If you receive errors when attempting to view this white paper, please install the latest version of
Adobe Reader.
"NetSuite CRM+ offers powerful
customer relationship management (CRM) with sales force and marketing automation, built-in order management, customer service and support, incentive compensation management and analytics."
Source : NetSuite
How to Choose a Hosted CRM Application for SMBs
Hosted CRM is also known as:
Hosted CRM Software,
Hosted CRM Solutions,
Hosted CRM Service,
Hosted-CRM Market,
Hosted CRM Revenues,
Hosted CRM Vendor,
Hosted CRM Implementations,
CRM Software,
CRM Solutions,
CRM on Demand,
Small Business CRM,
CRM Application Enterprises,
CRM Data,
Web-based CRM Application,
CRM Application Strategy,
CRM Service Management,
CRM Application Implementation,
CRM Success Strategies,
CRM System,
CRM Application Integration,
Hosted CRM,
CRM Hosting,
CRM Web Services,
CRM Business Technology,
Customer Relationship Management.
This AberdeenGroup Executive White Paper focuses on the business value
of front-to-back office integration for small and mid-market companies as
well as the role of Software-as-a-Service in enhancing that value.
AberdeenGroup field research conducted for this paper concludes that
small and mid-market companies will soon find they have outgrown their
sales-focused CRM applications and will require more robust solutions to
fully integrate pre-sales information with customer data contained in their
transactional systems.
After reading this Executive White Paper, please contact NetSuite at
1-877-NETSUITE to learn how thousands of customers have enhanced
their bottom line by using one complete, on-demand system to manage
their entire company.
Market Event
SAP and NetSuite made significant announcements regarding increased offerings and
sophistication provided by their SaaS Customer Relationship Management (CRM) solutions this
month. Driven by end-user demand, mid-market CRM applications, such as those offered by
Maximizer, NetSuite, Sage Software, Salesforce.com and SAP, are gaining in sophistication.
While virtually all on-demand CRM vendors provide features to support sales force automation,
marketing campaign management and/or customer service, providing front-to-back office
integration has become a clear differentiator in vendor selection.
Aberdeen Analysis
It’s No Longer About the Delivery Model:
On-demand CRM solutions have been around since the mid-nineties. In fact, my third CRM
implementation, (for a 125 person start-up) was an on-demand application which went out of
business in 2002. Since then, acceptance of SaaS CRM has reached a point where the delivery
model is no longer an issue. Competition for market-share in the mid-market CRM space has
sizzled of late, with each vendor articulating their unique business value. In general, on-demand /
SaaS delivery models will deliver quick ROI in terms of:
- Ease of use
- Rapid deployment
- Simplified configuration & customization tools
- Low cost of entry & ownership
However, these models are at risk of becoming another commodity. End-users quickly realize that
business needs of growing organizations cannot be met without significant custom integration
services that enable:
- Visibility across customers, products, partners & channels
- Front-to-back office integration for operational decision-support
- Multi-channel customer interactions
- Pricing & availability
- Order management & transaction processing
Upcoming Research
Customer Data Management: How Leaders Attain Tangible ROI
Figure 1: Use of CRM Functionality
Aberdeen believes early adopters will soon find they have outgrown their sales-focused CRM
applications and will require more robust solutions to fully integrate customer data contained in their transactional (ERP) systems. (See SAP CRM On-Demand, February 2006) This evolution
towards building a culture of customer-centricity is driven by customer expectations for a more
personalized purchasing experience. (See CMO’s Strategic Agenda, December, 2005).
Companies focused on retaining their most profitable customers will be the first to invest in
resources, services and technologies that support customer-centric initiatives. Integrating customer
data to provide both operational and strategic decision-support to those in customer-facing roles
has been shown to positively impact performance in key metrics: annual revenues, customer
retention and customer acquisition rates. (See Customer Intelligence: Converting Data to Profits
Benchmark Report, December 2005)
Where’s the Business Value?
SAP and Sage CRM solutions both offer hybrid mid-market CRM models, providing customers
freedom of choice as well as a clear migration path. End-users that require a rapid initial
deployment, and intend to migrate to an on-premise CRM solution to manage the customer
lifecycle comprehensively—from contact to lead to order through delivery—will find value in this
delivery model. Although both companies offer similar migration options, SAP will continue to
focus its CRM efforts on the MME and large enterprise markets.
While Maximizer and Sage CRM Solutions both offer stand-alone CRM applications, the
companies rely on a network of indirect channel partners to configure, integrate, and deploy the
software. Sage offers rapid CRM integration (less than 3 days) through its Accpac Pro and
Advantage Series ERP systems. Conversely, Maximizer’s Enterprise Edition provides a toolkit
for integration with standard ERP/Financial applications such as Great Plains as well as out-ofthe-
box integration with QuickBooks.
Beyond the easy to use features and intuitive user interface, significant value in the form of
business process workflow is provided through the companies’ value-added resellers (VAR’s).
(See Conferon Global Services: Front-to-Back Office Integration through Enterprise CRM,
March 2006 and Ipsos-Reid: Mergers, Acquisitions and the Single View of the Customer, July
2006). Maximizer and Sage each have a solid track record of satisfied customers in the SME and
MME markets.
NetSuite offers a fully integrated suite of functionality that includes: CRM, Accounting/ERP, and
E-commerce. Product-based companies in wholesale/distribution, online retail, business services,
and hi-tech industries, have adopted NetSuite for its robust functionality and tight integration of
customer transaction data with:
- Order Management
- Multi-product inventory management
- Demand planning / Safety Stock
- Partner relationship management
NetSuite’s strength is in front office features to support sales force automation, marketing
campaign planning and execution, and customer service processes. Growing organizations that
seek one-stop shopping and low cost of ownership for an on-demand solution should evaluate
NetSuite.
Salesforce.com, an early success story in the SME and MME space may have reached a market
maturation / saturation point. In relying on AppExchange partners to provide functionality the
company does not plan to develop in-house, Salesforce has created unnecessary complexity and a
certain amount of instability in its go-to-market strategy. For example, in providing integration
between Salesforce.com and SAP’s ERP applications through AppExchange partners—Above All
Software, Bluewolf, Bridgewerx, CastIron Systems, Integration Technologies and Pervasive
Software—SFDC maintains it will provide business value. However, not all this business value
will necessarily benefit end-users. Our assessment is that this will:
- Allow current SAP ERP customers the option to select SFDC over SAP
- Increase customer confusion regarding benefits and drawbacks of AppExchange
- Provide AppExchange vendors with new customers
As with all on-demand CRM vendors, SFDC license model is based a on a monthly, per user fee.
Companies should be aware that each ISV generated license will be based on a per monthly user
fee on top of the SFDC fee. End-users should evaluate their total cost of ownership based on
bundled license models.
CRM Analytics: Operational vs. Predictive?
Operational reporting using either front-office customer data or a combination of front and back
office information provides decision support based on current or historical data. Predictive
analytics utilizes both front office (interactional) and back-office (transactional) data to “predict”
certain forward-looking customer behaviors or propensity to purchase products and services. In
short, operational business intelligence is derived from analytical reporting performed on data
stored within CRM, SCM, or ERP systems. Predictive analytics is often used to plan marketing campaigns, create rules-based customer interactions, assess risk, and/or determine retail store
locations. Business intelligence and analytics tools use customer information stored within CRM
applications to perform predictive analytics; however predictive analytics cannot be run from
within a CRM system.
Table 1: CRM Analytics: Operational vs. Predictive
| Operational Reporting |
Predictive Analytics |
| Customer Profitability |
Customer Scoring / Profiling |
| Sales Performance |
Regression Modeling |
| Market Segmentation |
Event / Rules-based Interactions |
Source: AberdeenGroup, June 2006
All of the vendors mentioned enable end-users to run operational reports for sales, marketing and/or
customer service analytics. Sales analytics might include pipeline forecasts, opportunity
management, and win/loss metrics. Marketers use CRM to perform customer segmentation and/or
ROI assessments on marketing campaigns. Conversely, customer service analytics are used to
track call time resolution, product quality issues or case management.
Both NetSuite and SAP currently offer more advanced analytics functionality. NetSuite’s
integrated multi-channel approach provides a robust data-mart of information upon which to run
operational reports comprised of both front and back office data. Decision-support for corporate
performance management is provided through dashboards detailing individual customers,
employee, team, and/or corporate KPI’s.
MySAP CRM (on-premise), in conjunction with the NetWeaver platform, allows end-users to run
both operational and predictive analytic reports utilizing front and back office information. Endusers
running the hybrid SAP CRM 2006s will have access to this functionality.
Capitalizing on the Front-to-Back Office Advantage:
Competition and consolidation in Mid-market CRM applications has increased considerably in the
last year and will continue to grow. In May 2006, RightNow Technologies acquired SalesNet,
SSA Global acquired Epiphany, and Infor subsequently acquired SSA. Additionally, CDC
recently made two unsuccessful attempts to acquire Onyx Software before Made2Manage
announced its intention to acquire this stand-alone CRM vendor. To date, current and potential
Onyx customers should question the viability of their vendor, given CDC’s third attempt to
acquire Onyx this week.
Decision-makers should give high priority consideration to vendor viability and should perform an
internal review of corporate goals, plans for growth, and existing infrastructures. Moreover, each
company should assess its visibility requirements for access to customer, product, or partner
information by department, role and function. End-users should evaluate vendors critically, and
move beyond the marketing hype to understand the true cost of entry and ownership
Table 2: Evaluation Criteria for Mid-Market CRM: Front-to-Back Office Advantage
| Business Requirements |
Deployment / Integration |
Costs |
| User Access: mobile, remote, onpremise or all? |
Is the system scalable? |
Option to add users as needed and/or migrate to more robust offering? |
| Self-contained system or will integration with SCM, ERP, and/or Financial systems be required? |
Pre-packaged API’s included or custom integration require? Timeframe? |
Cost of configuration,integration and training? |
| Are pre-built analytical reports and/or domain-specific business process templates available? |
Are LOB users able to select and configure using these tools? |
How intuitive are these tools? Will additional training be required? |
| Will custom configuration be required given our business model? |
Who is qualified to configure, integrate and/or deploy systems— vendor, partners, IT resources? |
What will on-going training, support & maintenance cost? |
Source: AberdeenGroup, June 2006
In a competitive global economy, organizations that focus on understanding and serving
customers sustain a clear advantage. Consider vendors that provide greater visibility and
operational decision-support in regards to customer, partner or supplier needs. The delivery model
is no longer a primary consideration.
End-users who wish to contact me for further input into their decision-making process should
email me at the address listed below.
Founded in 1988, AberdeenGroup is the technology- driven research destination of choice for the global business executive.
AberdeenGroup has over 100,000 research members in over 36 countries around the world that both participate in and direct the most
comprehensive technology-driven value chain research in the market. Through its continued fact-based research, benchmarking, and
actionable analysis, AberdeenGroup offers global business and technology executives a unique mix of actionable research, KPIs, tools,
and services.
This document is the result of research performed by AberdeenGroup. AberdeenGroup believes its findings are objective and represent
the best analysis available at the time of publication. Unless otherwise noted, the entire contents of this publication are copyrighted by
AberdeenGroup, Inc. and may not be reproduced, stored in a retrieval system, or transmitted in any form or by any means without prior
written consent by AberdeenGroup, Inc.