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A Winning Combination: Software-as-Services Plus Business Consulting and Process Services
By Laurie McCabe
January 30, 2004
Customer Relationship Management (CRM) Application Service Provider Salesnet likens its service to a global positioning system (GPS) for Sales Representatives. Where other online CRM providers give you the high-level landmarks you’re going to pass, Salesnet will fill in the blanks in between.
“With a GPS system, even if you take a detour, it will re-plan how to get you to your destination on the fly. A GPS gives you the granularity of the streets you’re driving down,” explains Dan Starr, Salesnet’s Chief Marketing Officer. “Our secret ingredient is our patent-pending workflow technology that underpins our process engine, which companies use to implement a selling methodology or selling best practices. It guides and tracks the sales guys, helps them ramp up more effectively and helps them follow best practices.”
While other mid-market CRM vendors like NetSuite and Salesforce.com have focused on combining CRM with ERP and other functions into a suite, Salesnet has chosen to focus primarily on the sales piece of CRM, focusing on making sales organizations more effective.
“Not just efficient, but more effective in how they conduct their business,” says Starr. “We’ve put all our development into blowing out a system that is deeper than any other for sales guys. Other systems focus on sales efficiency, so they make you really productive at making the same mistakes you’ve always made. We focus on sales force effectiveness — making you sell better than you could before.”
Starr points out that in a typical sales team, the top-performing 20 percent of representatives bring in 70 to 80 percent of revenue. Managers needn’t worry about them, since they are already doing their job well. The bottom 20 percent don’t merit much attention either, since most of them are not likely to still be working there next quarter. That leaves the remaining 60 percent as the best place for a company to focus its energy.
“It’s the middle 60 percent of your sales team you really care about. If you can make them 10 or 15 percent more effective, then that would really affect the top line of your business,” Starr says. “What Salesnet does is provide a best-practice guide so that those middle 60 percent can perform more like the top 20 percent. It allows new reps to ramp up more quickly when you do roll out that bottom 20 percent, and it allows the guys in the middle to act more like the top 20 percent.”
Built for Software Users, Not Software Buyers
One way Salesnet has found success is by targeting its software development efforts on things that will help the users of the software, rather than the buyers of the software, Starr says. Client-server systems, which are typically sold to sales managers, focus on forecasting and reporting — things which are useful to sales managers. While this approach may make it easier to make a sale, if the product doesn’t deliver enough value to the users — the sales reps — they’re not going to use it, he says.
“So they end up using a stick rather than a carrot,” says Starr, with managers threatening sales reps that their commissions will be withheld unless they use the client-server CRM software. “So the reps use it begrudgingly as an administration tool they have to pound their data into every night so their manager knows what they’re doing. But they still sand-bag, and they only put the data in that they know is likely to close, so their manager isn’t on their back.”
Salesnet has attempted to make its solution very different from that image, choosing to craft the software as an assistant for the sales reps, providing workflow to guide and track their accounts. “It prompts them what to do, it helps them ramp up more quickly, it tells them when they should be calling clients,” says Starr. “Which means they actually want to use it. And because they want to use it, the data is good. Because the data is good, the manager gets his forecasting and pipeline.”
This approach generally appeals to larger companies, who understand the value of standardized processes to their business, he says.
“We provide this blueprint for best practices in a company through our workflow engine. Generally the larger companies get that; they understand it, they’re very process-centric. They understand that the way to scale and grow is to have a repeatable process.”
Smaller companies, who have been using contact management software and are simply looking to take the next step up by moving their CRM to a hosted model to connect all their contacts together across their sales force. generally turn to other ASPs in the space, Starr says.
“The problem with those products is that they don’t really have this notion of workflow. In some of the smaller accounts, their product may be more attractive, because these guys generally don’t understand that to grow you need to have a scalable repeatable process. Those companies that do, like start-ups, actually do get it, and they tend to pick us.”
Because Salesnet has many enterprise and mid-market customers, they’ve often found their product dropped into an environment where there are legacy systems, which need to share data. Maybe it’s an ERP system for looking at inventory, a billing system, or call center system. Larger enterprise companies will use Salesnet’s Web services interfaces and APIs to plumb Salesnet’s system into the back end of their systems.
Midmarket companies, who generally don’t have a large IT team, will usually look for someone to come in and do integration for them. “We looked around at the way it was being done, and the way we found it was being tackled in the industry was the way it’s always been tackled, and the way that client-server, licensed software vendors had approached it,” says Starr. “A truckload of consultants come in, they engage someone who wants $50,000 to write this thing, there’s an upfront license cost from the integration vendor and then an ongoing maintenance. Every time you rev one of those products, you’ve got to bring back the truckload of consultants. That’s the way the licensed software vendors have done it for years.”
Integration for the Modern Age
To address this need for integration in a way that better fit in with Salesnet’s ASP philosophy, Salesnet turned to AptSoft for an “integration-as-a-service” approach. AptSoft has developed more than 200 pre-built integration adapters for enterprise software applications. Each of those adapters exposes the underlying data structures of each system, with a master interface which the customer’s IT department uses to connect together the contact field of one data source with the contact field of the other data source, and configure the adapter with simple rules.
“We felt that what was happening was completely opposite to the approach we were trying to deliver with an ASP,” Starr says. “So when we were looking at how we were going to crack this nut, we wanted to find a vendor that had unique technology that was configurable by clicks, not code, and a business model that would allow people to buy it like a service. That’s really the relationship we put together with AptSoft.”
AptSoft’s solution has a setup fee of a few thousand dollars, and it’s usually up and running within a week. Customers then pay a per-user license fee, just as they do for an ASP product, Starr says. “What it means is companies that are paying $65 or $75 a month for an online CRM system don’t have to suddenly find themselves $100,000 to go and integrate this thing.”
Because AptSoft has 200 pre-built adapters sitting on the shelf, there’s a good likelihood that the system the customer needs to integrate will be one of those. If it isn’t, then AptSoft will create a new adapter within two weeks, at no extra charge. Theoretically, a company could buy this integration and then turn it off after two weeks, and AptSoft will never have made its money, because the ASP model builds over time. Starr says this isn’t likely, since the addition of the AptSoft integration makes Salesnet even more valuable to the customer.
“At the end of the day, it makes the CRM solution more sticky, it makes it more valuable, it delivers more business value. So AptSoft don’t feel in their agreement with us that they need to sell licensed software. They don’t need to sell it up front, they understand the model and they fully embrace it,” he says.
The integration is generally done with an ERP or call center system, but it could be done with a billing system, a product configurator or any number of systems. In some places, it can be 3- or 4-way connections, with the adapter brokering all the updates and synchronization of multiple systems, Starr says.
While people would generally think of an online CRM product like Salesnet as a displacement technology, Starr says that’s not the case. “We’ve also been used where CRM has failed, but they can’t throw it out because there’s too much skin in the game. They’ll drop in this integration to make a client-server work with an online front end, and this works very well in that environment.”
CRM Need Not Be Scary
Horror stories of failed CRM implementations abound. If client-server CRM is being deployed in a 12-month implementation, it’s possible for the Sales executive who ordered the software to be fired before the implementation is complete.
“Chances are it was brought in to fix a sales problem, and there’s only so long a company will put up with a VP of Sales not bringing in the deals every quarter. The time it takes to put a client-server CRM solution in place usually means that the guy who brought the system in has probably lost his job in a year’s time because it didn’t get in quick enough to affect the numbers,” Starr says.
“People are very nervous about these long implementations, so in some cases we’re dropped in as a stopgap to bridge the time between when a Siebel will get deployed and a need they have now. We find that we rarely get displaced, because they’re happy with the product, and it meets with their cost model. And this solution is very sticky with the sales guys. They don’t give it up once they have it.”
AptSoft plays very well in that kind of situation too, Starr says. Especially in cases where Salesnet is being dropped in as a stopgap or as a front end for another CRM implementation, there is not a lot of money available for integration. “If it’s only going to be in for a year, they’re not going to invest $100,000 for integration. They want integration that’s going to cost them a few dollars a month, just like the rest of the ASP, so they can turn it off,” Starr says.
Salesnet offers solutions for all levels of customers, from small workgroups to large enterprises. Like other ASPs in the space, Salesnet’s solutions are all based on a single product architecture. As a customer moves up from Salesnet Express to Salesnet Standard and Salesnet Enterprise, the only change is which features are turned on or off on the back end. There is never a need to migrate data or learn to use a new application. This approach also makes it very scalable for Salesnet, very easy to deploy, and very easy for clients to consume, Starr says.
Salesnet Express, a small business product, starts at $15 per user per month. Salesnet Standard is $65 per user per month and Salesnet Extended, the enterprise product, costs $99 per user per month.
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