Market Leaders: Sales Force Automation

The Market

After nearly two decades of development, sales force automation (SFA) is “hitting a point of maturity,” says Mark Smith, chief executive officer and executive vice president of research at Ventana Research. And, like any typical adolescent, the SFA market is feeling pressure to be more socially adept. In 2010, integrating social media capabilities shifted from a trend-to-watch to a crucial development for vendors in the lead pack. A market that’s more mature also results in a higher saturation point for customer adoption. A recent study from CSO Insights found that nearly 75 percent of firms already possess a core SFA system. In 2011, analysts assert that vendors will battle over the remaining one-fourth (and attempt to poach competitors’ current customers) with diminishing prices and specialized vertical solutions attracting new buyers.

The Leaders

Microsoft, a first-timer on last year’s leaderboard, extended its strong SFA story in 2010. Despite Salesforce.com honcho Mark Benioff’s glib comment to Forbes in May that “Microsoft has failed on the Internet,” the vendor nearly clinched the highest rating in company direction (second only to Salesforce.com itself). Several analysts suggest that Microsoft’s appeal stems from name recognition and Outlook integration, but the vendor continues to innovate with rollouts, such as the Microsoft Dynamics portal accelerators for social networking and partner relationship management. “Microsoft Dynamics is aggressively in this market,” says Rebecca Wettemann, vice president of research at Nucleus Research, “[pushing] the idea that we can use this application for more things.”

Last year’s One to Watch, NetSuite, made some serious strides in 2010. The software-as-a-service (SaaS) vendor saw its strongest first quarter results as a public company this year—a feat followed swiftly by the release of SuiteCloud 2.0. NetSuite has long been a favorite for small and midsize businesses, but Leslie Ament, research director and managing partner at Hypatia Research, attributes the vendor’s success to “higher levels of user acceptance and adoption of the SaaS model for enterprise applications.” A second cause for the upturn, Ament says, is “NetSuite’s on-demand information architecture, which is designed to run off a single data source—instant visibility and access to a single version of the truth.”

In 2010, Oracle was a study in peaks and valleys, attaining the highest score in depth of functionality among the leaders, and the lowest for customer satisfaction. This spring, the release of Oracle CRM On Demand 17 included industry-centric editions, thereby spearheading the marketplace trend towards vertical solutions. However, analysts cite customer complaints regarding management issues and challenges with highly complex deployments. Ray Wang, a partner with Altimeter Group, says these gripes may represent little more than growing pains. “It’s more of a sign of early-adopter maturity,” he says. 

RightNow Technologies once again earned a spot on the leaderboard, largely via its social networking push. Analysts say last September’s acquisition of social networking company HiveLive for $6 million is a much stronger buy than the questionable 2006 purchase of Salesnet, which RightNow failed to integrate successfully. Analysts remark that the acquisition of HiveLive and the integration of social networking in RightNow CX bolsters the social capabilities established through RightNow Cloud Monitor, which boasts 100 enterprise customers by last count. Brent Leary, partner and cofounder of CRM Essentials, says, “Emphasis on integrating customer experience initiatives with traditional areas should pay off nicely.”

The Winner

It’s no surprise that Salesforce.com, the SFA darling, waltzed off with the win for the fifth year running. Jim Dickie, managing partner at CSO Insights, says the on-demand pioneer “will almost always make the shortlist for consideration for new projects.” While the Salesforce.com brand is quite attractive, the vendor is relying on more than mere cachet. Following the 10-year anniversary of the company’s founding, and the announcement of a record $1.3 billion in revenue for the 2010 fiscal year—see CRM’s November 2009 issue-length profile for more details—Salesforce.com continued to make bold moves: the launch of collaboration application Chatter, a revamped AppExchange 2, and the acquisition of Jigsaw, the crowdsourced data services provider (named one of last year’s Rising Stars). Leary sums it up: “They move the needle.”  

One to Watch

Sage, the winner in this category back in 2005, saw ratings decline in subsequent years, until it was knocked off our scoreboard completely in 2009. However, the software stalwart looks to be making a comeback. Sage reported an uptick in sales, citing 127,000 new customers in the six months ending March 31. Two months later, the vendor launched its Cloud Computing CRM Suite. CRM Essentials’ Leary says that this deployment, combined with an “increasing integration with social and location-based services…should allow for more opportunities.” 

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