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Squeezing CRM into the mid-market

Where do resellers fit in?

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Quocirca's changing channels For the last few years, the mid-market, in the minds of applications vendors, has been ripe for improving the way they manage their customer relationships. Given the growth rate of some CRM vendors targeting this market, they may have a point. For a reseller looking to expand their portfolio to include a CRM offering, the range of choice is complex - where do you start?

For the press at least, the highest profile vendor has been salesforce.com, still small but with a loud voice. Its model of providing a wide ranging and customisable CRM solution hosted out of its own data centres using pooled hardware resources (multi-tenancy) is proving popular. It has seen a 60 per cent increase in customers during 2004 and the strong growth continues. The trouble for resellers is that salesforce.com is keeping this all to itself and only selling directly - something it will have to change if it wants to reach all corners of the mid-market.

Don't despair if your customers are crying out for such easy to manage, off-premise solutions - there are more out there. Other specialist hosted vendors who offer a similar capability to salesforce.com - RightNow and NetSuite - are doing alright and both work with the channel. Even Siebel, the once darling of the CRM market, now limping along following the collapse of the corporate CRM market, grumbling from its shareholders and the decamping of many of its employees to salesforce.com, has developed a hosted offering for the mid-market through multiple acquisitions and a lot of re-coding.

If you or your customers consider that this hosting business is just too risky, then you could look to Siebel's on-premise solution. But actually your choices open up even further here. The two giants of the business applications market - SAP and Oracle - both have mid-market offerings, but neither vendor has ever really mastered the channel and found a successful route through to the wider mid-market (apart from SAP in Germany).

Microsoft is the one vendor that resellers are increasingly looking to for an on-premise CRM solution. This may s0eem strange as its loss making Business Solutions division (MBS) has a CRM product of pretty limited functionality. But for many this is not the point - the product is good enough and Microsoft has the financial muscle to stay in the game while others flounder. Indeed, Microsoft is likely to hasten the demise of some of the established mid-market players. Some like Onyx and Pivotal are already struggling, but others like Sage and FrontRange continue to thrive, and like Microsoft they rely on the channel to reach the mid-market.

But Microsoft's long-term dominance of this market is not guaranteed. If the whole mid-market decided to go down the hosted route tomorrow MBS would be dead in the water. Its CRM and other applications are unsuited for multi-tenancy hosted delivery and Microsoft has no real current strategy for changing this.

The mid-market for CRM is a complex place for resellers, but a fascinating one for analysts. Watch this space.

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