NEWS	Week's Top News | Alliances | Business/Finance Product Launches | Trends

November 16, 2000

Competition among Internet-based ASPs offering sales force automation (SFA) and customer relationship management (CRM) applications has been intense. With some vendors now pulling back from the market, are we seeing a shakeout in the sector? Well, it's hard to tell since it depends on who's doing the talking.

Interact Commerce Corp, the maker of ACT! and SalesLogix software, announced Oct 23rd the closure of its SFA portal, interact.com, incurring a $10m write-off. Meanwhile, top enterprise CRM vendor Siebel Systems has decided to pull its Sales.com offering back inside the company, reversing the spin-off initiated last year.

But contradicting these events, claims of large customer gains by other players suggest the market is responding very favorably to ASP-delivered CRM/SFA solutions.

Take Upshot.com for example.

According to Keith Raffel, UpShot's founder and chairman, the company is very healthy and growing by leaps and bounds. Charging $55 per user, per month (PUPM), UpShot is experiencing paying customer growth of 20 percent per month.

SalesForce.com is another pure-play SFA ASP announcing huge customer gains. At $50 PUPM, SalesForce.com has signed 1,200 paying customers in eight months. This works out to 150 new customers per month. The company also recently announced a deal with Yahoo! to provide SFA applications for Yahoo!'s small business portal.

Marc Benioff, the company's founder, told ASPnews that SalesForce has 20,000 organizations engaged in free trials. He also said that, by end of Q1 2001, the company will be offering a complete ASP delivered CRM solution to its clients.

Luring clients

Oracle's free ASP SFA offering, OracleSalesOnline, has, according to the company, attracted 6,000 users. But Oracle is taking some criticism for offering a free service intended to lure clients in to become upselling fodder for its enterprise-level CRM application. That CRM product, say analysts, is not selling very well.

According to a Sep 14th report by analyst group Gartner, out of the over 700 CRM customer shipments Oracle claims to have made worldwide, Gartner "found less than 100 clients worldwide in production ... By giving away its software, the numbers game becomes easier to defend."

But, even with all the company announcements, other evidence points to a less than willing marketplace.

Interact's portal was launched as a separate brand in August to support the company's widely used ACT! contact management program. Even so, it proved too costly to maintain as a separate brand, Michael Simpson, Interact's chief marketing officer told ASPnews. That is why it was pulled back and now is offered only as an ancillary service within the ACT! desktop program.

Instead, Interact will rely on the six ASP solution providers in its channel and a network of 500 value added resellers to move its Saleslogix CRM package as an ASP hosted offering, Simpson told ASPnews.

"They're in a better position to be an ASP than the software vendor," he said.

Oracle's VP of CRM online services, Jesper Andersen, confirmed OracleSalesOnline is not intended to make money but to attract customers to the company's enterprise level CRM modules.

"Right now we're not making a penny. Obviously, we hope to upsell various fee-based services," Andersen told ASPnews. "Oracle is not a charity. (OracleSalesOnline) is to take mind share away from Siebel and SalesForce."

Customer confusion

Amy Levy, an ASP industry analyst with Summit Strategies in Boston, adds yet another level of speculation to the mix by pointing out that customers are confused and therefore not lining up to sign on for ASP delivered CRM/SFA services.

"Most ASPs that are targeting the small-to-medium sized business market — they really need to have CRM/SFA as an initial offering to get in the door," Levy said. "The problem is there is so much confusion in the market. People that operate day-to-day (in the market) have trouble keeping track of what's going on in the industry."

UpShot and SalesForce, which never existed before the Internet, for example, are being lumped together with older bricks-and-mortar companies like Oracle and Siebel. This makes it hard to define each company's offerings in light of its competition, she said.

"That's what's fueling, at least among the analysts, (the speculation) why the market is not taking off," she said.

Another level of speculation is added by players debating the best business model for the job.

"ASP models going forward will be merely packaging options for leading brands," said Interact's Simpson. "That will be the shakeout. It's just like ordering Chinese food, I can order it take-out, delivery or I can go to the restaurant. I think ASP for the sake of ASP will go away."

Upshot's Raffel, however, sees things a bit differently.

"Can the client server model survive? I think it's very difficult as technology moves from one phase to another for companies to eat their young, to cannibalize their core business," Raffel told ASPnews. His argument is that software powerhouses such as Siebel and Oracle won't give their online ventures the free rein they need to grow and thrive.

Raffel believes UpShot's success comes from the fact it is a URL. It succeeds with speedy implementation time, lower cost, and by meeting the stripped-down needs of mid-market sales managers.

"We can get a company up and running much faster than the dinosaurs can," he said. "We are lowering total cost of ownership by 90 percent."

Oracle's Andersen believes that ASP will eventually be the delivery model of choice. But he added that, without enterprise-level functionality, dot-com only offerings like UpShot and SalesForce may disappear.

"That's basically why life as a niche player is hard," he said.

Tools:

Add aspnews.com to your favorites Add aspnews.com to your browser search box IE 7 | Firefox 2.0 | Firefox 1.5.x

Back to News Trends