time commitment • CRM Live SaaS from Microsoft direct: slated for 2Q 2007; pricing TBD.

NetSuite Customer Premise: NA SaaS: • NetSuite: Integrates ERP, CRM, e-commerce, partner collaboration. Designed for midsize compa-

nies (under 500 employees). From $499/month plus $99/user/month. • NetSuite Small Business: For businesses with under 20 employees, Integrates sales, service, ac-

counting and Web presence. From $99/month plus $49/user/month. • NetSuite CRM: CRM sales and marketing functions. From $79/user/ month. • NetSuite CRM+: Adds order and incentive management; project tracking, analytics; customer por-

tal and partner management; cross-sell/up-sell. From $129/user/month. • Vertical Editions: Wholesale/Distribution, Professional Services, Software.

Right-Now

Customer Premise: same as SaaS offering. SaaS: Integrated CRM suite includes multi-channel customer service and support, sales force auto-mation, multi-channel marketing automation, portfolio of voice-enabled CRM applications. • Pricing based on modules, users and interactions. Monthly, term or perpetual license options. Av-

erage selling price in Q1’06 was $140,000. • Customers can move hosted to on-premise or vice versa. Approximately 87% of customers are

hosted; there is no additional charge for hosting. Sage Customer Premise:

• ACT! by Sage: Contact and customer management for individuals, small businesses, workgroups and divisions of larger companies. $299-$399/user.

• Sage CRM for 30 users or less: sales & marketing automation, customer care, option to purchase integration server and SOLO. Access, synchronization for Microsoft Outlook, wireless PDA, offline synchronization.

• Sage CRM for 31 + users: Above plus integration server, wireless PDA access, CTI toolkit, option to purchase SOLO and Web self-service. Access, synchronization for Microsoft Outlook, wireless PDA, offline synchronization. $595-$795/user.

• Sage CRM SalesLogix: Fully customizable development platform provides integrated sales, mar-keting and customer service automation for moderate to highly complex organizations. $995-$1095/user.

SaaS: SageCRM.com: Integrated sales, marketing and support solutions; configurable business proc-ess automation; browser-based interface; $69/user/month. (20%-30% of Sage CRM customers use SageCRM.com).


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Table 3: Comparison of CRM Products and Pricing

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Delivery Models As Microsoft’s recent SaaS conversion underscores (the vendor announced that it plans to launch a Microsoft hosted MS CRM Live in the second quarter of 2007) SaaS has passed the tipping point in the CRM world. Built as multi-tenant, Web-based subscription services from the get go, SaaS can provide MBs with economies of scale and skill that yield faster, less expensive and easier deployments and maintenance. As more vendors embrace the SaaS model, it becomes less of a differentiator. However, vendors still distinguish themselves, in part, on the types of delivery models they offer, as follows:

• On-demand zealots. Pure-play SaaS vendors such as Saleforce.com, Entellium and NetSuite maintain that the on demand way is the way. By building, running, maintaining and servicing all customers on a common code base, version and infrastructure, they can amortize costs and provide the best economies of skill for mid-market customers. These vendors position packaged CRM as a dinosaur, emphasizing on demand benefits such as low up-front costs, anywhere, anytime, access, real time visibility, rapid deployment, ease-of-use and more responsive support as key SaaS selling points—and reasons why subscriber rates are growing at a double-digit pace.

• Conventional packaged software vendors that now support choice. Most traditional CRM


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sales-force.com

Customer Premise: NA SaaS: Sales and partner relationship management, marketing automation, service & support, analytics and data quality management. • Enterprise Edition: For larger/more complex businesses. Supports multiple divisions and

processes, workflow automation, product line forecasting, revenue allocation. $125/user/month.

• Professional Edition: For companies of all sizes. Includes sales force automation, market-ing automation, and customer service and support. $65/user/month.

• Team Edition: For small business. View, update and share information, activities and events in real time from any Internet-connected computer. $995 for up to 5 users/year.

• Unlimited Edition: Greater access to AppExchange network of services, apps, tools and components, spanning CRM-related solutions to finance, HR and industry-specific applica-tions.

• CRM Editions: On-demand, Offline, Wireless, Offline PDA, Outlook, Office. SugarCRM Customer Premise: Sales management, marketing automation, customer support, reporting

and collaboration. • SugarOpen source: on premise only. Provides lead tracking, contact, opportunity, account

management; activities and tasks, marketing campaigns, shared calendar, email process-ing, dashboard charting, project and case management, bug tracking, employee directory, RSS syndication, web portals. FREE.

• SugarProfessional: Above plus cross-module reporting, campaign reporting, MS Outlook integration, sales forecasting, document management, product catalog, quoting, contract management, team management, wireless access, workflow management, access control, multiple deployment options. $239/user /year.

• SugarEnterprise: Above plus Oracle 10g and 9i support, offline client sync and SQL report-ing. $449/user/year.

SaaS: • SugarProfessional, same as above. $480/user/year. • SugarEnteprise same as above. $900/user/year. • (Approx. 40% of customers are SaaS; 50-55% on premise; 5% appliance)

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vendors are evolving to offer a combination of software-as-service and/or application hosting alternatives in addition to packaged software. Hybrid players include Microsoft, Sage and SAP, who posit that providing customers with a choice between SaaS and on-premise CRM products is the best route. Although Sage jumped into the SaaS world a few years ago with SageCRM (formerly ACCPAC CRM), Microsoft and SAP just recently announced their SaaS options and plans. Clearly, these vendors recognized that they would be at a competitive disadvantage without a SaaS solution. However, Microsoft and SAP still tend to position SaaS as an interim solution, one a company would use until it “grows into” running CRM in house. They continue to promote the benefits greater customization, flexibility, control, and lower ongoing costs as benefits of their packaged software options.

• Next generation agnostics that have always offered choice. RightNow and SugarCRM fit this

profile, offering a choice of delivery options from the start, and the option to switch back and forth between SaaS and on-premise options. SugarCRM indicates that about 40% of its customers use the on demand version, and about 50% of its customers use its on-premise, fully customizable solutions. The remainder chooses it’s pre-configured, on premise appliance. Although on demand option is the fastest growing segment, for SugarCRM, it continues to see plenty of headroom in on premise deployments. RightNow has also given customers a choice since its inception in 1997. Over the years, however, customers have increasingly favored SaaS. Today, approximately 90% of new customers opt for SaaS, and about 87% of all RightNow customers use its on demand solution.

• Pure-play packaged CRM vendors. Vendors such as Maximizer, as well as others not featured in

this report, have stayed on the packaged CRM course. Seeing enough opportunity in the in this area to provide steady growth for at least the next few years, they’ve held back on making the major technical and business investments necessary to bring a true, SaaS product to market. Instead, they focus their energies on marketing to customers that want an on-premise solution, and on strengthening capabilities such as ease-of-deployment and use, integration, and wireless and offline capabilities in their packaged products, and continue to enjoy solid growth.

Pricing and Packaging As a new kid on the block, how do you compete with existing, well-known players? Newer and less well-know vendors are undercutting bigger players to appeal to budget-conscious mid-market customers. For example:

• Entellium, offers its CRM solutions both as individual modules (marketing, sales force automation, services) for $50 per user per month, or as a bundled offering for just $60 per user per month. Pricing includes implementation and training, and 24/7 support.

• SugarCRM takes advantage of its open source roots to lure customers with the most aggressive CRM

pricing in our line-up. For example, at $480 per user per year or about $40 a month, SugarProfessional Edition is the most affordable SaaS CRM solution.

• Maximizer trumps packaged CRM rivals on pricing, offering Maximizer Enterprise 9 solution for $299

per user license. Established vendors use pricing as a competitive weapon as well. In July, Microsoft announced it would bundle MS CRM Server, Professional Edition with each Microsoft ERP sale beginning in August. Microsoft is also offering a free MS CRM server to its existing ERP customers currently on maintenance contracts. With this offer, Microsoft hopes to remove at least one obstacle to deploying MS CRM (customers must still purchase user licenses, maintenance and services), potentially motivating thousands of its ERP customers to join the MS CRM installed base.


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On the packaging side, vendors slice and dice their solutions in many ways to appeal to different market segments and budgets. Most vendors sell their solutions either as full suites, and sell individual modules separately, to provide MBs with flexible options. Many vendors, including Microsoft, salesforce.com, and SugarCRM, also offer different editions, which differ in terms of features and the number of users they support, in efforts to hit the nail on the head for different target segments. Service and Support Prompt service and support are critical for maintaining customer satisfaction and loyalty. Most vendors offer standard service and support components, including technical support, maintenance and training, bundled into the yearly subscription service, or for the first year of the license, as noted on Table 4. Most often, vendors provide optional, fee-based support for customers that want faster or more personalized support resources. Micosoft’s Deluxe Support Services plan, for instance, offers an on-site supportability review and report, priority status on support requests delivered by Senior Support Professionals, 1 hour guaranteed response time on support requests, managed newsgroups and 20% discounts on eCourses. Table 4: Comparison of CRM Vendor Service and Support Options


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Vendor Service and Support Options

Entellium • Implementation, deployment and training included with 90-day contract. • Free real-time, unlimited access to global customer support via Live Chat, 24x7x365. • Automatic rebate if Entellium doesn’t meet 99.7% uptime guarantee. • Free data export anytime, within 30 days of termination of service.

Maximizer Software

• Standard License & Maintenance Agreement (LMA) 20% of MSRP (with a minimum of $1,000).

• Support is not bundled w/licenses, but complimentary half hour is included w/purchase. • $35 per 30 minutes for contract customer support for the following products: Maxi-

mizer, Accounting Link for QuickBooks products, ecBuilder, MaxLink. $100 per 30 min-utes for Maximizer Enterprise Pervasive Workgroup, MaxExchange, MaxSync.

• Additional services: training, business process consultation, software implementation, customization/integration and 1-800 technical support line. Fees based on daily rates and custom work basis.

Microsoft • Full Packaged Product (FFP) Maintenance,included with purchase (available first year only). Product updates, transformational assurance, customerSource; online training benefits; discounts on Flex Support.

• Software Assurance (SA): 25% of customer’s system list price (for Open, Open Value, Select and Enterprise Agreements). 2 tech support incidents, 3 hour guaranteed re-sponse time; discounts on Flex Support; managed newsgroups; online training; 2 Mi-crosoft CRM eCourses; product updates, transformational assurance, customerSource.

• Deluxe Support Services: Starts at $25,000 + 25% (SA). Technical Services Account Management; on-site supportability review and report, support coverage defined by the client’s Software Assurance or FPP Maintenance enrollment; 24/7 support access for severity 1 issues, priority status on support requests; 1 hour guaranteed response time on support requests, managed newsgroups 20% Discount on eCourses.

Flex Support Customers enrolled in a service plan Customers not enrolled in a service plan

Per-Incident $125 USD $175 USD

5-Pack $600 USD $850 USD

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SaaS vendors, by the nature of their offering, must tightly link solutions and the services required to support them. NetSuite, RightNow, salesforce.com and SugarCRM bundle basic service and support into their SaaS subscription fees, and provide optional plans for customers that want a higher level of support. Upstart Entellium is taking support a step further, providing free real-time, unlimited access to global customer support via Live Chat, 24/7, for all Entellium subscribers. Entellium also prides itself on offering the industry’s most competitive service level standards by guaranteeing an automatic rebate if it fails to meet 99.7% uptime. Because responsive, comprehensive and superior service can ultimately provide more differentiation and customer loyalty than product differentiation—particularly as products become more commoditized—pressure will mount for vendors to create more innovative, value-add services options. Section 6: Beyond the Basics--Tapping into Specific Requirements


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NetSuite • 60-Day free support with purchase of NetSuite; customers can submit unlimited e-mail cases. Support hours are M-F, 6 a.m. to 4 p.m. (PST).

• After first 60 days: standard support includes: 24/7 self-service support via online tools (NetAnswers Knowledge Base, User Guides, Help, Glossary, Tips, Free Training Clinics, etc.).

• Net CARE Silver Support: priority call queuing calls; unlimited cases and calls. Price: 22% of annual subscription. Respond to call within 1 business day.

• Net CARE Gold Support: extended support hours; "front of the line" queuing; unlimited cases; telephone support via toll free line. Weekend e-mail support, limited phone sup-port on weekends of major release. Price: 27% of annual subscription. Respond to calls within 6 hours.

RightNow • Basic Support: included in solution price;includes 24x7 Web-based self-service, email support, 24x7 access to RightNow Site Status Page.

• Preferred Support: includes 24x7 phone support, priority handling of submitted incidents (in addition to what is included in Basic). Pricing: 18% of software sold.

• Premier Support: Includes a technical account team (in addition to what is included in Basic and Preferred). Pricing: 25% of software sold.

Sage • Standard maintenance & support contracts: Access to new software, SupportOnline Web site with KnowledgeBase, Web-based ticket/issue submittal and phone access to Tech Support. Price: 20% of MSRP of software purchased (10% for maintenance and 10% for support).

• Additional programs: in-person and online product training, provided by business part-ners; basic per-incident support plans.

• Sage’s Priority Software Support: annual subscription-based service; unlimited access to support reps and 1-hour call back.

• onDemand Support plan: available per incident or by the 5-pack (3 hour call back, $125 per case, $525 for 5 case resolutions).

Salesforce.com • Basic Support: Basic customer support via multiple channels. • Premier Support: Increases in access and response times, plus personalized service

and best practices. • Premier Support with Administration: Management of application by an experienced

Salesforce administrator, plus benefits of Premier Support. SugarCRM • Standard Support: 4 business hours maximum response time for Priority 1 cases, unlim-

ited cases, email, support portal, pro help forums, included in any editions that custom-ers buy.

• Extended Support: 2 business hours maximum response time for Priority 1 cases; unlim-ited cases. Email, support portal, pro help forums, live phone support during business hours. 15% of the total license deal or $1,000/year, whichever is greater.

• Premium support: 1-hour maximum response time for Priority 1 cases; 24x7xx365; unlimited cases. Email, support portal, pro help forums, live phone support during busi-ness hours, after hours phone support available for Priority 1 cases, assigned support representative and quarterly account reviews. 25% of the total license deal or $4,000/year, whichever is greater.

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What are vendors doing to differentiate themselves beyond core CRM capabilities, packaging and delivery models? Although we could look at multiple areas, we’ve chosen three—industry-specific CRM, mobility and integration—that vendors are investing in to spur adoption of their CRM solutions in the mid-market space. Industry Specific CRM Industry specific enterprise resource planning (ERP) solutions have been around for a long time. In contrast, CRM has historically been cast as a horizontal function. However, the vertical bug is biting CRM vendors too. By aligning their solutions with specific vertical needs, they hope to provide under-resourced MBs with a way to further cut time and costs for deploying their solutions. Some are taking a do-it-yourself approach and others are relying on partners, as detailed in Table 5. • Industry-specific do-it-yourselfers: These vendors believe that “spot-on” solutions catered to specific

verticals serve target segments more effectively than horizontal CRM. By building industry-specific language and processes into each edition, they purport to save customers time and money. NetSuite, for example, offers vertical CRM editions for professional services, wholesale/distribution and software industries. For example, the company’s Wholesale/Distribution Edition comes with features such as advanced inventory with bin management, landed cost for detailed warehouse management, and tracking, drop shipment returns management. NetSuite indicates that this customization is paying off, as 40% of its overall sales are from these three verticals. Maximizer offers out-of-the box templates for financial services, hi-tech software and real estate industries. Although Oracle/Siebel declined to be interviewed for this report, Siebel CRM On Demand also provides four industry specific versions.

• Partner proponents. Microsoft, Salesforce.com and Sage leverage business partners—typically a mix of

developer, VAR and system integrator types—to add industry expertise and tailoring. Microsoft and Sage have strong existing partner networks, and rely heavily on VARs and SIs to customize their CRM solutions for customers. Developer partners also figure into vendors vertical market equations. salesforce.com’s AppExchange platform and marketplace, for example, enables buyers and sellers to archive, sell and share applications. More than 40 of the 350-plus AppExchange solutions address industry-specific needs. salesforce.com recently introduced AppExchange OEM Edition, an on-demand platform that partners can use to develop and deliver new on-demand applications. MyLoanBiz, for instance, is built entirely on AppExchange OEM Edition, providing loan officers with an on-demand application to help manage all aspects of the loan business.

Both Entellium and SugarCRM have taken unique approaches. SugarCRM relies on partners and customers drive delivery of vertical capabilities. They can tailor via configuration via SugarStudio, or use APIs for deeper customization. SugarCRM’s open source community can share via SugarForge, through which SugarCRM offers Sugar Suite extensions, modules, language packs, themes, and a range of support and information services. Entellium takes a different tack entirely. In its view, companies need to tailor solutions based on they way they sell—via direct feet on the street sales reps, inside telesales, indirect and distribution channels, etc. Entellium designs specific features that relate to the requirements of these different channels, and, at the same time, can roll up for a complete customer view across all channels.


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Table 5: Comparison of CRM Vendors’ Industry Strategy

Although many companies will continue to find horizontal CRM perfectly satisfactory, industry-specific CRM is a trend that is here to stay. Vertical editions give vendors a way to differentiate in the market, and if done well, industry-specific CRM gives customers a quicker route to a short list, and a solution that more readily and inexpensively conforms to their specific business requirements. However, there are so many verticals and micro-verticals--along with individual company nuances--that demand for one-on-on vertical tailoring should also be in demand for a long time. CRM Mobility Solutions MB demand for easily extending applications to remote, geographically dispersed and mobile users is rising. As mentioned in Section 1, 38% of MBs have telecommuting employees, and 79% have a mobile workforce, and of course, sales people, by their very nature, are often on the go. In addition, high-speed data networks and mobile devices are increasingly ubiquitous, and the technology to package and deliver information via mobile devices is improving. These forces are driving CRM vendors to beef up mobility and offline synchronization capabilities. SaaS solution vendors have offered offline synchronization capabilities for a while now. This enables customers to store sales and customer information on their disconnected laptop, and bi-directionally update changes when they reconnect. Meanwhile, all vendors are keen to extend wireless access, but capabilities and pricing varies, as shown on Table 6. For instance:

• Entellium provides eMobile, an extension of Entellium eSalesForce, for $25/user/month. Customer’s who buy Entellium solutions via Verizon can add wireless access for $10 per user per month.

Vendor Industry Strategy

Entellium Tailors its solutions for the ways a company sells–direct, telesales, indirect, etc. instead of by industry. Solutions are designed to meet these different channel needs, and roll up for a complete view across channels.

Maximizer Software Offers out-of-the box vertical templates for the financial services, hi-tech software and real estate industries.

Microsoft Works with partners (both ISVs and Solution Providers) that design vertical solutions that integrate with MS CRM.

NetSuite Offers vertical Editions for services, software and wholesale/distribution companies.

RightNow Does not offer industry-specific applications, but has a high concentration of customers in public sector, financial services, retail / CPG, high tech, telecomm and services.

Sage Addresses vertical CRM requirements predominantly through business partners, who apply their experience and core competencies in the industries in which they specialize. ACT! by Sage for Real Estate was introduced May 2006 as a first packaged, industry-specific product, based on substantial adoption of ACT! in the real estate industry.

salesforce.com Addresses vertical requirements with AppExchange, its an online marketplace, where buyers and sellers can archive, sell and share applications. 40+ AppExchange solutions address industry-specific needs. AppExchange OEM Edition enables partners to develop and deliver new on-demand ap-plications, including industry-specific ones.

SugarCRM Relies on partners to design solutions tailored to the needs of different verticals, such as healthcare, financials, etc.


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• Maximizer users can use any PDA with a browser to connect to and access all company contact information via Maximizer’s wireless portal (which is included in the Enterprise product) and through the employee portal.

• Microsoft CRM Mobile is available on all devices that run Windows Mobile. • Sage’s CRM solutions have mobile synchronization to most handhelds, with full CRM applications

on mobile devices such as Blackberry, Windows Mobile Pocket PC and Windows SmartPhone devices. Pricing for Sage CRM SalesLogix Mobile for Pocket PC, Blackberry, and SmartPhones, for example, is $395 per user license.

• salesforce.com offers AppExchange Mobile, priced at $50 per user per month, enabling mobile

access to Salesforce CRM or AppExhange apps from any mobile device. Table 6: Comparison of CRM Vendor Mobility Capabilities

Although a few vendors currently lag in this area, packaged wireless options are on their way to becoming a staple. SugarCRM is working with SONA mobile for a full wireless client user interface (due later this year), and NetSuite is working with two wireless solution providers. RightNow currently provides wireless integration via its professional services organization, but its recent acquisition of Salesnet (which has strong mobility

Vendor Offline and wireless capabilities

Entellium • Entellium eMobile: $25 per/user/month. • Offline synchronization for disconnected laptops.

Maximizer Soft-ware

• Maximizer 9 access: Palm PDA synchronization and Maximizer. • Enterprise 9 access: wireless online PDA (BlackBerry, Treo, Pocket

PC), and Palm PDA synchronization. Microsoft • Microsoft CRM Mobile: available in all devices that run Windows Mobile.

New open-source client for mobile devices available August 2006. NetSuite • Working with two wireless solution vendors; not yet publicly announced.

• Offline synchronization for NetSuite CRM. RightNow • Wireless integration via professional services (e.g. send an alert to a

Blackberry when an inquiry is created). Sage • Mobile synchronization to most handhelds; full CRM applications on

Blackberry, Windows Mobile Pocket PC, Windows SmartPhone devices. • Corum Mobile Platform to develop Sage CRM SalesLogix Mobile capa-

bilities for Pocket PC and Blackberry; J2X to develop ACT! capabilities with Blackberry.

• ACT! add-on solution with Sprint subscription service: $24.95/month, $239/year per user

• Sage CRM SalesLogix Mobile for Pocket PC, Blackberry, and Smart-Phones: $395/year per user.

Salesforce.com • Offline Edition: disconnected laptop synchronization. • Offline PDA Edition: offline access to salesforce CRM via Pocket PC or

Palm OS device. • AppExchange Mobile: mobile access to salesforce CRM or AppExhange

apps from any mobile device. SugarCRM • Offline synchronization, bi-directional synch with SugarEnterprise.

• Working with SONA mobile for full wireless client user interface, to be available in a few months.


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functionality) should help RightNow to make this a standard offering soon. Integration Most MBs deploy back office solutions, such as accounting and financials, before CRM. Ideally, they want to eliminate redundant data entry and gain a complete view of their customers—making solid integration capabilities a must for CRM vendors. Over the years, vendors have tackled this challenge in many ways, with everything from one-off integrations to integrated suite solutions to product-specific connectors. Since the late 1990’s, XML and Web services related technologies and standards have gradually been making it easier and cheaper to integrate applications, and vendors are progressively incorporating Web services and service-oriented architecture (SOA) frameworks, tools, procedures and workflows into their applications. But, while this eases some integration issues, many remain. After all, these technologies and standards are still developing, and customers are using—and vendors are still selling and supporting—legacy applications that were built long before Web services came to the forefront. And, while Web services and standards are making it easier to integrate best-of-breed solutions, pre-integrated business solution suites are likely to afford integration benefits for the near future. In addition, suites that are more comprehensive enable vendors to enter other application markets, and increase account presence and customer spending. As a result, as indicated on Table 7, vendors tend to align their integration strategies with pragmatic interests as well as longer-term Web services integration goals. For instance:

• Vendors with pre-integrated front and back-office suites, such as NetSuite and SAP Business One, contend that since business transactions are tightly coupled, applications should also be tightly linked. Because their applications are on a common code base, they provide a single, integrated system of record. NetSuite, for instance, believes that while standards-based, Web-services integration eases some integration woes, pre-integrated suites, standardized on a single system of record, will always be easier and more cost-effective for customers.

• Vendors with different back and front office solutions. Microsoft and Sage have a full complement of

back office solutions, but each has multiple products and different code bases within its portfolio. These vendors offer connectors to help customers link their CRM solutions to both their own back office products, and to other popular brands. For instance, Sage offers 20 packaged integrations, providing standardized integration with other Sage and third-party accounting and financials solutions. Today, Microsoft uses its .NET platform for integration, and is developing deeper support for Web services. It also provides prepackaged connectors and templates for connecting its solutions with its own and third-party ERP and financials solutions. In the future, Microsoft’s Dynamics will provide deeper support for Web services, and easier information exchange via XML.

• Standalone CRM solutions. Entellium, Maximizer, RightNow and SugarCRM also invest heavily in this

area. SugarCRM, for instance, provides open access to its code, posts validated plug-ins and connectors to its library, and rewards contributors. RightNow uses Web services based intelligent agents and other tools to create re-usable integration templates. Maximizer provides an out-of-the-box integration for Intuit QuickBooks, and plans to do more of these for other popular SMB brands. It also offers an integrator toolkit for financials and ERP applications.

Though their approaches vary for practical reasons, all of these vendors recognize that integration capabilities—or lack thereof—will make or break many mid-market deals. Most MBs are unlikely to rip and replace their legacy back office solutions until they run out of steam, and CRM vendors—even if they offer both front and back office solutions—need to be able to easily integrate with a wide array of mid-market back ERP and accounting solutions. In reality, the age-old debate over integrated suites v. best-of-breed isn’t likely to end any time, and customers’ preference for these approaches is likely to remain split. All vendors will need to keep pace with standards-based integration trends, offer a modular approach for customers that want to mix and match, and strive toward the goal of delivering true, turnkey integration. Meanwhile, for new companies, without legacy applications, and companies that have decided to replace legacy applications, the integrated suite approach is likely to be very attractive.


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Table 7: CRM Vendors Integration Strategies/Capabilities

Vendor Integration Strategy/Capabilities Entellium • Uses Web services for integration.

• Pre-built "connectors" between Entellium and SMB financial packages, desktop apps, etc. • CRM smart client allows customers to use power of desktop for instant business intelli-

gence. Maximizer Soft-ware

• Uses Integrator toolkit (supports all major programming languages) to enable partners to do custom ERP integrations.

• Out of the box interface for Intuit QuickBooks. • Intends to add nine additional out of the box integrators.

Microsoft • .NET platform integrates MS CRM more tightly with other MBS and partner solutions and with MS Office suite as part of the MS “integrated innovation” strategy.

• Direct integration to MS Dynamics GP available now; MS Dynamics AX will ship this year. Connectors to Siebel CRM SAP, Oracle, PeopleSoft, and others available via MS CRM BizTalk adaptor this fall.

NetSuite • Web services-based NetFlex platform for integration with third-party apps, customization, extension, and building new apps.

• Advocates pre-integrated suite approach via NetSuite pre-integrated front and back-office solutions.

RightNow • Integration capabilities built on an XML and Web services. • Five integration methods: XML API, External Events and Email Event Handlers, Data

Transfer Utilities, Pass Through Authentication, and Application Portal. • Actively involved with the WS-I (Web Services Interoperability Organization). • Has performed more than 150 integrations including CTI, order management, billing, credit

card processing, and others. • Packaged integrations:SAP, Remedy, Siebel, PeopleSoft, Clarify, Kana, eGain, Onyx and

Cybersource. Packaged CTI integrations include Avaya, Five9 and SimpliCTI. Sage • Supports integration in 3 ways:

• Designs its own products to integrate with each other; uses open standards to allow cus-tomers to do integration themselves

• Integration platforms link products via standard integration (CRM Solutions provides 20 standardized packaged integration solutions)

• Discrete integration plans between product lines built around non-standard data fields or customizations that need to be integrated.

• Supports integrated data viewing (i.e. dashboards), application integration, business proc-ess integration, and service-based integration via Sage Application Integration Services (AIS) standards. Native product interfaces for Sage CRM products are used to build adap-tors that plug into AIS, and provide access to the application’s data, determine data changes, and access business logic in an application.

Salesforce.com • Web services enabled APIs and AppExchange platform for integration, application exten-sion, and building new applications. Supports integration with enterprise applications, in-cluding SAP, PeopleSoft, Oracle, other third-party solutions, homegrown applications, por-tals.

SugarCRM • Solutions built on open Linux, Apache, mySQL, PHP (LAMP) stack; PHP SOAP layer is built into its offerings. Sugar provides open access to code, posts validated plug-ins to its library, and provides rewards for contributors. It plans to continue to expand its library of plug-ins.


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Section 7: Channel Strategies Finding the “right” channel strategy is critical for vendors that want to succeed in the mid-market, but the job isn’t easy. MBs have more complex solution and integration requirements than small businesses, but lack the IT expertise and financial resources of a large company. Many vendors struggle to come up with a profitable, successful channels formula that provides MBs with the attention they need. To meet this challenge, most of the CRM vendors that we interviewed employ both direct sales and indirect channel partners. However, the degree to which they utilize partners varies significantly. Not surprisingly, vendors with a traditional, packaged software legacy tend to favor a traditional, partner-centric approach. Meanwhile, although newer SaaS vendors—as well as open source vendor SugarCRM—relied heavily on evangelistic, direct sales model to jump start their businesses, many are now building indirect channels programs to accelerate growth. Instead of concentrating on traditional IT VARs and SIs, however, some are choosing to pursue relationships with broader range of channel types, including retail, telcos and the open source community. In some cases, vendors fit more than one of the following categories, but we can categorize them based on their primary focus, as discussed below and indicated on Table 8. Partner-centric vendors Partner-centric vendors rely heavily on traditional VARs and SIs to drive sales. Vendors should find an increasingly receptive channel as traditional IT channel players continue to shift from reselling commodity hardware and software to solutions that provide opportunities to sell higher value add services. AMI-Partners 2005-2006 U.S. Channel Partner survey indicates that the percentage of partners offering customization services for packaged software jumped from 49% in 2004 to 62% in 2005.

• Microsoft indicates that 100% of its SMB sales are via its 1,500 active CRM partners worldwide. (Note: Microsoft intends to sell MS CRM Live directly to SMBs when it launches in 2007). Microsoft’s CRM go-to-market resources include 100 sales and technical specialists, 50 marketing program managers, 400 account teams covering over 10,000 accounts and 450 partner account managers. This investment is paying off: Microsoft reported that its CRM customer base has surpassed 7,500, growing more than 100% since 2004.

• Sage sells over 90% of its solutions via partners, and invests in multiple recruiting, marketing and

sales support programs. Some of Sage’s more unique programs include its 100/100 Program, which helps 100 select business partners find, hire and train 100 field executives in 100 days; and it’s Fast Track for Growth Program, which provides smaller partners that don’t have a dedicated sales staff with sales training, lead generation support, mentoring relationships, and help developing a custom sales and marketing plan.

Channel Pragmatists These vendors favor direct channels, with heavy emphasis on the Web, telesales and/or feet-on-the street sales reps. However, they also leverage a variety of channel partners to help expand market reach. Since SaaS solutions don’t require hardware and software implementation, vendors such as NetSuite and RightNow are more likely to strike mutually productive deals with business process consultants and SIs than with conventional VARs, who rely on hardware for the majority of their total revenues and sell the highest percentage packaged software among all channel types. In contrast, Maximizer’s packaged solution aligns well with VAR business models and expertise.

• Maximizer has found that some midsize customers want a direct relationship with supplier; by providing this relationship, Maximizer gains a competitive advantage. While 68% of Maximizer’s sales are direct sales, and 32% are via partners, the vendor estimates that partners influence about 60% of its sales. To avoid channel conflict, Maximizer enables partners to secure accounts they’ve


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identified, and farms out qualified leads to partners. • RightNow relies heavily on direct sales, which account for about 90% of its revenues. However, the

vendor’s service and referral partner program offers revenue opportunities for consultants, systems integrators and solutions providers that sell RightNow's solutions to their customers and/or provide complementary solutions and professional services to RightNow customers. For instance, outsourced call center partners can use RightNow as a platform to provide customer care solutions to their clients.

• NetSuite, with 200+ mid-market VAR and boutique partners, has long viewed the channel as a critical

on ramp to a volume SMB business, and has aggressively pursued traditional VARs and SIs for the past few years. NetSuite targets classic mid-market VARs, and large enterprise VARs that want to move into SMB. NetSuite pays active VARs recurring revenue for the life of the contract (roughly 30-45% of service, depending on volume). Today, these partners drive about 25% of NetSuite’s sales, with 75% of sales driven through direct “friend referrals” or search engine placement. NetSuite recently reinforced its June agreement with CompUSA, in which CompUSA’s 220 business centers, 1,100 dedicated business service representatives, and 20,000 independent partners (local VARs and business solution providers) will resell NetSuite solutions. The partnership potentially provides NetSuite with the local presence, personal touch and the training resources required to help bring its solutions to a broader SMB audience.

Channel Innovators Some vendors including Entellium, salesforce.com, NetSuite and SugarCRM are pursuing the channel road less taken. While they may also have programs for traditional VARs, they are as or more focused on forging new types of channel relationships—for different reasons:

• Entellium avoids the traditional VAR channel. Instead, Entellium, whose sales to date have primarily been via direct telesales and the Web, intends to partner with existing SMB “brand holders”, exemplified with its first such partner, Verizon Wireless. Through this relationship, Verizon’s 5,000 sales reps will sell Entellium to Verizon’s SMB base. Entellium believes that while Verizon—and other non-IT brand holders—might find it difficult to sell more complex CRM solutions, they will find Entellium's portfolio relatively simple enough to sell.

• salesforce.com’s strategy is to attract influencers, such as SIs, sales methodology firms, consulting

firms—and most visibly—other SaaS developer partners. salesforce.com’s sales are 100% direct, but the vendor sells jointly with AppExchange partners; consulting partners that provide complementary technical and business consulting services; and marketing and referral partners that introduce its CRM solutions to their customers earn a percentage of revenues for referred accounts. AppExchange is clearly salesforce.com’s channel centerpiece: the vendor has more than AppExchange 300 partners that distribute their applications on its AppExchange platform. AMI Partners research reveals that software developers derive the highest percentage of revenue from MBs (23%) among channel partners, underscoring the potential that AppExchange has in the mid-market.

• SugarCRM finds that the open source community is its best lead source. Open source evangelists test

and pilot SugarCRM, and many go on to decide to they advanced functionality and a commercial relationship— drastically abbreviating the sales process and reducing the cost of sales. In fact, SugarCRM sees a direct correlation between downloads and revenues, and on average, a one to two month sales cycle. The vendor’s inside, inbound sales team closes about 60% to 70% of all sales. SugarCRM also has commercial, revenue sharing partnerships with open source players that provide translations and vertical functionality, and also resell the solution; many also contribute code back (not all do this). SugarCRM works with these partners to support their sales efforts, and intends to put more programs and process in place to support this channel. AMI-Partners research indicates that although Microsoft Windows still dominates, 43% of medium business focused channel partners now support the Linux platform, boding well for SugarCRM’s channel initiatives.


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Table 8: Comparison of CRM Vendors Channel Approaches, Partners and Programs


Channel-Centric Vendors

Channel Partners Channel Programs/Resources

Microsoft • 100% indirect SMB

sales. Microsoft-driven, partner-assisted sales in large business.

• VAR, SI, Hoster, Reseller and ISV partners.

• 1,500+ MS CRM partners world-wide.

• Includes Gold, Certified and Reg-istered partners.

• Resources include: 100 sales and tech-nical sales specialists; 50 marketing program managers; 400 account teams; 450 partner account managers.

Sage • 90%+ indirect sales.

• Business process experts, indus-try specialists, technology and integration specialists.

• 23,000 certified Sage partners worldwide; 60,000 consultants refer CRM business from accoun-tancy world.

• Multiple programs include Fast Track for Consultants,

• 100/100 Program, Fast Track for Growth, Hiring Assistance, Marketing Alliance Program, Cross Product Refer-ral Program.

Channel Pragmatist Vendors

Maximizer • 68% direct sales; 32%

indirect.

• 400 partners worldwide • Maximizer Enterprise: Reseller

channel (certified reseller busi-ness partners (VARs) and sales agents (referrals); direct Sales.

• Maximizer: direct inside sales; eStore; retail (Staples, Business Depot, etc.); distribution (i.e. Ingram Micro).

• Programs for: • Certified solution providers • Authorized sales agents • Certified consulting partners • Authorized resellers

NetSuite • 75% direct sales; 25%

indirect.

• 200+ VAR and boutique firms, CPA, Payroll Services firms.

• CompUSA partnership: lever-ages CompUSA’s 1,100 dedi-cated business service reps, 20,000 independent consult-ants, 220 business centers.

• Solution Provider: certified NetSuite Partners that offer pre/post-sales ser-vices.

• Referral: revenue sharing referral pro-gram.

• NetFlex: helps partners extend Net-Suite with NetFlex Web services plat-form.

RightNow • 90% direct sales; 10%

indirect.

• Consultants, system integrators and solutions providers and out-sourced call centers.

• Service & Referral Partners: for part-ners providing RightNow solutions and/or complementary solutions and profes-sional services.

Channel Innovator Vendors

Entellium • 70% direct; 30% indi-

rect.

• Telcos and “SMB Brand Hold-ers,” i.e. major credit holders, software companies and others with strong brand equity and SMB installed base.

• Verizon Wireless (5/06) Jointly targeting wholesale, distribution, healthcare, con-struction, professional services.

• Partnerships with other telcos and “SMB brand holders” in process.

Salesforce.com • 90% direct

• Solutions Partners: create solu-tions on the AppExchange plat-form.

• Consulting Partners: trained and certified in implementation best practices; provide complemen-tary technical and business ser-vices.

• Marketing & Referral Partners: introduce salesforce.com’s solu-tions to customers and earn a percentage of revenues.

• AppExchange: platform and market-place for on-demand applications. on-demand platform. More than 300 appli-cations are available.

• AppExchange OEM Edition: allows ISVs and partners to build, sell, and deliver on-demand applications built on the AppExchange platform.

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The good news for vendors using indirect channels is that according to AMI’s 2005-2006 U.S. Channel Partners study, total SMB channel partner revenue grew over 13% to $132 billion. In addition, channel partners are shifting their focus somewhat from small business to medium business. The proportion of revenues that channel partners derive from SBs decreased from 2004 to 2005, while the proportion of revenues from MBs increased slightly, reflecting MB customers’ greater demand for applications and services. However, as competition for mid-market CRM customers soars, vendors’ investments to identify, recruit and sustain productive sales partnerships will intensify. In general, partners in highest demand will be those with:

• Existing presence and customer relationships in the mid-market; • Experience selling, servicing and supporting mid-market customers in the CRM space; • Industry-specific expertise, applications or services that complement the vendor’s solutions; • Commitment to train and/or certify sales people on the vendor’s applications, and proactively

engage in joint sales and marketing activities; and • Commitment to integrate their solutions/services with the vendor’s.

That said, each vendor will align their channel mix based to their strategic market objectives and the relative complexity of selling and deploying each solution. For example, Entellium, which prides itself on having a very easy, turnkey solution, will continue to concentrate its partnering energies on telcos and SMB brand holders that can significantly extend its reach. Others, such as Microsoft and Sage, whose solutions require more implementation and integration expertise, will continue to focus on building partnerships with vendors that can provide these services. Meanwhile, salesforce.com is likely to put a premium on demand application developers to further its AppExchange platform and marketplace goals. Section 8: Summary and Conclusions Many vendors provide strong CRM solutions targeted at MB customers. However, one size does not fit all—either from a market or vendor perspective. Although larger MBs often have more sophisticated needs than smaller firms, size is just one factor in the equation. MB CRM requirements will fit somewhere along a spectrum from simple to more sophisticated, as follows:

• MBs with basic CRM needs: These customers are often deploying a true CRM solution for the first time. They have more basic CRM requirements, and tend to have less in-house CRM process expertise and technical proficiency. In most cases, the need to streamline the sales process—as opposed to marketing or service automation--is the primary driver for buying a CRM solution. As first time buyers, they’re likely to be more cost-conscious and risk-adverse, and less tolerant of complexity, whether in products, pricing and packaging, or services.

• MBs with more complex CRM needs: These customers’ CRM requirements align more closely

with those of large businesses. With more in-house CRM business process expertise and technical resources available, they engage in a more rigorous solution evaluation process. While some are first time CRM buyers, many are looking to replace an existing CRM system or contact


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SugarCRM • 60%-70% direct via in-

side inbound telesales team.

• Recruits partners that: • Are more technically advanced/

skilled • Share OSS strategic vision • Provide implementation, inte-

gration capabilities • Provide consulting capabilities • 120 partners in more than 30

countries around world.

• Open source community for lead generation.

• Channel group works with partners on revenue sharing commercial relationships.

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management solution that has run out of horsepower with one that provides greater flexibility, scalability and functionality. Service and/or marketing automation capabilities are likely to be as or even more important than SFA. Their requirements for integration, mobility, vertical tailoring and other functionality are specific and sophisticated.

As the array of CRM providers and solutions expands, MBs are increasingly likely to find can a solution that meets their specific requirements. However, most customers will look first at the obvious suspects—CRM vendors with brand power and marketing clout. When all else is equal, all of these MB CRM leaders can leverage brand strength and marketing power to gain consideration in a greater percentage of deals, and often, when all is equal, to seal the deal against lesser-known challengers. salesforce.com, by virtue of its strong growth trajectory, comprehensive solution set and marketing muscle, is the biggest brand in the CRM space today, giving it an immediate edge in consideration, across the MB spectrum. Though not as splashy as salesforce.com, Microsoft CRM, Sage and RightNow are also strong brands in the MB space. These vendors are enjoying strong growth, and their status as public companies with solid financials and greater name brand recognition gives them an advantage. Microsoft and Sage also have large partner networks, providing another leg up onto MB short lists, although they tend to appeal to different types of customers, for different reasons, as shown on Table 9.


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Table 9: Comparison of MB CRM Brand Leaders

Because they’re not as well-known as their rivals, MB CRM challengers, as indicated on Table 10, have a tougher time getting into consideration in the first place. However, with all the attention that vendors and media are lavishing on the CRM space, MBs are becoming more educated about CRM and their choices. Challengers, as shown in Table 10, often provide customers with very attractive alternatives, offering more aggressive pricing, extra services or other value-added differentiators to entice customers to their solutions. If challengers’ strengths map closely to a given customer’s requirements, their solutions may provide a better fit than MB CRM leaders.


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MB CRM Brand Leaders Vendor MB Strengths MB Weaknesses Best MB Customer Fit

Microsoft CRM • Overall Microsoft brand

• Strong channel and ISV network

• Pre-integration with Great Plains Dynam-ics

• On demand solution not yet available

• Lacks pre-integration with other MBS and third-party back office solutions

• Invested in .NET platform, MBS back office solutions

• In-house IT resources to deploy/manage

• Effective existing relationship with MBS solutions provider

RightNow • Choice of on demand or on premise

• Deep service and call center capabilities

• 24/7 email support included in basic sup-port

• Strong integration capabilities

• Web services-based platform

• Lacks brand aware-ness for SFA consid-eration

• Lacks extensive chan-nels coverage

• Lacks turnkey wire-less solution

• Larger/more sophisticated cus-tomer

• Service/call center needs domi-nate

• Wants flexibility to move between on demand and on premise

• Requires voice enablement • Wants direct relationship with

CRM vendor

Sage • Range of CRM solu-tions

• Choice of on premise and on demand

• Sage CRM available standalone or pre-integrated with AC-CPAC suite

• Strong channels net-work

• 20 standardized inte-gration solutions

• Difficult to position and market multiple CRM offerings

• Must support multiple technologies, plat-forms, versions, etc.

• Currently use Sage back office solution(s)

• Effective existing relationship with Sage solution provider

• Wants pre-integrated front and back office functionality (Sage CRM and ACCPAC)

• Larger/more sophisticated MB that wants fully customizable CRM (SalesLogix)

Salesforce.com • Market leader • AppExchange market-

place • Web services-based

platform • Strong developer and

consulting partner network

• Lacks on premise op-tion

• Steep pricing jump from Team Edition to Professional Edition

• Options/pricing be-coming complicated

• Requires on demand solution

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Table 10: Comparison of MB CRM Brand Challengers

MB CRM Brand Challengers

Vendor MB Strengths MB Weaknesses Best MB Customer Fit

Entellium

• Simplicity of deployment and ease of use

• 24/7 service included in sub-scription price

• Affordable pricing

• Lacks broad market awareness

• Insufficient channels coverage

• Lacks IT staff • Limited budget for upfront investment • Wants an on demand solution • Requires simplicity • Needs out-of-the box QuickBooks

integration • Needs easy, affordable mobile

solution Maximizer Software

• Affordable pricing

• Solid existing installed base

• Strong financials

• Good channels coverage


• Lacks SaaS offering

• Requires an on premise solution • Requires simplicity • Wants CRM tuned to financial

services, hi-tech or real estate • Needs out-of-the box QuickBooks

integration • Needs choice of mobile solutions

NetSuite • Offers CRM separately and in pre-integrated suite

• Broad local channel reach via CompUSA

• Web services-based platform

• Has yet to an-nounce wireless solutions

• Lacks broad mar-ket awareness in CRM

• Does not provide on premise alter-native

• Ready/planning to replace legacy financials/ERP

• Wants single system of record • Wants on demand solution • E-commerce is a key business com-

ponent • Wants CRM tuned to software, ser-

vices, wholesale/distribution • Needs out-of-the box • Does not have immediate wireless

needs SugarCRM • Choice of on

demand or on premise deployment

• Open access to open source code, plug-in library

• Affordable pricing leader

• Open source community sales and development


• Lacks turnkey wireless capability

• Familiar with open source/need to customize (for on premise)

• Budget-conscious buyers • Wants open source, on demand

solution • Does not have immediate wireless

needs


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As examined earlier in this report, MB CRM market is still under-penetrated, with plenty of headroom. What do vendors need to do to accelerate market growth, and expand their own market share? While each vendor must of course, tailor its approach to its current market position, offerings and strategic direction, all vendors need to:

• Zero in on real MB product and service requirements—as opposed to fancy bells and whistles--as they attempt to differentiate against the competition. SaaS vendors, with their closed loop customer relationship, can probably do this more efficiently than packaged CRM competitors.

• Clearly communicate a unique value proposition. While a couple of vendors have a good shot

at capturing a broad swath of the volume MB CRM market, most will need to carefully position and focus their sales and marketing energies on their best-fit MB customer segments.

• Tune up channel initiatives. The business applications channel landscape has been changing

for a while now, and SaaS, open source, and an expanding array of CRM vendors will continue to cause changes, and increased competition, for a limited universe of effective partners. Vendors need to ensure that they are capitalizing on these changes, refreshing programs and partnerships, and tapping into partnerships that will help them to best tune into their market sweet spots and overcome their own product and/or go-to-market deficiencies.

• Make it easy for MBs to figure out total cost-of-ownership (TCO). Sure, everyone has a

sticker price, but with multiple solutions and service options, and varying infrastructure, IT and consulting requirements (not to mention confusing Web sites), it can be tough to figure out what the true price tag is. Appeal to MBs’ pragmatic nature with visible, transparent pricing and TCO data.

• Strive for on demand integration. MBs are always going to need to integrate CRM with

something else. All vendors (even those that advocate a pre-integrated suite approach) need to pursue all routes that facilitate integration—pre-built connectors, open APIs, standards-based Web services--to ease integration obstacles. Vendors that identify, prioritize and develop the most valuable CRM integration points will have an edge. Those with a crisp integration story that simply works, and works simply, will win MB hearts and minds.

By staying focused on these objectives, vendors can continue to help MBs overcome many of the barriers that have stalled productive CRM adoption in the past, and differentiate their solutions in this very crowded market.


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Vendor Profiles

Source: AMI-Partners based on information from vendor


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Entellium

Date Founded 2000

HQ Locations Seattle, WA

International location(s) Western Europe, Asia Pacific and Mexico

Vendor URL www.entellium.com

Public/Private Private. Funded by Ignition Partners.

Performance metrics • Over 200% year-to-year subscriber growth • Less than 7% in churn rate

Target market(s) Businesses with 25-1,000 employees, especially IT resource constrained mid-market companies.

Entellium targets VPs of sales, service and marketing with a “user effectiveness” message during the selling process.

95% of customers are mid-market (defined by Entellium as cos. with 50 to 1000 employees).

Delivery Options 100% SaaS.

CRM Solution Description Entellium offers a full-featured modular CRM suite (Sales Force Automation, Customer Service, Marketing Automation). Core fo-cus: helping mid-market companies acquire more qualified leads at a lower cost, win more selling opportunities vs. competitors, keeping their customers happier longer, at a lower cost. Product areas of focus include user interface, workflow/automation and embedded analytics. Entellium suite: $60/user/month. $50/user/month for individual modules. Entellium has a no con-tract, pay as you go policy with a minimum of 90 days of service.

Wireless Accessibility Entellium eMobile, an extension of Entellium eSalesForce for an additional $25 per month.

Key Partners Telcos, with Verizon Wireless as its first partners. Entellium ex-pects to partner with other telcos and “SMB brand holders,” which could include major credit holders, software companies and oth-ers that have strong brand equity and a large SMB installed base.

Channel strategy 70% of its total sales come from direct telesales and the remain-ing 30% coming from partnerships with telcos and other “SMB brand holders.”

Future development plans • Add more telco partners • Look to partner with “SMB brand holders” • Make its products available in multiple languages • Focus more on verticalizing based upon sales role: inside sales, major accounts, etc.

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Vendor Profiles


Maximizer Software Date Founded 1995

HQ Locations Vancouver, Canada

International location(s) Americas, Europe/Middle East/Africa (EMEA), and Asia

Vendor URL www.maximizer.com

Public/Private Public (Toronto Stock Exchange: MAX)

Performance metrics 170 employees worldwide 7,500 Maximizer Enterprise customers Over one million Maximizer licenses shipped $17.5 million in revenues for 2005 and profitable for past three consecu-

tive years Target market(s) Small offices/Home offices (SOHO), Small businesses and Mid-size busi-

nesses Maximizer Software targets and has large customer bases in the high

tech, real estate, financial services and professional firm verticals Delivery Options 100% customer premise though many customers choose to have the sys-

tem hosted by Maximizer Software’s business partners to achieve a hosted deployment

CRM Solution Description Maximizer 9 – CRM solution designed for individuals, home office and small businesses Maximizer Enterprise 9 – CRM solution designed for small to mid-sided businesses and divisions of large corporations. Typical implementation time is approximately 1 week with moderate customization Maximizer - $299 Max Enterprise W/G CRM - $499 Max Enterprise Client Server CRM - $599 Max Enterprise Client Server eCRM - $799 Partner Portal - $499 Maximizer also offers out-of-the box vertical templates for the financial services, hi-tech software and real estate industries.

Wireless Accessibility Maximizer 9 can be accessed via Palm PDA synchronization and Maxi-mizer Enterprise 9 can be accessed via wireless online PDA (BlackBerry, Treo, Pocket PC), and Palm PDA synchronization

Key Partners • Maximizer has more than 400 partners worldwide • Technology partners include Microsoft, Business Objects, RIM /BlackBerry, Intuit, Pervasive, Vineyarsoft, Palm

Channel strategy Worldwide – 32% of revenues from the channel and 68% direct: EMEA (Europe, Middle East and Africa) is 100% direct. Maximizer sells through 4 types of business partners: • Certified solution providers • Authorized sales agents • Certified consulting partners • Authorized resellers

Future development plans Launch version 9.5 of Maximizer Enterprise in Summer of 2006 Enhance portal functionality and deeper integration with Microsoft Office Release Windows 5 PDA application for Maximizer Enterprise CRM Build additional brand awareness and publicize customer successes


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Vendor Profiles


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Microsoft Business Solutions

Date Founded Microsoft Business Solutions established in 2002: MS CRM product launched in January 2003

HQ Locations Redmond, WA

International location(s) Worldwide

Vendor URL www.microsoft.com

Public/Private Public

Performance metrics Microsoft does not split out MS CRM revenues; however it does state that Microsoft Business Solutions (MBS) revenue for Q3 FY 2006 was $216 million; 21% growth y-y. Other MBS data points include: 300K customers Approximately 10K selling partners 58K registered ISV Partners Microsoft CRM specific metrics: Over 7,000 customers Over 180,000 users Over 1,500 partners Available in 22 languages

Target market(s) Small and medium businesses and divisions of large enterprises. Mid-market – 50 to 250 seats SMB sweet spot – 50 + seats

Delivery Options 90+% customer premise.

CRM Solution Description Microsoft offers a complete CRM suite that leverages the Microsoft platform, and includes marketing, sales and customer ser-vice. On-Premise Solutions: license + 1 year of SA • Small Business Edition (SBE): US $440-$499 per user; $528-$599 per

server • Professional Edition: US $622-$880 per user; $1244-$1761 per server

Hosted Solutions: flat rate and not time commitment Subscription Pricing (price to hosting partner): US $24.95 per month per subscriber wholesale pricing to service provider (service provider marks this up for end-user pricing).

Wireless Accessibility Microsoft CRM Mobile is available in all devices that run Windows Mobile.

Key Partners Over 1,500 active MS CRM partners worldwide including VAR, SI, Hoster, Reseller and ISV partners. Hosting partners include major telecoms in Europe and vendors such as Navisite, Streamline and EchoPass in the U.S. Total Microsoft Partner Program Numbers (Not CRM specific) WW US Gold 7,822 2,344 Certified 19,355 6,645 Registered 332,306 129,199 Total 359,483 138,188



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Vendor Profiles


Microsoft Business Solutions

Future development plans Planning for 90% growth rate in FY07 & FY08 Next major release (“Titan”); multi-tenancy, multi-currency, business

intelligence and reporting improvements, data management (update, purge, migration), improved integration and features with Office 2007

Roll MS CRM out in China with emphasis on hosting. Work with VARs and ISVs for industry specific solutions.

Channel strategy Partner-driven sales in SMB; primarily Microsoft-driven (and partner-assisted) sale in enterprise MS CRM Go-To-Market Resources include: • 100 sales specialist & technical sales specialists • 50 marketing program managers • 400 account teams covering over 10,000 accounts • 450 partner account manager


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Vendor Profiles


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NetSuite

Date Founded 1998

HQ Locations 2955 Campus Drive, Suite 100, San Mateo, CA 94403

International location(s) Ontario, Canada; Sydney, Australia/New Zealand; United King-dom; Singapore; Hong Kong; Tokyo, Japan

Vendor URL www.netsuite.com

Public/Private Private (Investors: Larry Ellison, StarVest Partners L.P., ADP and UBS). Approximately $100M in investments.

Performance metrics Turned cash-flow positive in February 2004 24 consecutive quarters of growth Over 7,500 customer accounts States average new deal size is about $30,000/year AMI estimates 2005 revenues of $45 million

Target market(s) Size: SMBs (Small=60%, Midsize=40%) Verticals: Wholesale/distributor, professional business services,

and Software companies Geographic markets: North America (90%), Europe (10%), and

APAC (less than 1%) Delivery Options 100% SaaS.

CRM Solution Description Solutions include CRM; order management and fulfillment; in-ventory management; finance; ecommerce and Website man-agement; and employee productivity. NetSuite: Flagship product integrates ERP, CRM, e-commerce

and partner collaboration capabilities. Designed for midsize companies (less than 500 employees). Pricing begins at $499/month plus $99/ user/month.

NetSuite Small Business: Designed for smaller businesses with under 20 employees, one complete application that inte-grates front and back office, managing sales, service, ac-counting and Web presence. Pricing begins at $99/month plus $49/user/month.

NetSuite CRM: Includes the traditional CRM capabilities needed to manage marketing through customer acquisition. Pricing begins at $79/user/ month.

NetSuite CRM+: NetSuite CRM plus order management, cross-sell/up-sell, incentive management, project tracking, ana-lytics, customer portal and partner management. Pricing begins at $129/user/month

Vertical Editions for: Services, Wholesale/Distribution, and Soft-ware Companies.

NetFlex platform: Enables customization and extension of NetSuite.

SuiteScript platform and toolset: JavaScript-based for flexi-ble business process customization.

Wireless Accessibility Working with two wireless solution vendors, but not yet publicly announced.

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Vendor Profiles


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NetSuite Key Partners Reseller/VAR program: 200+ VARs and boutique firms

such as Clifton Gunderson, (CPA and consulting firm), Sky-tek Corporation, Initiative One, LSTechnologies. NetSuite targets classic mid-market VARs, and large enterprise VARs that want to move into SMB. NetSuite pays active VARs re-curring revenue for the life of the contract (roughly 30-45% of service, depending on volume). Partner Referral program: for CPAs and other trusted advi-sors to small business. NetSuite pays referral partners a one-time fee based on the annual contract value.

Channel strategy Direct sales and VARs. Approximately 25% of sales through channels. Generates most direct sales via “friend referrals” and search engine placement. NetFlex and Suitescript help developers extend and custom-ize NetSuite solutions.

Future development plans Develop partnerships with payroll service providers. Add more vertical partners and NetSuite branded vertical

solutions. Finishing translation engine. Targeting early next year for

release of Chinese and Japanese translation capabili-ties. (currently available in 7 languages)

Expand channel program, especially in EMEA and APAC. “The Happiest Customers” program: Determine “happiest”

customers and analyze for patterns to refine marketing. Campaign more aggressively against salesforce.com to

boost consideration. Focus on providing more robust capabilities and partner ca-

pabilities

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Vendor Profiles


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RightNow

Date Founded 1997

HQ Locations 40 Enterprise Blvd. P.O. Box 9300 Bozeman, MT 59718-9300

International location(s) U.K., Germany, Australia, Japan

Vendor URL www.rightnow.com

Public/Private IPO in August 2004 (NASDAQ: RNOW)

Performance metrics 1,500 + customers Total revenue increased 41%, from $61.8 million in 2004 to

$87.1 million in 2005, 33 consecutive quarters of growth, with bookings growth of

40% in 2005 from 2004 and 71% in Q1'06 over Q1'05 Q1 2006: RightNow formed the backbone of more than 280

million customer interactions, an increase of 69% over Q1'05. We have now served a total of more than 1.8 billion customer interactions.

Target market(s) Small, medium and large enterprises 50% customers: less than $1B in revenue 41% customers: more than $1B in revenue 9% customers: government/education

Delivery Options Approx. 90% of new RightNow customers opt for hosted. Approx. 87% of all customers are hosted. Customers can move from hosted to on-premise, or vice-versa.

CRM Solution Description RightNow CRM 7.5: integrated CRM suite includes: • RightNow Service, multi-channel customer service and support • RightNow Sales, a sales force automation application • RightNow Marketing, a multi-channel marketing automa-tion application RightNow Voice, portfolio of voice-enabled CRM applications

Pricing based on modules, users and interactions. Customers can choose from monthly, term or perpetual license. Average selling price in Q1’06 was $140,000

Wireless Accessibility Wireless integration via professional services (e.g. send an alert to a Blackberry when an inquiry is created).

Key Partners Partners include: Convergys, West Corporation, ICT Group, Aspen Systems, KPN. SI partners include: Cambridge Technol-ogy Partners, RightAnswers, Sierra Atlantic, TLConsulting, Working Solutions. SI/VAR partners in EMEA include: Arragon, BT, Butcher Suter, CapGemini, Datapoint, Deloitte, Dimension Data, IMNET, Infoco/Unisys, KPN, Javelin Group, Lagan, Northgate, PA Consulting, Paul Eric, Pearson, Portals, Proff-com, Protein, SNT, Star, Steria, Syntegra, TietoEnator, TWA. In Japan, RightNow has an extensive reseller relationship with next COM. In New Zealand, RightNow has an extensive resel-ler relationship with Datamail.

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Vendor Profiles


RightNow Channel strategy No OEM partners, 90% direct; 10% indirect.

RightNow's Service & Referral Partner Program offers revenue opportunities for consultants, systems integrators and solutions providers interested in providing RightNow's solutions to their customers and/or providing complementary solutions and pro-fessional services to RightNow customers. Outsourced call centers can leverage RightNow solutions to provide higher-value, lower-cost customer care solutions to their clients.

Future development plans Continue to develop solutions that help companies deliver an improved customer experience while also reducing costs

Continue to develop close ties with call centers/contact centers to displace legacy vendors (90% of its revenue from call/contact centers)

Continue to invest in voice recognition technology and solu-tions.

Integrate Salenet into RightNow suite (recent acquisition)

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Vendor Profiles


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Sage

Date Founded 1981

HQ Locations Newcastle Upon Tyne, United Kingdom

International location(s) North America, South America, Australia, Spain, France and Ger-many

Vendor URL www.sage.com

Public/Private Public London Stock Exchange (LSE)

Performance metrics • 25 years of SME focus • 5.0 million SME customers • 50,000+ corporate CRM business customers • 23,000 application solution business partners • Sage Group FY05 Revenues: $1.4 Billion (14% Growth) • Sage Software (N.A.) FY05 Revenues: $584.7 Million (14% Growth; 41% of Global)

Target market(s) Businesses of all sizes Sweet spot, 1-1000 employees

Delivery Options 90+% customer premise.

CRM Solution Description The Sage CRM Solutions portfolio includes: ACT! by Sage Contact and customer management for individuals, small busi-nesses, functionally defined workgroups and divisions of larger companies. Sage CRM / SageCRM.com Out-of-the-box sales, marketing and support solutions; configur-able business process automation. Browser-based interface; avail-able via SaaS and on-premise models. Sage CRM SalesLogix Fully customizable development platform provides integrated sales, marketing and customer service automation solutions for moderate to highly complex organizations. Sage CRM SalesLogix ACT! by Sage $299 - $399 / User Sage CRM $595 - $795 / User SageCRM.com $69 / User / Month Sage CRM SalesLogix $995 - $1095 / User Sage Migrator: enables ACT! by Sage data migration to Sage CRM, SageCRM.com and Sage CRM SalesLogix. Also enables migration from Goldmine to all Sage CRM Solutions; other com-petitive migration paths are in development.

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Vendor Profiles


Sage

Wireless Accessibility Mobile synchronization to most handhelds as well as full CRM ap-plications on the Blackberry, Windows Mobile Pocket PC, and Win-dows SmartPhone devices. In addition to its own wireless technol-ogy development, Sage works with the Corum Mobile Platform to develop Sage CRM SalesLogix Mobile capabilities for Pocket PC and Blackberry and works with J2X to develop ACT! capabilities with Blackberry. ACT! Add-on solution with Sprint subscription service: $24.95/month, $239/year per user Sage CRM SalesLogix Mobile for Pocket PC, Blackberry, and SmartPhones: $395/year per user

Key Partners 23,000 certified Sage business partners worldwide; 60,000 consult-ants who refer CRM business from the accountancy world.

Channel strategy Sage sells through business partners. Sage believes that the mar-ket requires a high touch model and not just a technology enabled model. Many businesses do not have time or resources to become ‘experts’ in CRM and stop their day-to-day activities to concentrate on deploying a CRM solution. Views the strength of its channel model and its CRM Solutions business partners’ CRM expertise as a key differentiator.

Future development plans • Continue its migration strategy by adding additional competitive migrators to its Sage CRM Solutions product family. • Continue to offer purpose built, mature solutions that collec-tively cover the broadest addressable market.

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Vendor Profiles


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salesforce.com Date Founded 1999 HQ Locations San Francisco, CA International location(s) Worldwide Vendor URL www.salesforce.com Public/Private Public (NYSE: CRM) Performance metrics • 24,800 customers

• 501,000 subscribers • FY 2006 revenues of USD $309.9mil, up from FY2005: USD $176.4mil 1,300 employees

Target market(s) SMB (66% of business) to Large Enterprises: includes Business Services, Communications & Media, Distribution & retail, Education & Non-Profit, Energy, Financial Services, Healthcare, Technology, Manufacturing, Pharmaceuticals & Life Sciences, Real Estate, Travel & Transportation cos.

CRM Solution Description SaaS: Sales and partner relationship management, marketing auto-mation, service & support, analytics and data quality management. Enterprise Edition: For larger/more complex businesses. Supports multiple divisions and processes, workflow automation, product line forecasting, revenue allocation. $125/user/month.

Professional Edition: For companies of all sizes. Includes sales force automation, marketing automation, and customer service and support. $65/user/month.

Team Edition: For small business. Enables users to view, update and share information, activities and events in real time from any Internet-connected computer. $995 for up to 5 users/year.

Unlimited Edition: Offers greater access to AppExchange network of services, apps, tools and components, spanning CRM-related solutions to finance, HR and industry-specific applications.

CRM Editions: On-demand, Offline, Wireless, Offline PDA, Outlook, Office.

AppExchange on demand platform with over 350 AppExchange applications, 8,600+ installed applications and 122K+ test drive.

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Vendor Profiles


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salesforce.com

Wireless Accessibility Offline Edition – makes sales and customer information available on a disconnected laptop. When reconnected to the Internet, changes are updated. Offline PDA Edition – provides offline Salesforce access via Pocket PC or Palm OS device AppExchange Mobile – enables mobile access to Salesforce CRM or AppExhange apps from any mobile devices.

Key Partners Salesforce.com has more than 100 partners that distribute their applications on its AppExchange platform. Over 300 applications on offer on the applications exchange

Channel strategy • States sales are 100% direct, but often jointly sells with: • Solutions partners: for developers to create solutions around

the salesforce.com via Sforce Web services API., Sforce de-velopers, two-tier program.

• Consulting partners: partners trained and certified in imple-mentation best practices, and provide complementary techni-cal and business consulting services.

• Marketing & Referral Partners: introduce salesforce.com's in-dustry-leading CRM solutions to their customers and earn a percentage of revenues for referred accounts,

Future development plans • Continue its strategy of penetrating larger accounts, but main-tain its focus on the SMB market.

• Planning to achieve “The Billion Dollar Dream” • Improving its search platform for marketing using Google’s

search technology • Continue to expand internationally

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Vendor Profiles


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SugarCRM

Date Founded 2004

HQ Locations 10050 North Wolfe Road, SW2-130 Cupertino, CA 95014

International location(s) None

Vendor URL www.sugarcrm.com

Public/Private Private. Secured S Series A & B financing from Draper Fisher Jurvetson (DFJ). Secured Series Silicon Valley venture capital firm, Walden International. Raised $26M in funding

Performance metrics 70 employees 600 + customers in five quarters of selling Done 40 Salesforce.com replacements in the last year 120 + partners in more than 30 countries 1.5M downloads 14,000 + project members 4,500 + developers 40+ languages 200 + extension projects

Target market(s) "Companies of all sizes." 5 – 500 users is primary target, but divi-sions/departments of larger companies and government agencies are also target markets.

Delivery Options SaaS (approx. 40% of customers) On premise (approx. 50-55% of customers) Appliance (approx. 5% of customers)

CRM Solution Description CRM solution with distributed, open source (LAMP) product devel-opment or full source code availability for all products offered. Sugar On-Demand is the hosted version of the core CRM applica-tion, Sugar Professional. Sugar On-Demand offers all of the Sugar Sales Professional func-tionality, complete with online access to the full source code ena-bling solution customizations. • SugarOpen source –free, can only be used on premise. • SugarProfessional - $239/user /year on premise, $480/user/

year on demand • SugarEnterprise - $449/user/year on premise, $900/user/year

on demand

SugarForge: location to download new modules, power tools, lan-guage packs and more. All created by the Sugar Open Source community

Wireless Accessibility • Offline client synchronization, bi-directional synch with Sug-arEnterprise

• Working with SONA mobile for full wireless client user inter-face, will be available in a few months.

Key Partners 120 partners in more than 30 countries including U.S., Australia, Austria, Belgium, Brazil, Canada, Chile, France, Germany, Mexico, Netherlands, Romania, Spain, U.K.

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Vendor Profiles



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SugarCRM

Channel strategy Customers can purchase direct via SugarCRM Web site. Inside sales team answers pre-sales questions. Launched partner network 11/04. Focused on recruiting partners that: • Are more technically advanced/skilled • Share OSS strategic vision • Provide implementation, integration capabilities • Provide consulting capabilities • Sugar pays partners commission as percentage of sales. Developer Zone: helps developers customize SugarCRM, fix bugs, translate to other languages and/or add new features.

Future development plans • Focus on and refine current partner programs, recruit new partners, develop training and best practices programs to help them be successful.

• Reach out to different verticals in different ways: financial services, high tech and government

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Access Markets International (AMI) Partners, Inc., Company Profile

AMI-Partners specializes in IT, Internet, telecommunications and business services strategy, venture capital, and actionable market intelligence — focusing on global small and medium business (SMB) enterprises. The AMI-Partners mission is to empower clients for success with the highest quality data, business planning and “go-to-market” solutions. AMI was founded in 1996 under the name of Access Media International (USA), Inc. by Andy Bose, formerly a group vice president at IDC. Since its inception, the firm has built a world-class management team, each with ten to fifteen years’ experience in IT, telecom, online communications or multimedia. AMI-Partners has helped shape the go-to-market SMB strategies of more than 150 leading IT, Internet, telecommunications and business services companies over the last ten years. The firm is well known for its IT and Internet adoption-based segmentation of the SMB markets; its annual retainership services based on global SMB tracking surveys in more than 20 countries; and its proprietary database of SMBs and SMB channel partners in the Americas, Europe and Asia-Pacific. The firm invests significantly in collecting survey-based information from several thousand SMBs annually, and is considered the premier source for global SMB trends and analysis. For more information on AMI-Partners or our global SMB surveys, please visit www.ami-partners.com, e-mail [email protected] or call 212-944-5100.



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