Understanding the TCO of SaaS CRM and KM in the contact centre
This report looks at the current trends in the hosted contact centre customer relationship management (CRM) and knowledge management (KM) markets, and the effects on enterprise balance sheets of software-as-a-service (SaaS) versus on-premises solutions. It also presents a matrix of the leading global CRM vendors, which offers a valuable insight into the strengths of various hosted vendors’ CRM solutions.
Executive summary
In a nutshell
Ovum view
Key messages
Flexible CRM deployment options are appealing in a difficult economy
Web self-service is high on the list of enterprises’ priorities
Enterprises need to consider the TCO rather than just the capex and opex advantages of SaaS
On-premises CRM vendors offer new pricing models in a highly competitive market
Vendors need to develop social media and KM strategies
Market opportunity
The CRM market is changing to include more flexible pricing and deployment options
Enterprises are focused on cost reduction and customer retention
CRM and KM play an increasingly important role in the contact centre
Flexible deployment methods are appealing in a difficult economy
SaaS CRM is growing from a mid-market option into larger enterprises
Vendors are changing their pricing for on-premises CRM to meet demands for more flexible pricing
KM is gaining traction to help agents and customers find accurate information
Web self-service is high on the list of enterprises’ priorities
Vendors are providing ways to monitor information from social media as usage grows
Vendors must overcome scepticism about hosted CRM and provide RoI statistics for KM
A difficult economy has led to a longer procurement cycle
There is still a stigma attached to hosted CRM and SaaS
The RoI for KM has yet to be fully understood
Technology evolution
CRM is evolving to include more flexible delivery and deployment options
Web-based delivery models are increasing in popularity
Platform-as-a-service provides users with even greater flexibility
CRM follows the market from on-premises to hosted, SaaS and now cloud computing
Enterprises are linking CRM solutions with business process objectives
Unified agent desktop solutions tie together different applications
On-demand CRM needs to be integrated with legacy applications
New features include contact priority management
KM vendors are embedding their solutions within CRM applications
Knowledge solutions are moving from agent-facing to customer-facing
Social media is influencing CRM vendors and CRM interfaces are becoming akin to online services
Vendors are adding interactive features and providing users with the ability to add and rate information
CRM and knowledge management applications now incorporate information from social media
Customer impact
Cost transparency especially pertinent in the current economic climate
TCO encompasses use, maintenance, support and services over a solution’s lifetime
The associated costs vary for different deployment models
Financial statements are impacted differently depending on the deployment model
Expensing treats subscription fees as a period expense
The non-cost-related benefits to SaaS include faster deployment and reduced IT resources
Disadvantages of the hosted model
The key target for SaaS has been SMEs
Hosted CRM is not industry-specific
Technology industry customer focus: iRobot
Travel and tourism customer focus: NJ Transit
Retail customer focus: Zappos
KM is deployed to ensure accurate information is available to agents and customers
Gaming industry customer focus: Second Life
Retail industry customer focus: online auctioneer
Competitive landscape
CRM vendors are targeting a broader range of customers
The competitive landscape for hosted CRM is disjointed
Acquisitions and increased demand for web self-service help KM play a greater role within the CRM market
SaaS CRM vendors include NetSuite, RightNow, Salesforce.com and TeamSupport
NetSuite
NetSuite: strengths
RightNow
RightNow: strengths
Salesforce.com
Salesforce.com: strengths
TeamSupport
TeamSupport: strengths
There are a number of vendors offering both on-demand and on-premises CRM
Oracle
Oracle E-Business Suite
Siebel CRM
Oracle: strengths
SAP
SAP: strengths
Microsoft
Microsoft: strengths
SugarCRM
SugarCRM: strengths
Proprietary on-premises vendors are gradually offering more flexible deployments
CDC Software
Ciboodle
Niche CSA and KM specialists remain mostly premises-based
KANA
KANA: strengths
KPS
KPS: strengths
InQuira
InQuira: strengths
nGenera
nGenera: strengths
Parature
Parature: strengths
Go-to-market approach
Hosted offerings require different go-to-market strategies and partners
Targeting the mid-market requires a diverse partner base including resellers and developers
As enterprises focus on business processes, services and integration become more important
Future trends
The on-premises market will remain strong despite continued growth in SaaS CRM
The Web enables changing consumer patterns, and the self-service trend will only increase
Mobile and video communications will become part of the knowledge base
Vendor acquisitions, partnerships and consolidation are likely
Recommendations
Provide cost transparency and flexible pricing for both on-demand and on-premises models
Map software capabilities to business processes
CRM vendors should work closely with partners or enhance their KM solutions
Develop a social media strategy
Definitions
CRM
Deployment models
Cloud computing
In a nutshell
Ovum view
Key messages
Flexible CRM deployment options are appealing in a difficult economy
Web self-service is high on the list of enterprises’ priorities
Enterprises need to consider the TCO rather than just the capex and opex advantages of SaaS
On-premises CRM vendors offer new pricing models in a highly competitive market
Vendors need to develop social media and KM strategies
Market opportunity
The CRM market is changing to include more flexible pricing and deployment options
Enterprises are focused on cost reduction and customer retention
CRM and KM play an increasingly important role in the contact centre
Flexible deployment methods are appealing in a difficult economy
SaaS CRM is growing from a mid-market option into larger enterprises
Vendors are changing their pricing for on-premises CRM to meet demands for more flexible pricing
KM is gaining traction to help agents and customers find accurate information
Web self-service is high on the list of enterprises’ priorities
Vendors are providing ways to monitor information from social media as usage grows
Vendors must overcome scepticism about hosted CRM and provide RoI statistics for KM
A difficult economy has led to a longer procurement cycle
There is still a stigma attached to hosted CRM and SaaS
The RoI for KM has yet to be fully understood
Technology evolution
CRM is evolving to include more flexible delivery and deployment options
Web-based delivery models are increasing in popularity
Platform-as-a-service provides users with even greater flexibility
CRM follows the market from on-premises to hosted, SaaS and now cloud computing
Enterprises are linking CRM solutions with business process objectives
Unified agent desktop solutions tie together different applications
On-demand CRM needs to be integrated with legacy applications
New features include contact priority management
KM vendors are embedding their solutions within CRM applications
Knowledge solutions are moving from agent-facing to customer-facing
Social media is influencing CRM vendors and CRM interfaces are becoming akin to online services
Vendors are adding interactive features and providing users with the ability to add and rate information
CRM and knowledge management applications now incorporate information from social media
Customer impact
Cost transparency especially pertinent in the current economic climate
TCO encompasses use, maintenance, support and services over a solution’s lifetime
The associated costs vary for different deployment models
Financial statements are impacted differently depending on the deployment model
Expensing treats subscription fees as a period expense
The non-cost-related benefits to SaaS include faster deployment and reduced IT resources
Disadvantages of the hosted model
The key target for SaaS has been SMEs
Hosted CRM is not industry-specific
Technology industry customer focus: iRobot
Travel and tourism customer focus: NJ Transit
Retail customer focus: Zappos
KM is deployed to ensure accurate information is available to agents and customers
Gaming industry customer focus: Second Life
Retail industry customer focus: online auctioneer
Competitive landscape
CRM vendors are targeting a broader range of customers
The competitive landscape for hosted CRM is disjointed
Acquisitions and increased demand for web self-service help KM play a greater role within the CRM market
SaaS CRM vendors include NetSuite, RightNow, Salesforce.com and TeamSupport
NetSuite
NetSuite: strengths
RightNow
RightNow: strengths
Salesforce.com
Salesforce.com: strengths
TeamSupport
TeamSupport: strengths
There are a number of vendors offering both on-demand and on-premises CRM
Oracle
Oracle E-Business Suite
Siebel CRM
Oracle: strengths
SAP
SAP: strengths
Microsoft
Microsoft: strengths
SugarCRM
SugarCRM: strengths
Proprietary on-premises vendors are gradually offering more flexible deployments
CDC Software
Ciboodle
Niche CSA and KM specialists remain mostly premises-based
KANA
KANA: strengths
KPS
KPS: strengths
InQuira
InQuira: strengths
nGenera
nGenera: strengths
Parature
Parature: strengths
Go-to-market approach
Hosted offerings require different go-to-market strategies and partners
Targeting the mid-market requires a diverse partner base including resellers and developers
As enterprises focus on business processes, services and integration become more important
Future trends
The on-premises market will remain strong despite continued growth in SaaS CRM
The Web enables changing consumer patterns, and the self-service trend will only increase
Mobile and video communications will become part of the knowledge base
Vendor acquisitions, partnerships and consolidation are likely
Recommendations
Provide cost transparency and flexible pricing for both on-demand and on-premises models
Map software capabilities to business processes
CRM vendors should work closely with partners or enhance their KM solutions
Develop a social media strategy
Definitions
CRM
Deployment models
Cloud computing
LIST OF TABLES
Table 1: Forecast segment revenues ($ million)
Table 2: Simple cost differences between hosted and premises-based CRM deployments
Table 1: Forecast segment revenues ($ million)
Table 2: Simple cost differences between hosted and premises-based CRM deployments
LIST OF FIGURES
Figure 1: Forecast global spending on hosted and premises-based CRM in the contact centre
Figure 2: Enterprises must provide consistent information across all channels
Figure 3: KM is embedded within CRM applications
Figure 4: Effects of the on-premises model on the financial statements of end users
Figure 5: Effects of the on-demand model on the financial statements of end users
Figure 6: Common customer pain points and how they can be resolved with KM solutions
Figure 7: Pure-play SaaS vendors and hybrid CRM vendors are competing more frequently
Figure 8: The leading CRM and KM vendors
Figure 1: Forecast global spending on hosted and premises-based CRM in the contact centre
Figure 2: Enterprises must provide consistent information across all channels
Figure 3: KM is embedded within CRM applications
Figure 4: Effects of the on-premises model on the financial statements of end users
Figure 5: Effects of the on-demand model on the financial statements of end users
Figure 6: Common customer pain points and how they can be resolved with KM solutions
Figure 7: Pure-play SaaS vendors and hybrid CRM vendors are competing more frequently
Figure 8: The leading CRM and KM vendors
