Most hosted CRM solutions cost a fraction of traditional software, which is run and managed in-house. Siebel CRM on Demand starts at US$90 per user per month, while Oracle Ebusiness Suite Special Edition can be hosted by a third party for around the same price. Smaller software providers can be even cheaper, but Kwiatkowski warns companies to check out the viability of potential suppliers. "With the entrance of Microsoft and Siebel into the hosted CRM market, we expect to see significant consolidation," he says. "If you're working with a smaller provider, make sure they have a decent business model and a good track record. If they do, the cost savings can be huge."
When Crane Telecommunications, a 150-employee distributor based in Sussex, rolled out a hosted CRM product from RightNow, cost was a key part of the decision. The company needed to reduce operating costs to cope with shrinking margins in the telecoms sector, but also wanted to improve customer service, explains Will Morey, Crane's group marketing manager. "Products like Siebel were completely out of our reach," he says. "Besides, it's very easy to get excited about this stuff, only to find your IT department doesn't have the time or resources to roll it out."
The hosted CRM package from RightNow was a good fit as all that the IT department needed to do was provide bandwidth to access the Web-based software. The upfront cost was significantly cheaper than in-house software, but there are also ongoing savings. "We have far lower support costs, because the hosting company deal with routine upgrades, security patches and so on," says Morey.
In most cases, integrating a CRM application with legacy or third-party applications is the same process whether the software is internal or hosted, says Craig Sullivan, director of marketing with Netsuite, an application hosting company. Following the demise of the first generation of Application Service Providers (ASPs) the industry realised that hosting would die unless companies settled on standard interfaces and integration tools. "We support XML based interfaces so information can be shared between any applications, in batch or real-time," Sullivan says.
But there are exceptions. David Lewis used to sell hosted SAP solutions when he worked with consulting firm Logica. Now IT director of Hillary's, a midmarket blind manufacturer and retailer, Lewis has kept his CRM software firmly in-house. "We did consider hosting, but it didn't meet our requirements as a business," he says.
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