Welcome to the CRM Mid-Market Abyss-PeopleSoft


Event Summary

TEC reviewed the PeopleSoft Preconfigured Mid-Market Solutions because it has taken an important share in PeopleSoft's overall customer base. With over 1,100 customers from the small and medium enterprise (SME) market, The Pleasanton, California, PeopleSoft (NASDAQ: PSFT), not only establishes its market dominance along with Siebel (NASDAQ: SEBL) and SAP (NASDAQ: SAP) as an enterprise solution provider, but also demonstrates its capability to cater to the mid-sized space and step on the traditional SME vendors' toes. PeopleSoft's strategy in tapping into the potential of the mid-market is based on targeting its Preconfigured Mid-Market Solution to the upper layer of the market. In a recent interview, PeopleSoft mid-market vice president and general manager, Jeffrey Read, defined the mid-market "as a tale of two markets: companies with simple business requirements and companies with sophisticated business requirements."

Like large enterprises, sophisticated SMEs have similar requirements with regards to functionality, business processes workflow, and integration. The principal difference comes from size. PeopleSoft is strongly aiming at this portion of the market by offering a preconfigured application with a data model, which maps out the special needs of the SME niche market place.

Product Definition and Market Impact

Today's small and mid-sized companies all have something in common. They are running on tight budgets while still sharing some of the bigger players' primary needs. The primary needs:

  • Empowering their sales forces and customer service teams to better communicate with customers
  • Allowing front-office employees to better perform collaborative work, thus enhancing team-selling opportunities
  • Delivering information where it is needed and when it is needed
  • Increasing efficiency and productivity while still being able to reduce costs

The SME market diverges from the larger-sized arena particularly in its lack of ability to sustain application or integration complexity and overdue return on investment (ROI). In other words, these companies need affordability, predictability, simplicity and instant value, along with a comprehensive application. The SME market diverges from the large enterprise not only from a functional standpoint but also in the way it adopts and implements technology. The formula is complex but it characterizes what is considered as today's market potential.

As the demand for small and medium-sized enterprises grows and outshines the large implementations, the market gets crowded with SME application providers. The SME market potential has CRM vendors and integrators of all sizes and shapes drooling. The market is growing at the rate of 13 percent per year, which is considerably faster than large enterprise growth.

What are the Cultural Differences between the SME and a Large Enterprise?

An SME is not big, mature, resource-rich, capital-comfortable, or very knowledgeable about what CRM system it wants. Vendors identify the mid-market range from a low end of $50 million to a high end of $1 billion (USD). Individuals have multiple roles in an SME and their business processes are underdeveloped, with best practices often nonexistent. They view CRM as modular versus enterprise-wide and their CRM implementation should be accelerated and at a fixed price.

Some exceptions however exist within this business space for companies that have implemented best practices and incrementally have improved demarcation of job descriptions. The largest vendors address this space more effectively than they do the typical SME space, but they still do not have a clear understanding of the difference between these organizations and large enterprises. The processes embedded in good SME CRM software applications have to be flexible enough to recognize constantly shifting roles and responsibilities. Often to be able to use CRM functionalities, mid-sized companies have to shift how they do business.

Traditionally the SME market was catered to by vendors like Onyx, Epicor, SalesLogix, J.D. Edwards, FirstWave, Frontrange (Goldmine), Maximizer, etc. These vendors basically created their tools based on the SME needs and priced the tools accordingly. Microsoft recently joined the team with its new CRM package MSCRM. See Microsoft Convergence 2003 Portrayed an Enterprise Solutions Crossroad!

The Major Leagues are Courting the SME Market

Faced with stagnant growth in the Enterprise-sized demand, many of the top CRM vendors such as Siebel, SAP, Oracle, and PeopleSoft are now heavily focused on the mid-market offering. Amongst them PeopleSoft is presenting an interesting approach based on what the SMB market requires. The method is not new and is already being used by other vendors to shorten implementation time. PeopleSoft would predefine delivery options and claims to be able to rollout the system in as little as twelve weeks. Other significant elements in the PeopleSoft strategy for mid-market are its fixed costs and firm delivery dates. Both approaches are definitely considered assets in gaining momentum within the realm of small and mid-sized companies.

In order to deliver on their promises, most of the large application providers have to rely on preset templates with minimum customization. However, let's not forget that regardless of the size, every company has its own character that translates into customization needs.

The PeopleSoft Accelerated CRM architecture is a Pure Internet Architecture?, empowering both users and administrators to add, subtract, and personalize entire screens or just a portion of their screens, with the information that works best for them. PeopleSoft Enterprise Portal could also be used as the primary or secondary doorstep for an e-business site. Having an e-business strategy for SMEs is undoubtedly an opening towards a mission-critical sales and services channel.

In general full Internet architecture requires no code on the client system—users need only a web browser to use the application. The Pure Internet Architecture? reduces implementation complexity and lowers long-term support costs. PeopleSoft's CRM architecture could eventually integrate small and mid-sized enterprises' e-business strategy, knowing that self-service ability tends to be a good thing for SMEs.

Since the mid-market is less burdened with heavily weighted legacy systems, integration should be less cumbersome. From the integration side, the PeopleSoft Accelerated CRM could easily integrate other PeopleSoft back-office systems like the supply chain management, financial applications, and human resources systems. PeopleSoft also provides APIs (application program interface) for other back-office systems integration.

The PeopleSoft Accelerated CRM solution covers a myriad of process areas like help desk, marketing, portal, sales, support, field service, interaction management, and a new universal access capability for mobile workforces. The solution starts at $50,000 (USD) per module and includes all the implementation, installation, and training costs.

Like the Onyx Software (NASDAQ NM: ONXS), recent announcement of its partnership with IBM consulting services, PeopleSoft has also partnered with IBM (NYSE: IBM) to provide implementation skills. IBM has also built a preconfigured eServer to sit underneath the PeopleSoft Accelerated CRM Solution, providing a lower TCO for customers.

User Recommendation

PeopleSoft's mid-market solutions are facing much sharper competition than its enterprise flagship operations. Its strategy to tackle the sophisticated portion of mid-market customers further reduces its market potential. The California company has considerably aligned its product offering with a number of SME requirements. However, it might still be considered by SMEs as high-end technology, far beyond their reach. PeopleSoft's recent announcement during a customer conference in Las Vegas that it would reduce costs by opening a software lab by year end with nearly 300 consultants in Bangalore, India, demonstrates the cost reduction pressure that the company faces.

PeopleSoft Accelerated CRM remains a PeopleSoft product with many functionalities and complexities. To the savvy computer worker it may all look like a piece of cake. For the majority of SME users more familiar with their Outlook and Notes applications, the browser interface filled with options would represent an unknown space.

Users must be aware that a full Internet architecture is certainly a positive component in reducing the time to roll-out but it hardly makes a difference to the user's learning curve. "Accelerated" can also mean minimum customization, which prevents companies from fully integrating their existing processes into their CRM system. Unlike Microsoft however, PeopleSoft will embrace Linux hoping to boost to its software sales. PeopleSoft shares were recently down three cents to $16.64 representing a fall of 9 percent so far this year and that could deprive PeopleSoft mid-market initiatives from valuable investments.

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