The midmarket is where the CRM action is right now.
Solution providers, vendors and analysts alike say the land grab is on for market share in the potentially lucrative midmarket arena, typically defined as businesses with revenue of $250 million to $1 billion.
"The vendors have run out of people in the enterprise to sell to," said Joe Basile, director of CRM for ePartners, a Dallas-based integrator.
Basile said the proposed Microsoft CRM offering, due by year's end, has seen most of the buzz, although that product initially will target very small businesses.
Midmarket companies must have a solution that isn't a huge drain on limited IT resources but can still do the very complex job of funneling up-to-date sales and marketing information to appropriate users in a quest to better serve customers.
These companies "have the same CRM needs-increased customer service, increased lead generation, decreased cost to service their customers that General Electric does," said Adam Honig, president of Akibia Consulting, a Boston-based CRM specialist.
Smaller companies need to take advantage of their ability to "turn on a dime" to implement CRM solutions faster than their bigger competitors, Honig said. He also recommends that they refrain from hiring a CRM integrator that is larger than they are.
On the downside, CRM in the enterprise has suffered a black eye from tales of costly implementations that don't live up to expectations. And in the midmarket, return on investment is perhaps even more critical than in resource-rich enterprises, observers said.
"The most interesting things will happen in the midmarket. The enterprise space has solidified. . . . The midmarket is where all the flux is," said Meta Group analyst Steve Bonadio.
CRM powers such as Siebel Systems continue to try to push into beyond their enterprise roots into smaller accounts, as has Oracle. Other companies such as Pivotal Software and Onyx Software made their names in midmarket companies. But a bevy of other players from Salesforce.com, which offers CRM via an ASP model, to FrontRange Systems, SalesLogix and others are also battling it out on this front, analysts said.
Vendors and solution providers agree that to attack this market, solutions have to be implemented fast, show quick ROI and be expandable to accommodate future growth.
Siebel, San Mateo, Calif., recently launched a financial vertical version of Siebel 7 Midmarket for investment banks.
"We're the only ones that have done a targeted middle market product and also take it into the verticals," said George Ahn, general manager of Siebel MidMarket.
Ahn would not provide pricing on the Financial version, but one solution provider said Siebel 7 Midmarket typically costs about $1,400 per seat, plus 22 percent of the license cost for maintenance.
But some observers said that shrinking down Siebel for smaller venues is overkill. "Siebel still requires a lot of training, some say 12 days of training for just one module, and most IT guys don't have time for that," said AMR analyst Kevin Scott.
Meta Group's Bonadio agreed. "I'd argue that the enterprise guys, even Siebel, don't understand the midmarket. It's no less complex than the enterprise, but the midmarket looks for ease of use, they're price-sensitive and they're looking for something packaged to meet their needs. They won't necessarily go for plain vanilla," he said.
Pivotal and Onyx traditionally have done well in the midmarket but face increasing pressure from new competitors, he said.
Siebel also attacks the midmarket through its licensing arrangement with Microsoft's Great Plains group, although that pact ends at the end of the year. Microsoft's decision to put out its own CRM product puts a continuation of that contract in doubt.
"Microsoft CRM is the death knell for Great Plains-Siebel MidMarket," Bonadio said.
Siebel has not succeeded in licensing deals either with Great Plains or via similar arrangements with J.D. Edwards and Lawson Software, he said.
Earlier this year, Erin Kinikin, an analyst at Giga Information Group, said J.D. Edwards, which purchased Youcentric last year for its CRM application, "sold more CRM in two quarter with [Youcentric than it did in two years with Siebel."