It's dog-eat-dog in CRM land

Summary:CRM vendors are fighting each other for business. Old dogs like Siebel and Sage are fair game for aggressive upgrade deals, and even Salesforce.com isn't immune to churn.

The competition for customers among CRM vendors is getting just as fierce as the fight for subcribers among the cellphone networks a few years back. Old-style phone companies used to count on signing up a customer and then taking them for granted until they moved house. Software vendors have worked on the same principle, assuming customer loyalty at least until the next major hardware upgrade forced evaluation of what was available for the new platform.

Not any more. Selling software is getting a lot more like selling cellphone contracts. As in any pack of wild dogs, the wounded former leaders become the first victimsThe vendors are after your business, and they're offering loss-leading deals to tempt you away from your current supplier. No matter if some of their new customers turn into 'rate tarts' and move on to the next new deal when renewal comes around. Most won't want the hassle of changing again.

As in any pack of wild dogs, the wounded former leaders become the first victims. Hence RightNow's offer this week of a six months' free contract for Siebel users that switch over — provided they sign up for a minimum of two years. RightNow says it has a string of customers who've already made the switch, including one that is said to have "ditched $6 million worth of Siebel software and services."

Another wise old dog is Sage, owner of ACCPAC, SalesLogix, Peachtree, ACT and other venerable SMB accounting and CRM brands. "Stone-age Sage" was how on-demand business suite vendor NetSuite described the company's offerings last week as it launched a free-of-charge service for would-be customers to migrate their Sage data to the NetSuite platform. NetSuite likes to count its "defectors" from rival platforms -- take a look at the graphic at the top of this page and you'll see the company already claims to number its QuickBooks defectors in hundreds.

Salesforce.com of course, which released its third-quarter results on Wednesday, has a high enough visibility not to need to indulge in upgrade deals to entice new customers. Its Trailing Twelve Months (TTM) revenues, which I use to compare how publicly quoted on-demand vendors are doing, punched through the quarter-billion-dollar mark this quarter and now stand at just over $273 million. But despite its prowess at gaining new contracts, rivals whisper darkly of a surprisingly high churn rate when customers come to renew. There certainly seems to be no shortage of crumbs falling off the leader's table for the pack to snaffle up.

CRM customers had better get used to the idea of vendors fighting for their business, which at least ought to be good news for the quality of deal they can strike.

Topics: Enterprise Software

About

Since 1998, Phil Wainewright has been a thought leader in cloud computing as a blogger, analyst and consultant. He founded pioneering website ASPnews.com, and later Loosely Coupled, which covered enterprise adoption of web services and SOA. As CEO of strategic consulting group Procullux Ventures, he has developed an evaluation framework t... Full Bio

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