Salesforce Announces PRM, NetSuite Goes Retail

Posted: June 28, 2006 in CRM

Two things hit the wires this week relative to CRM that I think are interesting events and in some ways they go beyond the on-demand space.  Salesforce.com announced its partner relationship management (PRM) solution and NetSuite said it will sell its product in a retail configuration.  Let’s go back to front.

At first NetSuite’s announcement of a partnership with CompUSA seems counter-intuitive—ok, it won’t be next to the Wheaties in the supermarket, but it’s retail nonetheless.  Perhaps many people first thought, Holy cow! They’re going to sell NetSuite in a brick and mortar retail store: how twentieth century!  Don’t they already have a corner on the biggest marketplace in the history of retail called the Internet?  Why would they go retro? 

Well, I thought so too, but rather than making me question CEO Zack Nelson’s sanity, I like to believe this is a shrewd move.  Why?  Because, as many of us are figuring out, these days no matter what you call it, it’s becoming much less a sales process and much more a buying process.  In many situations today good sales people enable the purchase; they don’t make the sale, so the decision to use a regular retail channel to sell CRM makes a bit of sense. 

After all CompUSA prides itself on having a knowledgeable sales staff capable of intelligently discussing the ins and outs of products with customers.  SMBs, the kinds of companies that NetSuite targets, buy other supplies at CompUSA including software like QuickBooks, so why not also offer software that is delivered on-demand instead of on-CD?  What could be more natural?

NetSuite’s move into retail distribution is really one symptom of a major change taking place in the high tech market as a whole and Salesforce.com’s announcement of a partner relationship management offering is really another facet of the same object.

Like NetSuite, Salesforce.com is simply finding another way to service one of its core customer constituencies, in this case with PRM.  Salesforce.com is a phenomenon that started at the grass roots, in small companies, just the place you would expect a disruptive innovation to get going.  Since then, Salesforce has done a great job of moving up market but its customer base still looks like a pyramid with a large base of small companies.  Pretty much every customer base looks the same, by the way, since there are more small companies than large ones. 

Many of Salesforce.com’s core customers, in addition to being small, are also resellers in one indirect sales channel or another, so it makes double good sense for Salesforce to go after that installed customer base with a new product.  PRM is the kind of product that will bring larger OEM companies into the mix because, regardless of what a larger company might think of on-demand computing, the savvy ones, at least, will use this PRM product because their channels have already settled on a big part of the solution as a standard.

Taken together both of these events reinforce the point made here last week about secular change.  We might not be interested in ever setting the time on our VCR units, but that’s not because the technology is too tough to master; it more reflects our interest or lack thereof in having a clock embedded in every appliance we own.  Want to know the definition of insanity?  Try resetting all the clocks in your kitchen after a power failure.

If something that was once as complex and expensive as CRM can be sold in a retail store, then it really points to the fact that high-tech is moving (has moved?) to Main Street in a big way.  Ditto the indirect channel.  This is a big change and it happened very quickly. 

Moreover, going after the reseller market by Salesforce.com shows that at multiple levels, vendors are seeking alternative and less expensive sales channels through which they can deliver their products. 

We tend to look at the call center as an almost separate and distinct part of CRM and in many ways it is.  Interestingly, the call center went through the same kind of change earlier and I for one did not see it as a game changing event though in retrospect it was. 

The event in question was the advent of the on-demand call center.  All of a sudden you could provision a call center seat—not simply an SFA seat, but a call center seat with access to all kinds of exotic equipment like automatic dialers (ok, I’m an SFA kid, I admit it)—on-demand across the Internet.  That was a game changing event and one that commoditized an industry.

So, where to from here?  Well if I could place a bet (and what the heck we’re dealing with Monopoly money here) it would be that the entrepreneurship opportunity in CRM will increasingly be found in the services we add to these and other core services that improve in reliability daily and on which we increasingly depend.

So, what did you think?

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