Headline Feeds
I had meetings last week with each of the big three on-demand CRM vendors -- Salesforce.com (NYSE: CRM), RightNow (Nasdaq: RNOW) and NetSuite -- and made some observations. Sometimes I get complaints from some of them when I mention more than one in an article because they like to pretend that they are unique. My grudging conclusion after my meetings is that maybe they are right. Let me elaborate.
While it is an objective fact that each is in the CRM business and that each delivers its solutions on-demand (for the most part), it is amazing how little overlap there is today between them.
That's not to say that customers don't short-list some or all of them, which results in head-to-head competition -- I have even seen companies that use two or three of these solutions in concert. So, it is interesting that each company has managed to build a position for itself that is, if not perfectly unassailable, at least firmly defensible.
Service and Support
RightNow is perhaps the least pure play SaaS (Software as a Service) offering because it offers traditional and on-demand deployments. It also gives the customer control over when to go live with a new release and will even support back releases of their products if that's what customers want.It is also fair to say that RightNow is also not on the platform bandwagon, meaning that it doesn't see itself following Salesforce's lead any time soon; however, it does place a good deal of emphasis on integration.
Since RightNow's calling card is its on-demand call center, it makes sense that integration rather than platform is the company's strategy and I expect to see it make more announcements about integration strategies in the future. Sales and marketing are newer additions to the product line, but at this point, the company is most firmly in the service and support market.
Going Public
NetSuite is different from RightNow and Salesforce in a couple of ways. The company offers a fully integrated ERP back end, and it is the only one of the three that is still private. The rumor is that NetSuite will join the club of public companies in the not too distant future.
Having both front office and back office solutions makes NetSuite a self-contained or vertically integrated provider. Its partner community leans more to integration and deployment partners though it also has developer partners as well. The developer community though, is not as large or growing as fast as Salesforce's.
In their own ways, NetSuite and RightNow both acknowledge the importance of enabling their solutions to work well with the outside world, but neither, I think is yet well positioned to address the real need for new application development within their architectures. NetSuite offers a scripting language and platform, but has not invested in marketing them as much as Salesforce.
Building an Ecosystem
Then there's Salesforce, which has some different business practices as well as technologies. First, the company may have started out as an SFA (sales force automation) provider, but it is clear that it is moving aggressively to be the leader in the emerging platform market. It's not a question of whether or not Salesforce will continue to be a CRM company; the issue is what else they will do.
Salesforce does not have the product breadth that NetSuite has with its ERP back end; instead, it prefers to involve competent partners to deliver additional functionality. This is Salesforce's way of building its partner ecosystem which will only help its platform business.
For Salesforce, the ecosystem is the most important thing, and I believe this fact should lay to rest the fears that many people express that the company will try to muscle out its partners from choice niches.
If Salesforce wanted to stay a CRM company, then I suppose you'd see it getting fat gobbling up its partners and their niches, but the company has been rather restrained about doing that. In 2006, Salesforce bought Kieden because it believed that solution to be core, but that's been it on the acquisitions front.
Elbow Room
So, if RightNow's primary calling card is customer service and NetSuite's is integrated ERP, Salesforce has SFA and the platform. These strategies have given each company plenty of elbow room to develop without encountering crushing competition that we once saw in the database wars. Also, we should not overlook the fact that these strategies have also enabled the SaaS movement to set down a pretty big footprint.
The footprint is one reason that on-demand is doing well today. If everyone had tried to pile onto the SFA patch, for example, the result would have been a dog fight in which one or two companies would have survived. Come to think of it, that's exactly what happened initially. There are still a few companies that think they have a better on-demand SFA mousetrap, but you don't hear much about them.
So now there are three strong branches in on-demand CRM as well as some others like Oracle (Nasdaq: ORCL) and SAP (NYSE: SAP) in the shadows. Frankly, whether the others will emerge is not as interesting at this point as how the big three will adapt to the new demands of CRM 2.0.
At the beginning of this piece, I noted how these vendors have strived for uniqueness and how they prefer to avoid direct comparisons. There's merit to that line of reasoning, and although they are a big part of the center of CRM on-demand, they each seem to be going their own ways.
I am sure there will be plenty of competition and overlap, but I also expect that increasingly, the competition will not be among these three but between them and the conventional application providers.
Denis Pombriant runs the Beagle Research Group, a CRM market research firm and consultancy. Pombriant's research concentrates on evolving product ideas and emerging companies in the sales, marketing and call center disciplines. His research is freely distributed through a blog and Web site. He is working on a book and can be reached at denis.pombriant@beagleresearch.com.
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