How close are you to achieving a complete hosted CRM suite?
We started on the more complex side of CRM – the customer service side. First with e-service, then it grew into the call centre and we started to displace Clarify, Vantive and Remedy. Then it was just last month that we introduced the full CRM suite. Gartner and Forrester claim that we are the only vendor that has a full CRM suite today on the on-demand model. No-one else has full campaign management today – they have to use third-party products to get the rest of the functionality.
The others are pushing towards that – that is the end game of the likes of Salesforce.com.
I understand that is their direction.
Do you think they will achieve it?
I think if you look at the first generation of CRM, then Siebel won. What strategy did they pursue? I think it's interesting that their largest business has always been customer service because that is the higher value problem within the organisation; it is more complex, the products are stickier. In many senses the CRM business is like winning the West -- it is easy to put tee-pees out on the plains but much harder to build a fortress up in the hills. Building CRM for seven years, we have been carrying blocks of granite up into the hills and building this fortress. These tee-pees have been popping up all over the place but in most organisations more customer touches occur in customer service than in sales.
Have you always been using the on-demand model?
We have always offered on-demand and on-premises which I think highlights something interesting -- four years ago, half our customers were using the on-demand model; today, more than 90 percent of our customers are using the hosted model. We don't charge for hosting – the price a customer pays is identical if we host it for them or they put it on their own hardware. Our profit margin is actually nominally higher if we host it because if they put it on their own hardware we have to provide technical support to keep the platform going.
Are your larger customers adopting the on-demand model? The perceived wisdom is that on-demand CRM doesn't work for large enterprises because of the integration issues?
We don't see any correlation between propensity to adopt and size of company, in fact over 40 percent of our revenue comes from organisations with greater than $1bn in revenue. Around 50 percent comes out of the middle market and 10 percent comes out of government. Interestingly, here in the UK we have 26 government agencies using our solution, borough councils, the tube, central government organisations – are all using it to deliver better service to citizens.
