Will Microsoft eat Salesforce.com’s lunch with their freshly announced pricing for hosted CRM? There is a heated debate on the subject, with longtime enterprise software guru Josh Greenbaum declaring that Microsoft is about to eat Salesforce.com’s lunch:
“2008 promises to be the real year of on-demand CRM: It’s Salesforce.com’s market to lose, and, unless something changes dramatically in their favor, lose it they will.”
Josh has been bearish on Salesforce.com for a while, declaring it the next Siebel. It’s a bold call, but calling it ahead of the curve, based on fundamentals, going against the trend is what makes a real analyst.
Salesforce.com does not seem to be worried about their lunch-ticket though:
“What it looks like is that Microsoft is just marking down an inferior product to what customers are actually paying right now. “
-says Bruce Francis, vice president of corporate strategy on Tod Bishop’s Blog. Ouch! He goes on:
“Also, one thing that I haven’t seen is the url where I can sign up for a 30-day trial.”
Well, I can point to such a URL, albeit not at Microsoft: http://zohocrm.com. (Disclaimer: I’m an advisor to Zoho)
I’ve long stated that Zoho’s product is actually more than just CRM: with Sales Order Management, Procurement, Inventory Management, Invoicing functionality Zoho seems to have the makings of a CRM+ERP solution, under the disguise of the CRM label. The company also stated they are working on Accounting and HR, they have a database/application Creator, and the best-in-class Office Suite: can you see the Big Picture?
Now, for the best part: pricing. Microsoft is heralded to undercut Salesforce.com with their $44/$59 per user pricing. That’s still a hefty price, if you ask me – Zoho CRM is free for the first 3 users, then $12 per user. I don’t know who is eating whose lunch, but if you are a business user, $12 bucks for CRM+++ is as close to a free lunch ticket as you can get.
How can Zoho do this? They are passionate about the real meaning of the On-Demand revolution: bringing good quality yet affordable software as a service to the masses. They are an efficient development “machine” and manage to cut out “fat”: Sales expenses, traditionally representing 70-80% of costs in the enterprise software business. We have an ongoing debate in the Enterprise Irregulars on whether this inexpensive “pull” model is hype or reality. The nay-sayers point to Salesforce.com, or the new IPO-hopeful NetSuite: sales costs are sky high, and for all the “no software” revolution Marc Benioff has brought about, he employs a rather traditional enterprise sales staff, a’la Oracle. The key differentiator IMHO is the target market:
“Salesforce.com is focusing more of its efforts these days on capturing larger enterprise accounts”
-says Phil Wainewright, and that means traditional, expensive sales. Viral Marketing, demand generation, try-online-then-sign-up works better with the Small Business market, which is what Zoho is focusing on. The Street only seems to value the large corporate market, so it’s understandable that venture funded, IPO-driven or already public companies strive to move up the chain; Zoho is privately owned, and can afford to grow their business as they wish – apparently they see the goldmine waiting to be explored on the SMB market.