|
|
|
|
| Farming out CRM |
| 02-14-2003 |
Weighing the possibilities
Analyst Erin Kinikin, vice president of CRM at Giga Information Group in Santa Clara, Calif., says that outsourcing CRM applications makes sense for midmarket companies that can use a service such as Salesforce.com, or for companies where CRM is not a high enough priority to be done in-house.
Outsourcing also makes sense for fully mature applications, which are not likely to need a lot of revisions, Kinikin says. But "the thing is, nobody's CRM system is so mature that they don't change and just have to be run," Kinikin says.
"People are still trying to figure out what managing customers means to managing their business. The downside of outsourcing is you lose that control and flexibility to make changes," she adds.
Although outsourcing can offer benefits in deployment time, costs, and even in security, because application hosts have the latest equipment on hand, the concept may not work for everyone.
"[Outsourcing CRM] would not be a good option for a customer who has very specific and very complex application-modification requirements with multiple integrators involved in delivering the modifications," Siebel's Pournader adds.
Outsourced CRM costs will vary depending on each company's needs, notes Paul Rodwick, vice president of market development and strategy at CRM vendor E.piphany, also in San Mateo. The majority of clients still prefer in-house hosted CRM deployments because they provide some feeling of control, he says.
"Some people feel that their customer data is their most valuable asset, so companies are reluctant to let that outside their firewall," Rodwick says.
Denis Pombriant, research director at Aberdeen Group in Boston, says that although outsourcing is useful in certain situations, "there will always be good reasons to go in-house," such as security concerns when sharing data outside the company firewall.
Nevertheless, Pombriant notes that "a lot of ASP vendors have better security systems than many enterprise datacenters have."
According to Sanjay Kaytal, vice president of marketing at PeopleSoft eCenter, the oft-cited disadvantages to outsourcing CRM, such as loss of data control and security, are no longer an issue, given the technologies now available to CRM hosts.
"Those were perceived to be big impediments two or three years back. That's not the case anymore," Kaytal explains.
The terrorist incidents of Sept. 11 and spate of recent computer viruses awakened customers to the fact that their data is vulnerable, and an outsourcer can provide data protection, Kaytal stressed. PeopleSoft, for example, has three levels of redundancy at its Pleasanton, Calif.-based eCenter facility.
Dallas-based Carreker, which provides consulting and software for the financial services industry, is having its PeopleSoft 8 CRM applications hosted via PeopleSoft's eCenter application outsourcing program.
"The cost of going with an outsourcing partner is less because you don't have to go out and invest up-front," in training, testing, and development, says Lori Faris, senior vice president at Carreker.
At Carreker, a hosted Web page gives customers and employees access to information; PeopleSoft is providing application and database support, disaster recovery and maintenance, and developmental support.
"The long-term [goal] is to implement a customer portal so customers can log their own service requests," Faris adds.
Jumping on the bandwagon
A wide variety of vendors are jumping on the outsourced CRM service bandwagon, including IT services companies such as IBM and PricewaterhouseCoopers. Additionally, San Francisco-based Salesforce.com hosts its Web-accessible CRM and SFA applications and expects to do $50 million in business this year, according to President and CEO Marc Benioff.
"The No. 1 reason why customers are choosing us is because [Salesforce's Web-hosted CRM paradigm] is the end of software as we know it," Benioff says. "The Internet changes everything."
Types of hosted CRM available range from those offered by companies such as Salesforce.com, which gives clients Web-based access to Salesforce.com's own applications, to IBM providing outsourced services for another vendor's software or PeopleSoft providing hosted services for its own software.
"We've been doing [CRM outsourcing] for quite a while, since May of 1998," eGain's Poffenroth explains. "I felt that eGain should really be agnostic about how the product is deployed," be it internally at customer sites or via a hosting arrangement.
Outsourcing accounts for about 20 percent to 25 percent of eGain's revenue. Company offerings have evolved from e-mail management and supporting e-commerce customers into a full suite of services for enterprise customers.
eGain has three datacenters in the United States, with redundant routers, firewalls, intrusion detection, and monitoring, Poffenroth notes. The average monthly hosting fee at eGain ranges from $7,000 to $20,000, depending on the number of applications.
Via a number of datacenters, IBM also provides CRM hosting services based on a variety of packaged solutions from companies such as Siebel. Services include legacy data integration and hosting, including the use of industry-based templates. Big Blue can also provide call-center services through partnerships.
"Beyond the cost savings, beyond the cutting time to market, we can help customers transform their business" through CRM deployment, says Joe Ragusa, vice president of transformational outsourcing at IBM Global Services in Somers, N.Y.
But no matter which form of outsourced CRM is selected, making sure the customer and the CRM host are on the right page is critical for success, Ragusa adds.
"I think that the challenge really becomes in defining an agreement with the customer and really making sure you're focused on the right business issues," Ragusa says.
Source: Techieindex Team
|
|
|
|
|
|
|
|
|
