Government Hosted CRM Software

Achieving faster implementation, improved user adoption and less cost

Software as a Service (SaaS) has become the industry accepted phrase for the hosted and on-demand delivery of CRM and other business software applications. The dramatic rise of SaaS solutions is based on the disruptive change in delivery, pricing and support. SaaS applications are are securely delivered over the Internet to users' browsers. Internet delivery facilitates anytime, any place and any device access and information system utilization. SaaS products are rented or purchased on a monthly or annual subscription instead of an up-front capital investment. Outside of the cost savings, the biggest benefit of the subscription model is acquiring the vendors vested financial interest. SaaS vendors recognize that if the customer isn't happy, they will choose not to renew their subscription. The final change in the SaaS paradigm is the transition of systems maintenance from in house IT (Information Technology) resources to the outsourced SaaS company.

Just like their private industry counterparts, federal and government CIO's and technology staff are challenged in aligning the most strategic IT projects with the agency's mission. CRM SaaS solutions offload the laborious deployment, maintenance and support tasks to a SaaS provider who specializes in these activities and typically performs them at a lesser cost than can be performed internally due to the economies achieved in managing CRM applications for hundreds of organizations from a central location. The SaaS provider manages the application software as well as the hardware procurement, tuning, patching, security and rotation.

The leading government SaaS CRM manufacturers are Oracle (at the high end) and Aplicor (in the middle). Salesforce.com is an extremely popular SaaS CRM product, however, has not made the inroads to government as its primary competitor Aplicor. Similarly, SAP give SaaS market hype, however, fails to effectively compete with Oracle for hosted government contracts.

The SaaS cost model is based on software utilization instead of ownership. The SaaS business model provides several public sector advantages:

• No Capital Expenditures
  The rental pricing model provides CRM software utilization and technical support based on a subscription model. SaaS eliminates the large up-front software and hardware investments required by on-site information systems.
• Faster Implementations
  On-demand information systems bypass the technical installation tasks associated with on-premise systems and significantly accelerate the implementation timeline.
• No Long Term Contract Lock-In
  Unlike software licenses which are purchased for perpetuity and not refundable, the SaaS subscription pricing arrangement can be negotiated by the month, quarter or year. Users are able to change CRM systems if the application fails to deliver.
• Predictable Costs
  As opposed to software procurement and the follow-on 'pay and pray' implementation effort, on-demand CRM applications are delivered according to an agreed service fee for the duration of the contract.
• Less Costs
  With on-demand or hosted software applications that are managed by the software application provider, customers require fewer technical support resources in their organization. According to the analyst firm Yankee Group, "Hosted CRM solutions lower the customer's TCO (total cost of ownership) by running its software in a centralized bank of computers, which dramatically reduces the cost of service per user. Because they are not installed on the customer's premises, hosted solutions also can reduce software implementation and customization costs by as much as 90%."
• Better Return on Investment
  In a well cited 2005 research study, Rebecca Wettemann of analyst firm Nucleus Research discovered that while only 40 to 50 percent of clients with on-premise CRM applications achieved a positive return on investment (ROI), 82 percent of companies using hosted CRM saw positive returns.
• A Financially Vested Partner
  According Amy Konary, analyst with IDC, a major advantage of the hosted model is that it aligns the interest of customer and vendor. With traditional on-site software licenses, she notes, "there's no strong vested interest from the vendor perspective to make sure the customer is successful." Once a software license is sold, she says, "the vendor is not coming back until it has something else to sell." By contrast, hosting vendors must ensure continued client success or risk losing their recurring subscription. "They aren't just throwing software over the fence," says Konary. "They have to make sure the customer is happy with it month after month."
• Better Uptime and Reliability
  According to Yankee Group, "The hosted CRM provider remotely manages and operates the technology, offering the customer measurable availability, reliability, security and performance based on service-level agreements. Hosted providers can centralize and utilize cutting-edge infrastructure technology and techniques, including redundant data centers that ensure application availability and business continuity. In addition, the hosting vendor can employ expert personnel to maintain the applications and provide the customer with ready access to its information technology (IT) staff. Customers benefit not only from the high-availability infrastructure, but also from reductions in IT-related infrastructure, labor and training costs."

See www.online-crm.com for a more detailed glossary of CRM on-demand and hosting terms.

Reference CRMlandmark.com for a complete Hosted CRM web site reference