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  Analyst's View of Hosted CRM
 
Despite rumors to the contrary, hosted CRM is alive and well. In his forthcoming report, Hosted CRM Popularity Continues to Grow, Denis Pombriant, vice president and research director, Customer Relationship Management, examines why vendors and enterprises alike are moving towards hosted solutions. In this interview Pombriant discusses some of the key findings of his report.
 
Q. You're publishing a report on hosted CRM well after most people thought the idea of hosted CRM had fizzled. Why?
 
Well, the truth is it hasn't fizzled. We certainly went through a period after the tech bubble burst when a lot of vendors were exiting the market but others survived and today they are flourishing.
 
Q. What happened to cause the turn around?
 
There are several factors to consider. First, hosted CRM sputtered early on because many business and technology models simply didn't work and they didn't make it. Second, the current state of the economy has caused many customers, who might not have an interest in CRM hosting, to take a hard look at it. What they're finding is a solution that was pretty robust and cost effective. Third, fair or not, CRM has a reputation in the market for being difficult to own and operate, and that turned a lot of people off. However, that reputation is changing. Now more than ever, hosting is perceived as a viable alternative to traditional software.
 
Q. Did you measure this newfound acceptance of CRM in your survey?
 
Yes. Our data shows that what people like about hosted CRM - ease of deployment, low cost of ownership, and fast ROI - are pretty much the same as the benefits that vendors talk about. At the same time, there are traditional sore points about hosting - off site data storage, inability to customize, and integration issues - that still bother some people. But the difference between what we saw a few years ago and what we see today is that these sore points have been reduced to the level of objections that are handled in the sales process and are not outright show stoppers.
 
Q. Speaking of selling, how is market uptake for hosting?
 
Our data says that market uptake is pretty good. About 35% of the survey population said they already use some amount of hosted CRM and 85% said they will consider hosting when they evaluate new or additional solutions. What's interesting to me is that we asked the same questions in January and at that time 24% said they were users of hosted CRM and 52% said they'd consider it. So clearly we've hit a tipping point in the last six months.
 
Q. Did any findings from the research surprise you?
 
Yes, several things surprised me. Maybe the biggest surprise was the fact that users said they were most interested in marketing, then sales, and then service applications. Throughout the economic slowdown we've seen service applications leading the way. The shift to marketing tells me that organizations think things are turning around and they recognize a need to prime the pump. So that was surprising on a number of levels, especially for what it forecasts for the economy.
 
The report Hosted CRM Popularity Continues to Grow is available for free download with registration on Aberdeen's Web site.