New York (June 21, 2004) - Many accounting software vendors and resellers are finding that their customer relationship management products are either driving sales for other areas of their business, or representing a significant revenue stream in and of themselves.

This is a large transition from even a few years ago, when they primarily sold general ledger systems.

What has contributed to this growth, even though it has been a slow evolution, is that CRM, as small to midsized businesses and their accountants know, is becoming less of an acronym or a luxury item and more of a necessity for improving revenue.

A recent Yankee Group study showed that more businesses are recognizing that CRM is the best and most efficient way to access critical data about their customers, which is often locked away in back-office systems. Moreover, 72 percent of surveyed businesses felt that the systems that they had in place for retrieving “the right information at the right time” were inefficient.

In addition, Yankee Group research found that meticulous data-management technology and processes such as CRM are critical to a business’ success.
“The old issues are still very critical and businesses are waking up to CRM as the economy is improving,” said Sheryl Kingston, program manager with the Yankee Group’s CRM planning service. “These days, they are primarily focusing on improving revenue, and the way to do that is through satisfaction and customer service. That is the heart of CRM.”

CRM product vendors are well aware of the SMB situation and are responding in kind with additional features, ways to use their products, and their marketing, which has, in some cases, opened the door to sales of other products. Accpac CRM and its hosted cousin AccpacCRM.com are clear examples of this activity.

The products, now a part of the Best Software CRM family (which also consists of ACT! and SalesLogix), have enjoyed some added attention over the past year or so due in part to the fact that the products’ resellers have been able to show nascent users — primarily smaller businesses — what CRM is and can do in a low-cost, hosted environment.

What’s more is that, once customers realize that companies such as Accpac have more to offer than just CRM, additional revenue streams open. For the Accpac business unit of BestSoftware, CRM accounts for 30 percent of new customer sales, as they are buying more than one product, such as CRM and accounting or a point-of-sale product.

CRM driving diversity
“If you look at where the industry was even in recent history, all it sold was accounting products. We sell as much of our other products now as we do our accounting products, and CRM over the last couple of years has been the most visible driver,” said Craig Downing, vice president of product management at Accpac. “If you already have an accounting system it’s not all that compelling to change, some might say. The more compelling argument is integration, and that’s where a good CRM product comes in.”

Downing also noted that demand hasn’t exactly been product-driven, but need-driven, in that companies are finally figuring out what CRM is and how it can improve their business. And with a line of comparatively lower-cost products available to smaller and midsized businesses, the larger, once-prominent product makers are getting a run for their money.

“Two years ago, companies like Siebel would have never seen us or even someone like Salesforce.com as a competitor, and now that has changed,” Downing said. “We are seeing this activity among smaller businesses because companies are now taking a quick hit approach to how they pursue CRM. They want to solve a specific problem through a system; then, once that’s done, they will move on to another issue. It’s not just an enterprise-wide answer anymore.”

Many CRM product resellers like New York-based Net@Work are also experiencing growth in their overall business, which is credited directly to CRM. Even though the firm has been selling CRM products such as Best’s SalesLogix and Accpac CRM for some time, it has only been in recent history that CRM has accounted for a significant part of its business.

Co-president Alex Solomon admits that currently half of his firm’s business is directly related to CRM sales or because it is selling CRM.

“CRM is the most significant part of our overall strategy as it touches every part of our clients’ business. Clients come to us for business solutions, we make our recommendations,” Solomon said. “We do accounting, so we have to make sure integration with front and back office exists, but we also build online businesses, so we have to make sure that is integrated, too. We are all about upselling.”

Solomon’s sales team also uses AccpacCRM.com as a sales tool to introduce CRM to new clients and those that are relatively new to the concept. The product still has a 30-day free trial and it is hosted, so there are no license fees and customers can pay as they go. He also noted that some of his customers, once they get used to how CRM can work for them, take the option to switch over to the desktop version of Accpac CRM.

Those SMBs who do opt for purely hosted, or Web-based, versions of CRM products — mostly businesses with a mobile sales force or disparate businesses in general — can now look to a number of vendors.

Everyone jumps in
As recently as two years ago, there wasn’t nearly the selection of hosted CRM products. But due largely to the low cost of ownership of these hosted products, even large enterprise CRM players, such as Siebel, PeopleSoft and SAP, have their comparable offerings for the SMB market. This is in addition to the likes of Accpac, Salesforce.com and NetSuite — a company that began with one of the earliest hosted general ledger products and shortly added CRM and other business application products to its mix to offer users a full suite of features.

Even though NetSuite is unique in that it is a 100 percent hosted accounting, CRM, enterprise resource management and business intelligence package, the company is also seeing CRM as one of its most attractive and lucrative features.

“A higher percent of new customers come to us for CRM, but as soon as we get our dashboard in front of executives they know they want it and eventually they end up switching out their accounting systems and going with our suite,” said Mini Peris, director of CRM product management at NetSuite. “More of our user base is realizing that they do need to tie front to back to stay competitive. Even with just our CRM system, because of the back-office heritage you should still be able to take an order in CRM, regardless of what you do with the back-office system.”

NetSuite released NetCRM version 9.5 in February 2004 and plans to roll out version 10 later this summer.

Microsoft and its Business Solutions division have also made some aggressive moves in the CRM space. Since last year’s launch of its branded CRM product, nearly 1,800 businesses now use it and the company claims that it is closing in on 100,000 seats. Though MS CRM is only in version 1.2, MBS sees this product as a central part of its business.

“CRM is driving a lot of business, but it’s mostly due to collaboration. Our partners are doing a great job of delivering integrations,” said Holly Holt, group product manager for CRM at MBS. “CRM is definitely driving good [Small Business Server] business and good [Microsoft] Exchange business for the company. It’s pretty easy to generate a substantial return on investment with our CRM product. We have great ERP, but it’s tougher to calculate the return on investment on what a new GL gets you.”

Holt said that the company has been actively working on enhancements for version 1.2, since version 2.0 will not be released until this time next year. Some of the key enhancements to the current MS CRM product will be rolled out this summer in what the company is calling the Version 1.2 Feature Pack. This will contain, among other things, specific abilities for the mobile work force, including synching data from mobile devices with Outlook and enhanced Microsoft Office integration.

MBS Inner Circle partners, such as Atlanta-based IBIS Inc., suggested many of the new enhancements to MS CRM. Firm president Andy Vabulas describes MS CRM as “the greatest door-opener product” he has ever worked with, in that, unlike simply selling general ledger systems, selling and consulting on CRM has opened up sales and consulting opportunities for other Microsoft products, such as SQL Server, Exchange and its ERP products.

“It’s so easy to get into a deal when you talk about ways you help businesses improve. It’s a lot better than going in and just saying, ‘How is your general ledger or your e-mail server?’” Vabulas said. “Whatever business you are in, you can’t be competitive anymore without CRM.”