The Year of the CRM Boom – Reality is starting to match the hype.

Read this article at Accounting Technology

By Robert W. Scott

Irving, Texas (April 04, 2004) – For about two years now, the market has debated how much the projections for the market for Customer Relationship Management systems were hype and how much realty. For Alex Solomon, one of the owners of Net at Work, an accounting software reseller, there is no doubt that CRM has begun to live up to the predictions.

“It’s my favorite thing in the world, right now,” says Solomon, whose New York City firm spent the last 12 months hiring people and building up its sales force, including cross-training personnel. “You can’t dedicate people to just CRM,” he says.

Net at Work installs both Best’s SalesLogix and Accpac CRM. He says that perhaps 60 percent of new license sales come from CRM and business intelligence.

Solomon believes that CRM represents a great sales opportunity to push new accounting systems. Clients who purchase CRM often want to have the integration that comes from having different systems from a single vendor.

“One deal we are working on right now, because we are going with SalesLogix, they are going to displace their Great Plains system and install MAS 500,” he says. In another case, a client moved its accounting to the Accpac Advantage system because “they love the CRM side of the system.”

Yes, 2004 may well be the Year of CRM—or perhaps it’s the first of many years, because CRM appears to be in the same position that accounting packages occupied in the early 1990s—not many companies have CRM packages. Since most organizations do have accounting packages, it is not hard to see why many resellers say that CRM has become the biggest source of new license sales. And it appears, as Solomon suggests, that CRM can be the foot in the door for accounting systems.

After two years in which many accounting resellers shrank their business by 50 percent, growth has struck again. But it’s a new game, because CRM gets sold and used by the sales force, not the accounting department.

One of the reasons for the explosion is the entry of Microsoft Business Solutions into the market with Microsoft CRM, although other companies may have benefited more than Microsoft.

Resellers are very excited by the product, says Holly Holt, group product manager for Microsoft CRM. The system integrates with Great Plains, with Solomon integration “just around the corner.” Holt believes the pricing also has a lot of appeal.

Asked about resellers’ comments that Microsoft CRM is a “decent version 1.0 product,” Holt replies, “It’s not Siebel, but it was never designed to be.”

Still, many more Best and Accpac resellers speak enthusiastically about their companies’ offerings, while several MBS resellers used phrases such as “It’s okay,” or “We can write around its limitations.”

However, most agree that Microsoft has had an impact simply by fielding a product. The giant software company’s marketing makes users aware of CRM and helps educate them on its uses.

“It’s simple, easier to deal with, and a lot less costly from the point of view of software and implementation. It also integrates with the other Microsoft capabilities,” says Mike Merfield, a partner with En’tegrate USA, an Axapta reseller based in Rolling Meadows, Ill.

Merfield believes some criticism of the Microsoft product stems from a backlash against software complexity. “It doesn’t do everything that Siebel does, but you don’t want it to,” says Merfield. Unlike some Best resellers, En’tegrate, and apparently many other MBS resellers, aren’t setting up separate businesses.

“It’s not something we would build an entire business around,” he says. The company has cross-trained some of its Axapta personnel and has conducted some CRM-specific direct marketing campaigns.

Dueling Best Products

With Sage’s pending purchase of Accpac International, Best Software has two products that have been competing—Accpac CRM, an online product, and SalesLogix, marketed by Best’s CRM division.

“It’s an interesting position to be in,” says Mike Bongiovanni, Accpac’s Senior vice president of sales. “SalesLogix is a decent product. It’s serving almost the same market we are from a feature and functionality standpoint. We are comparable. From an architectural and structural standpoint, we are much stronger.”

Bongiovanni says SalesLogix fits well in organizations that need deep features. Accpac CRM addresses the growing market for Web and wireless products.

“If you think about the way CRM is used, it’s the one mid-market application that truly needs to be deployed outside the office,” he says. Bongiovanni pictures Microsoft CRM in the way many MBS resellers picture it, as “a decent shot at a Generation One product” that helped legitimize the market. However, he echoes criticism that Microsoft’s strategy to sell CRM with the Microsoft “stack” of products makes it expensive. That stack includes Active Directory and BizTalk, which makes it “a significant expense,” says Bongiovanni. “It gets very complicated. The installation of Microsoft CRM is not for the faint of heart.”

Overall, Accpac and Best resellers talk much more enthusiastically about CRM than their Microsoft counterparts. This is apparently rooted in a measurable success in the market. Best was crowing when a recently released Gartner Group study reported that Best had 25 percent of the CRM market in the SMB space.

And Jon Van Duyne, the general manager of Best’s CRM Business Unit, says that top CRM partners are racking up 50 percent revenue growth.
The company’s SalesLogix VARs are still largely dedicated CRM resellers, companies that worked with the division when it was a separate company, but Best is beginning to train its accounting VARs.

Noting the accounting resellers who are forming CRM units, “we find the biggest success is when we have a business partner with a focused CRM department,” he says. Van Duyne estimates most installations range between $50,000 and $100,000, with a typical installation taking from one to three months to complete.

Best will certainly look to the Web increasingly. “Both mobility and the Web will play huge roles,” he said. In Europe, Sage has already launched some integration capability with its application integration server.

Best resellers who have changed their organizations include Solution Strategists of Cranford, N.J., which has formed a CRM division, as has the Macdonald Consulting Group of Atlanta.

Solution Strategists president Art Nathan, whose company posted sales of $1.6 million last year, expects CRM to help his firm grow. He has the services of two-and-a-half people in the CRM division and expects significant revenue gains.

“With the CRM unit, we are going to see quite a bump in sales,” says Nathan.

A Professional Angle

CRM has a second avenue, aimed at professional services such as accounting and tax firms, who charge by the hour instead of selling products.

Although products like Microsoft CRM can be tailored for such firms (see related story page 39), a separate group of companies such as Interface Software and Cole Valley Software are targeting accounting professionals.

Like Microsoft, Cole Valley enters the CRM world from the contact management sphere. Its ContactEase integrates with such systems as Microsoft Outlook, Lotus Notes, and GroupWise.

“The user continues to have the Outlook look,” notes Cole Valley president Jeff Reade. He sees the familiar look and feel as having a strong appeal to accounting and law firms. “So often they don’t want to learn to use new software,” he says. The ContactEase interface means “in many cases, they don’t have to have training.”

For budget-minded firms, ContactEase can be a good buy because it takes only two to three days to implement, on top of the low training costs. “We end up being about half of what the higher-priced CRM systems are,” says Reade.

Firms can also instruct clients to click on the firm’s URL and update their data, with the most important information going directly into the system. The product is priced at $150 a seat for Outlook users, with pricing scaled down as the number of seats increases, and from $250 a seat down for power users. Cole Valley, with about 10 to 15 accounting firm clients, has only recently begun to push into the accounting market.

However, Mahoney Cohen & Co., a New York City-based CPA firm, has used ContactEase for several years. It is how the 26 partners, along with principals, share information at this more than 200-person firm.

“We’ve got everyone on the same page,” says marketing director David Reimer. The system integrates with the Lotus Notes installation in use at the firm. ContactEase already integrates with Outlook, so that data entered in Outlook is automatically saved in the ContactEase database, and Cole Valley may provide the same integration with Notes.

Mahoney Cohen uses ContactEase to track who knows who, who went to school with who, which clients use which banks or attorneys, the source of businesses, prospects, and marketing activities. It can track new business by partner and referral sources. That makes the system a great year-end planning tool, says Reimer.

“If we got 15 percent of our new business from attorneys one year, but only 10 percent the next, we can sort by attorney,” he says. “Maybe we need to get back in touch with some law firms.”

The firm enforced use of ContactEase by requiring partners to enter new clients into the database in order to get a client code. “If you want to bill your client, you have to use it,” notes Reimer. There are also some required fields that must be filled in order to conduct business with the new client.

Interface Software, whose American offices are in Oak Brook, Ill., generally targets larger professional services firms, including CPA firms. Among its accounting firm clients is Vitale Caturano, a 215-person firm based in Boston. Vitale implemented Interface’s Interaction Software in December 2002.

“We were growing to the point where we had enough partners that you wanted to make sure there was some cohesiveness,” says Jill Hulsen, director of marketing. “They wanted to easily know who knew whom. We also had mailing list problems. We want to be able to segment the mailing list to target it more.”

Interaction lets workers categorize relationships in ways similar to the process described for ContactEase. Hulsen continues, “For our clients, we track who their lawyer is, who their banker is.”

Acceptance has been driven by partners, particularly because the partners who are responsible for generating new business “had the greatest need,” she says. Vitale has not had any whips to drive users to the system, and is just now implementing the VCC Service Olympics. Team members earn points for client service, including logging activities into the system. “If you make a change [to data] yourself, you get points,” she notes.

Both Reimer and Hulsen say it is difficult to state dollar amounts for a return on investment for their systems. But they have no doubt about the benefits. “It’s more than that,” says Hulsen. “It is a cultural adaptation. It is a way of increasing efficiency in the firm.”

The reason 2005 may be even stronger is that many resellers are just now getting ramped up to sell CRM products. Exact Software has had 130 installations of its Web-based e-Synergy in North America since the United States launch in June 2002. Exact stresses its intent to integrate CRM with accounting software as it works to get market acceptance for its Macola ES, the successor to the Macola Progression line.

The system offers “one database, one architecture,” notes Michael House, general manager of the e-Synergy business unit. However, because most installations still use the older Progression software, the company has developed an interface for Progression users.

Because sales people spend their time in the field, Exact is rapidly moving to make e-Synergy available in the field. “We actually have synergy available on handheld devices,” says House, describing the e-Mobile version of the system. “You can access work flow, customer records, and document management to some degree.” Human resource functions will also be added.

Tuning CRM for Accountants

Resellers are tuning Microsoft CRM for use in vertical markets—targeting all CRM products towards specific industries as one of the hot opportunities for all the packages. Those markets include accounting firms.

Templeton & Co., a CPA firm based in West Palm Beach, Fla., has retrofitted the Microsoft CRM package as CRM for Professionals, at an installed price that ends up about $1,000 per seat.

“What it does for CPAs is that it helps them track relationships,” says president Steve Templeton. Microsoft CRM needs adjustments in terminology to fit CPA practices. For example, Templeton’s firm turned the term “customer” into “client.” The firm is also targeting other professionals who bill by the hour. One of the big pluses, he continues, is that the CRM package integrates with Microsoft’s Outlook contact manager. Templeton’s firm sells both Great Plains and Solomon. Integration with Solomon is expected this year.

Templeton notes the resemblance between such professional CRM packages and practice management systems. “We want to work at integration with Visual Practice Manager,” he notes. VPM is the practice management system from CPASoftware, now owned by Best Software.