Special Report: Sage Advice on CRM

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Sage has made a move into the hosted applications space on the back of revamping its entire CRM range under a new global structure. But can it compete against market leader Salesforce.com?

SageCRM.com, based on the company’s Mid Market Edition (MME) will cost £50 per month and is available in a number of versions.

Specifically Sage is offering a Rent to Own option where an organisation can subscribe to the hosted service for the standard rate of 50 pounds per user per month, inclusive of support.

If it chooses to move to an on-premise model, Sage will provide a discount on the fees paid to date. Sage claims that by offering both on premise and hosted versions of its applications it is "freeing companies from the 'no software' model" by giving them "a way back from a hosted package to an onsite system".

Potential customers can also access SageCRM.com through the Self Starter Pack, which provides for self support, or the Expert Advice Pack which is offered by Sage's partners who will provide configuration, consulting, training and ongoing support.

A key differentiator from Salesforce.com and NetSuite is that the Sage hosted version is supported by the large network of local partners in the UK that Sage has built up. Sage's marketing director Gerry Carr. "What that gives us is local touch, companies our customers can rely on and are familiar with. If you’re used to dealing with a partner, then you still can. Partners have a referal scheme with us. The relationship with the client will be with us, but partners will refer customers to us.”

Clearly with a portfolio that offers both hosted and on premise options, there is a risk that the company will cannibalise its own revenue stream, although Carr reckons that the overwhelming majority of subscribers to SageCRM.com will be new customers who have not made a CRM commitment to date rather than existing on premises installations.

Sage is also only offering CRM as a hosted service, not any of its back-office software such as its accounting applications. Carr said MME had been written as a multi tenant application and as such was suited to the hosted approach.

The introduction of the hosted offering comes on the heels of a re-orgnisation of the entire CRM business under Dave Batt, who recently joined Sage as senior VP and general manager of global CRM.

Batt joined Sage in September 2005, after a 16-year career that includes heading the middle markets division of Siebel Systems and serving as Oracle's vice president of CRM for the services industry. His most recent position was general manager of Microsoft CRM.

Batt has the responsibility of managing the rebranding of the Sage portfolio which has become somewhat cluttered through various acquisitions with multiple brands such as Saleslogix, ACT and MME. These will now sit under a new brand of Sage CRM Solutions.

“We realised CRM is not bound by regulatory issues like accounting is, so we could have a global organisation," said Batt. "The approach the company had taken before was product-centric. When we had integration points, we'd go back to customers and they'd sort of shrug their shoulders. Now when we go back and say we have integrated processes in order-to-cash, they get this."

The other major technology initiative Sage is undertaking is the integration of its on-demand CRM products with its accounting packages—an exercise that is expected to be complete inside this fiscal year, according to Batt.

Inevitably rival vendors were scathing about the new approach. "It is nice to see another naysayer joining the hosted fold," said Steve Garnett, President, EMEA at Salesforce.com, "but I still don’t think they really get it. They are talking up how they can offer the choice to go back on premise which like offering a chance to go back to the past. It’s like calling up Google and asking them if they can provide an on premises version!"

Jason Nash, UK product marketing manager for Microsoft CRM, added: "We're glad to see that Sage believes in choice for its customers with on premises and hosted - at Microsoft we have been talking about Choice for some time now! We enable our partners to deliver Microsoft CRM as an on-premise solution or as a hosted solution (with the option to move between the two).

"This enables partners and customers to choose the option that best fits their business amongst different licensing and pricing models such as perpetual licensing, financing and/or subscription licensing"

Analysts were reasonably impressed however. "It's no small cultural shift for Sage to do something globally like this," noted David Bradshaw, analyst with research firm Ovum. "Sage has made a virtue out of what most other software vendors regard as a vice - its geographic diversity of products. However, we still find ourselves underwhelmed by this announcement. Firstly, we think the naming is confusing - shouldn't Sage CRM be the core brand, not just one of the products?

"But more fundamentally, we think that Sage has at least one product too many, and we'd have liked to hear that it was doing something about that. We can't see any good reason for keeping two distinct server-based products (SalesLogix and Sage CRM). It would be better to converge them, over a period of time, into a single product with multiple options - for example, simple for the sales department, but sophisticated for customer services (or vice-versa) all on a single, consistent customer datastore.

"However, we do like Sage making the same product (Sage CRM) available as a hosted service and a conventional product - we strongly believe that customers will come to demand this flexibility from all software vendors."

Elsewhere it looks like Microsoft is set to start offering its own CRM hosting services from next spring, alongside existing services from its partners. According to reports this week, Microsoft hopes to have hosted CRM available in the second half of 2006, with hosted Dynamics ERP likely to follow.

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