Finding Niche Is Key To CRM

Solution providers remain upbeat about relationship management applications, despite warnings from CRM developers that enterprises are delaying projects.

CRM vendor Onyx Software, Bellevue, Wash., was one of several software companies to adjust earnings expectations and announce layoffs last week in the face of a cooling economy. Enterprises are postponing IT projects because of recession fears, says Brent Frei, CEO of Onyx.

"The watchword now is lots of small projects, rather than monolithic changeovers," says Mark Cofano, president and CEO of Intersect, a Bellevue-based integrator.

Quick implementation and believable return on investment (ROI) arguments are winning customers, says Scott Silk, senior vice president of business development at integrator ePresence, Westboro, Mass.

One niche in relationship management being exploited with some success involves automating basic provisioning tasks that help companies interact with employees and supply chain partners, says Silk.

These solutions often are built on top of directory services and can show ROI in six to nine months, about half the time of applications built with traditional relational databases, says Silk.

Provisioning application developer Business Layers, Rochelle Park, N.J., expects to shift 70 percent of its sales to channel partners by next year, says CEO Izhar Shay. "A typical installation is $300,000 in software licenses, and the customer pays about that amount to professional services organizations," Shay says.

In earnings and layoff news last week, Onyx laid off 135 employees, or 17 percent of its workforce and expects to lose between 31 cents and 33 cents per share for the first quarter ended March 31.

Waltham, Mass.-based Firepond laid off 165 people, about 20 percent of its workforce, and Kana Communications, Redwood City, Calif., disclosed it expects to lose up to 43 cents per share for the first quarter, compared with a First Call forecast of 19 cents per share.