The SaaS customer relationship market (CRM) in Apac was valued at $116 mn in
2007 while the Indian SaaS market stood at $27 mn during 2007, a large part of
which was SaaS CRM, says Springboard Research. SaaS CRM or On-demand CRM, is a
whole lot different from the traditional CRM.
The fundamental difference is that unlike traditional client-server CRM
applications, no hardware or software needs to be purchased, implemented,
maintained, or upgraded. The organization simply needs to use an Internet
browser to plug-in and succeed and since there is no software to install, the
time-to-benefit is accelerated.
The customer can choose to deploy CRM in various wayshe could opt for the
in-house perpetual license-based solution, wherein the consumer would own the
software application and get it installed in the premise. This sort of a set-up
is more suitable for those enterprise that are looking for making long-term
investments in CRMs and also have their own IT teams in place to manage IT
application. Moreover, this is a good option for enterprises that believe their
confidentiality is critical and would like to keep the information within their
management.
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Users at Millipore India |
On the other hand, companies that are trying to reduce their upfront costs
in CRM investment may prefer On-demand wherein they would be required to pay for
the use of software on a subscription basis while the application would be
hosted by either a vendor or its partner, says Sushant Dwivedy, director,
Microsoft Business Solutions, Microsoft India. The monthly pay-as-you-go
subscription model allows organizations to embrace business applications through
operating expenses as opposed to amassing a large capital budget.
Jeremy Cooper, VP, Marketing, Apac and Japan, Salesforce, believes that
functionality is not compromised with the On-demand model. In fact, because of
multi-tenant architectures, functionality is enhanced as customers enjoy
automatic upgrades. Simply put, every customer, irrespective of size, benefits
immediately, he adds.
The low success rates of client-server CRM, which is largely driven by poor
use adoption, is also turned on the head with the On-demand model. By leveraging
many characteristics associated with consumer websites, consumers can enjoy
unprecedented ease-of-use which fuels adoption and, in turn, delivers on the
original promise of CRM that is orchestrating people, processes and technologies
to identify, acquire, service, market, and retain valuable customers.
Traditional Vs On-demand
Some industry players believe there has been a lot of hype attached around
the potential of On-demand CRM and that it has not been able to overshadow the
On-premise CRM software. While we see an uptake of On-demand CRM application,
there is no doubt that On-premise CRM software will continue to exist and grow,
says Balaka Aggarwal, manager, Syndicated Research, Springboard Research. This
is precisely where companies like Microsoft have positioned their software and
services strategy implying that customers can continue to use software as
On-demand and also on the On-premise model.
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Admin Dept at Macmillan |
Even Thomas Abraham, MD, Sage Software, agrees that considering that the CRM
market is still in its nascent stage in India, it is difficult to predict
whether On-demand will grow faster. Also, we are observing another interesting
trendorganizations initially opt for On-demand CRM model but over a period of
time move to the On-premise model, Abraham notes.
Shoppers Stop is one such organization that discontinued the usage of
On-demand CRM last year. Deployed in early 2006, the company did not want to
create an application from scratch and, therefore, deployed the SaaS CRM model.
Also, at that time we were seeing some changes on the horizon in the business
model so we did not want to make a significant investment in a new application,
says Ranjit Satyanath, CIO, Shoppers Stop. Post the deployment, the company was
able to do away with the manual sales tracking process. However, the company
soon had to discontinue On-demand CRM as a business model changed as anticipated
and also the retail chain was able to deploy a solution with a lower TCO than
Salesforces On-demand CRM.
As our relationship with Salesforce progressed, our experience with them
left us feeling that Salesforce.coms focus on India was very limited. We felt
wed see benefits only if the number of users increased dramatically which was
never going to happen in our case, he adds. They then realized that the
On-premise CRM model was far more cost-effective than the On-demand solution we
were using.
However, there are users who have opted for the On-demand CRM model and have
been fully satisfied with it. Sharath Chandra Prasad, VP, Administration and
Finance, Millipore India, opted for the On-demand CRM model and it was not just
cost which tilted the scale in favor of On-demand. Factors like ease of
maintenance, ease of upgradation were some of the primary drivers. If we had
opted for the conventional software, it would have required time and energy of
our people and would also have required resources, both human and hardware, to
be allocated. Besides, the time taken for implementation, too, is far lower as
compared to the traditional CRM model, he adds.
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Vikas Dhandhania, head, Central |
Vikas Dhandhania, head, Central Marketing, Macmillan Publishing Solutions, is
another satisfied customer. After the deployment of the On-demand CRM solution,
an obvious benefit was the improved strategic planning for quicker response to
the changing market trends and most importantly cost efficiency since
investments and capacity building were carried out in a timely manner.
Roadblocks
But there is clearly a long way to go for the SaaS delivery model of CRM.
The number one barrier in the growth of the On-demand CRM market is awareness.
Cooper of Salesforce feels that a majority of Indian companies are desperate for
an alternative model that will consistently deliver proven success with very few
Indian companies actually aware of the On-demand model. These companies dismiss
technologies based on cost and complexity and are content to adopt
resource-intensive IT projects, he says.
Aggarwal of Springboard adds that even though there is sufficient information
about SaaS, users are apprehensive about adopting the On-demand CRM
applications. This can be attributed to the fact that although customers are
aware of the availability of On-demand CRM, they are not familiar with the
application and its functionalities. And this is where the role of channel
partners will come into play since they can educate customers in CRM.
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It was not just cost which tilted the scale in favor of On-demand. Factors like ease of maintenance, ease of upgradation were primary drivers
Sharath Chandra Prasad, VP, |
Secondly, CRM is only one part of the customer management system. For the
On-demand application to be effective, it has to be integrated with other
enterprise application.
Growth Drivers
Customer relationship management is the process of identifying, acquiring,
servicing, marketing, and retaining valuable customers, and is perhaps one of
the oldest IT solutions that are still in vogue. It is perhaps the fundamental
art of how a business survives and thrives.
On-demand delivers on the promise of enabling CRM strategies by eliminating
the cost, complexity and risk associated with the earlier software models, says
Cooper of Salesforce. This is especially true in a market like India where the
buoyancy of the economy makes customer acquisition and retention as well as
enabling business continuity through a single information repository by
mitigating the impact of employee attrition competitive prerequisites.
Companies are opting for the On-demand model because of the low cost of
implementation, speed of implementation and because customers dont have to
focus on their IT infrastructure. Therefore, we are seeing a greater uptake of
the On Demand model, especially from the mid-sized business segment, says
Prasad Rai, senior director, CRM On-demand, Oracle ASEAN. Oracle has undertaken
a significant ramp-up in the joint go-to-market activity and is targeting new
On-demand CRM market opportunities including Code Theatre, CRM IT, and Sonata
Information Technology.
Benefits
The initial trigger for SaaS CRM is obviously the cost factor. With lower
upfront costs, more and more organizations are taking to On-demand CRM like
never before but there are other factors too that have propelled the adoption of
this application. As SaaS CRM gets more pervasive, other factors like ease of
use and management have a greater role to play in the uptake of SaaS CRM. Also,
factors like the reliability of the Internet as a medium for using business
applications have contributed to the growth of On-demand CRM, says Balaka.
Vikas Dhandhania of Macmillan Publishing Solutions says, Rolling out the
solution was the easy part, convincing the people to actually use it was the
difficult part of the deployment. Once the people were convinced, the
deployment enabled the company to better track the sales force performance with
each salesperson with the overall view of the entire pipeline activity that
provided real time assistance to the sales force apart from giving a perspective
on how to manage the day-to-day activities. On-demand CRM also enabled the
sales force to get a better understanding of our sales capabilities and build
strategies and skill base accordingly; we could also evaluate each sales
persons focus and performance more objectively, says Dhandhania.
Prasad from Millipore, post the On-demand CRM deployment, found that the
sales force benefited from the deployment the most, considering that leads,
opportunities, tasks, campaigns and follow-ups became much easier. Prasad adds,
Group communication is in-built so that no emails are required for copying the
reports and the tree is well defined so that the manager can track the sales
person.
Going Forward
With more and more businesses focusing on their core business areas,
companies are finding it increasingly difficult to manage their IT
infrastructure. And companies are now looking to simply tap into a utility
provided by services providers.
Organizations now want to be able to focus on innovation and not on
infrastructure. The On-demand model allows them to embrace software and residing
information with ease. With growing awareness about the availability and
benefits, we are seeing an increase in the adoption in larger enterprises but
the deciding factor would be the flexibility that organizations can have to move
from the On-premise model to SaaS CRM without any disruptions. Once On-demand
CRM adoption is on the upswing in large enterprises, SaaS CRM will also make
inroads in the SMB segment as well.
Marrying social networking with CRM, Oracle recently introduced its latest
On-demand CRM solutions, boasting of its social networking capability. The new
release introduced social CRM capabilities, including social networking and
collaboration capabilities, to enhance end-user productivity.
Stuti Das
stutid@cybermedia.co.in