CRM channels

Customer relationship management (CRM) solutions were the hot topic of the moment as the new millennium rolled in. A few years later that hype and buzz has given way to the steely realities of proving total cost of ownership (TCO) and return on investment (ROI) to customers wary of IT investment, and building the best routes-to-market possible.

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By  Stuart Wilson Published  September 24, 2004

Extended solutions|~|aymanorcle200.gif|~|Ayman Abouseif, senior marketing director Eastern and Central Europe, Middle East and Africa at Oracle|~|Standalone CRM solutions have increasingly become subsumed into wider application suites. The ability to integrate seamlessly with a range of other business applications has become an imperative. Channel Middle East spoke to some of the major vendors operating in the region to assess the market's readiness to embrace the benefits offered by CRM solutions. CRM still has some way to go in the Middle East before it challenges the dominance of ERP and captures the hearts and minds of resellers searching for the next big thing. Vendors straddling the divide between ERP and CRM admit that the former software category remains the mainstay of integration projects for partners. “At this point in time resellers are still more inclined to sell ERP systems in the region because that is where the larger market is,” said Shishir Srivastava, executive director and general manager at business application vendor Sage’s Middle East operation. “CRM is however an area where partners can develop vertical skills and build up a differentiation in the market.” While the market for pure CRM implementations remains limited, ERP vendors have started encroaching into the area through extended enterprise offerings. Indeed, in the business applications space the days of standalone best-of-breed solutions for each software area have been largely consigned to history. Vendors such as Exact Software, which employs a direct sales strategy, are leading the charge into extended business application offerings. “Our solution is termed as an extended ERP solution because we extend the functionality of the traditional ERP product into other horizons,” commented Nizar Badwan, general manager at Exact Software Middle East. “If you look at our solution, it touches resources, customers and suppliers, and service providers. We have a logistics offering in the solution and for suppliers and customers we have a CRM solution. For the resources we have the human resource solution. Those three pillars enable companies to manage their entire operation.” CRM solutions are being sold in the Middle East but increasingly they are part and parcel of a wider implementation project and do not receive the fanfare they were formerly accustomed to. “Three years ago CRM was definitely the flavour of the month,” explained Ayman Abouseif, senior marketing director Eastern and Central Europe, Middle East and Africa at Oracle. “It was almost impossible to see a write-up of any product no matter what it did without the three magic letters. If you had a little spreadsheet application that did contact management you would rename it CRM. Customers were buying computer-telephony integration software and contact management solutions because it was called CRM and they felt they had to have one. That is why a large percentage of these projects failed despite companies like Oracle advising customers to hold on and wait.” CRM has come a long way from the days of frenzied selling that resulted in unsuccessful implementations and software packages ending up as unused shelfware for customers. Today, the industry is preaching a mantra of application integration that makes CRM software an investment that is easy to justify. ||**||Competitive vendor landscape|~|devassy200.gif|~|Joe Devassy, SMS&P manager at Microsoft South Gulf|~|“Today I think the world has changed and a lot of people understand the value of having information systems that are integrated,” continued Abouseif. “Many people buy CRM without any fanfare. They buy accounting and inventory management software and also take the service module and telemarketing module. No one needs to talk about CRM as it has become part of the wider business application suite.” It is a theory that Oracle has put into practice with its e-business suite. “It is now a case of looking at the complete IT environment rather than individual solutions for areas such as ERP, CRM and SCM. That is why Oracle has the e-business suite although customers can still choose to buy modules independently,” added Abouseif. The art to selling CRM solutions — be it a channel-led sale or the result of a vendor’s direct sales team — is to fully appreciate the size of the customers, develop an intimate understanding of their business needs and provide vertical functionality where necessary. There is a vast difference between an enterprise-focused CRM solution and an off-the-shelf package aimed at small and medium businesses (SMB). In the low-end of the market, the competitive landscape is developing fast. Besides Sage and the CRM components of Oracle’s e-business suite, the market is bracing itself for the entry of Microsoft into this developing market segment. Software behemoth Microsoft is already pushing its CRM solution in Europe and the US and is busy laying the foundations for a successful launch in the Middle East. Part of the Microsoft Business Solutions (MBS) business unit, Microsoft is in the process of building a channel-to-market for its CRM solution. “We are still in the stage where the partners are signing up to become CRM resellers,” said Joe Devassy, SMS&P manager at Microsoft South Gulf. “At present our MBS partners in the region remain focused on ERP. This is mainly Great Plains business because those products had an established brand name here.” Microsoft CRM will be targeting the SMB space and this is reflected in the channel-to-market the company will roll out in the Middle East. “CRM can be bought just like a Windows Server or SQL Server product through Microsoft distributors: Tech Data, Mindware, Logicom and Aptec. Any partner can become a CRM partner and purchase product from the distributors,” explained Devassy. “There is no agreement to sign with Microsoft although partners do have the option to sign up and qualify as a service and implementation partner for CRM. This partner can then qualify for a 30% back-end rebate. Any partner can sell the CRM solution where they see an opportunity whereas with ERP solutions such as Great Plains we need more involvement with the implementation partners.” ||**||Regional growth|~|Nizar200.gif|~|Nizar Badwan, general manager at Exact Software Middle East|~|The growth of CRM in the UAE has filled vendors with hope that other markets offer significant untapped potential. Recent IDC reports suggest that the UAE market is currently bigger that the Saudi Arabian market for CRM solutions. “There is potential and I believe that any partner with a significant customer base should be able to sell CRM. They can then work with a qualified service and implementation partner on the installation if necessary,” said Devassy. Microsoft’s imminent entry into the Middle East CRM market has not gone unnoticed by other vendors. “At the moment Microsoft is advertising CRM and we come across them on an occasional basis in the smaller accounts rather than bigger ones,” said Abouseif. “Competition is good for the customer and we are very satisfied with the way we are building the applications business and the number of customers we have.” Within the CRM and wider business applications arena, the market is undergoing a seismic shift as traditionally enterprise-focused vendors turn their attentions to the midmarket or look even further down into the SMB sector. “I think eventually they will succeed at getting into the midmarket. The big difference will be, when you deal with a company like Exact that has experience of dealing with the midmarket, we have developed some best practices on how to implement for the midmarket. Trying to sell into the midmarket with a tier one methodology will always be cumbersome and expensive,” said Bazwan. To successfully penetrate the midmarket and SMB market for CRM solutions vendors need not only a suitable product but also a channel with genuine market reach. “We have broadly speaking two types of products,” said Srivastava at Sage. “One is products meant for small and medium businesses (SMBs) with between 5 and 25 employees and the other is products for small and medium enterprises (SMEs) with between 25 and 500 employees. The route-to-market for SMBs is different to SMEs where the sales cycle is longer.” Whatever the size of the customer, vertical focus is a major differentiator in the CRM space where the opportunity to customize a solution to meet an individual customer’s requirements is much greater than in the ERP space. “In the CRM space, the idea is to develop vertical strengths. I find the two spaces remarkably different. There is only 20% difference in the implementation process for ERP at two companies in different market sectors. 80% of the implementation is very similar,” explained Srivastava. Selling CRM solutions represents a prime opportunity for resellers looking to climb the value ladder, build service revenues and differentiate themselves from competitors. It does however require a serious commitment if they are to successfully crack a vertical market. The CRM market is poised to grow in the Middle East. To reap the benefits of selling customized solutions into a vertical market, resellers need to look outside their home country and take advantage of the economies of scale that can be achieved by building a genuine regional operation. ||**||

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