If you host it they will come, say CRM vendors

The online CRM space is suddenly getting crowded as two more CRM vendors, Kana Software Inc. and Entellium Corp., are launching hosted services this week.

A field that is still dominated by Salesforce.com Inc. is now looking to at least five other vendors offering competitive solutions: The two new entrants plus Siebel OnDemand, RightNow, and NetSuite.

One industry analyst said the hosted phenomenon is a swing back to business users who have the money to buy but don’t have the IT resources to implement.

Erin Kinikin, vice-president and research director at Forrester Research Inc., said sales managers want to make sales more effective but they don’t want to spend six months with IT to design a solution.

“Hosted is a way around IT,” Kinikin said.

Kinikin’s comments resonate with H. A. Schade, vice-president of products at Kana.

Schade said Kana created the hosted version, the same as the on-premise solution, in response to a “very large” customer who told Kana it likes its products but wants Kana to manage it.

Kana focuses on customer service applications mainly to the financial services and telecommunications industries and is launching hosted versions of its iCARE Suite of Service Resolution Management, Response Live solution for both collaboration and text chat.

“Co-browse gives an agent and a user the same experience at the same time. It is used by banks providing customer service while customers are filling out loan applications to guide them through that experience,” Schade said.

Response Live will be followed by Kana’s e-mail response management applications and then its knowledge management solution.

Kana will still offer an on-premise solution, plus the hosted version at about US$400 per month per seat as well as an on-premise term license instead of a perpetual license.

While Kana made the move to offer a hosted version in response to some of its largest customers, Entellium CEO Paul Johnston, another CRM provider launching a hosted version this week, said that hosted applications appeal more to the mid-market which is looking to lower its TCO.

Entellium, focused exclusively in the Asian market up until now, is targeting midsize companies with hosted sales, marketing, and customer service modules in North America.

Other than the monthly subscription price ranging from US$10 to US$67 per seat per month, Johnston also said the Entellium integrated platform for all of its applications also lowers the TCO.

“All of our solutions are built using the same workflow engine. We can organize and orchestrate all of the sales, marketing, and customer service processes,” Johnston said.

According to Johnston hosted CRM is moving to second-generation hosted offerings. The first generation lacked the ability to customize applications for industry-specific business processes.

“Now the direction of the industry is to provide vertical solutions for each area. If you don’t have a workflow capability built within your product and the capability to change the look and feel of the screen and change the business rules, how can you offer vertical solutions,” said Johnston.

Forrester’s Kinikin believes hosted is the new departmental system and will spread just like departmental systems did.

“One day IT will wake up and find they have seven of them. Good news for getting started quickly but bad news for new long-term consistency,” Kinikin said.

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