On-Demand CRM – Integration Hub for the Small Business or Enterprise Department

There is an interesting phenomenon happening in the small and medium business segment. The widespread adoption of on-demand or software as a service (saas) CRM, led by Salesforce.com, and followed by companies such as NetSuite and RightNow Technologies.

Well, that’s not really new.

What is new is the expanded use of saas CRM software within these mini-enterprises, whether independent businesses or smaller divisions or departments of larger corporations, as their principal business platform. Since saas CRM manages the lifeblood of the business, sales and customers, and is increasingly more user friendly and flexible, it is becoming the preferred method for companies to manage their business.

As a result, it is also becoming the de facto integration hub, or SOA enabler, for the smaller enterprise.

A case in point is the experience of a well-known educational products sales company. It’s parent company sells educational toys through retailers. However, it launched a division that sells education-oriented items to schools and school districts, such as a handheld screen-based interactive tool that uses story narratives to teach English proficiency to non-native English speakers. This newer division established a territory sales model, with geographically-based sales executives selling to school districts in their area.

The main corporate entity has only a handful of account managers who sell to large retailers such as Wal-Mart and Toys’r’Us. Whereas it is geared towards a retail sales model and related B2B IT infrastructure, the newer division had the infrastructure needs of a territory-based direct sales model. They required a CRM application to track leads, opportunities, and closed sales, and because of the reduced bandwidth of this smaller business unit, they required the efficiency gains of an automated commission calculating application.

With no dedicated IT resources (IT resources are tied to corporate and are available “on-loan” to the new division), and a need to ramp-up quickly, the division chose to bring the CRM and commission calculation functionality of the on-demand model. They chose Salesforce.com and Xactly Corporation, respectively, to fulfill these functions. The one on-premise application they had access to was Oracle Financials for accounting.

The missing piece was to integrate these applications together. They chose to go with a packaged integration platform, adopting their subscription-based pricing model and on-premise software.

In addition to being the CRM platform for the new division, Salesforce.com is also serving as the de facto “enterprise service bus” to incorporate the accounting functionality of Oracle Financials, and to trigger Xactly to do it’s job of calculating sales commissions.

This use of Salesforce.com as a de facto on-demand ESB platform was noted in an August 2007 white paper entitled “Busting Myths of On-Demand Integration,” by Peter Coffee, Director of Platform Research.

“On-demand platforms exhibit the growing capability to provide a foundation for integration,” he said, citing a May 2007 announcement of the Salesforce.com SOA technology that enables the exposure and consumption of web services.

In the same paragraph he notes:

“This is not to say, however, that a move to a Web services protocol strategy (such as that of using a saas application such as Salesforce.com) is a prerequisite for on-demand integration…there are options available for use with the salesforce.com platform” such as custom coding or a third party integration platform.

In other words, on-demand applications, Salesforce.com being the most prominent, are quickly establishing themselves as integration hubs the way ESB providers such as Sonic Software, IBM’s Websphere, and BEA’s Weblogic were formulated to be.

These SOA solutions, however, are cost-prohibitive for smaller companies, divisions or departments, and are often managed by enterprise IT staffs who are unresponsive to the needs of the department. These smaller enterprises have to fend for themselves, and are adopting on-demand applications that require little to no IT involvement.

IT typically has to get involved when it comes to integration, according to Coffee. Such was the case with the educational products company. Their IT department provided the input that the newer division needed to give the technical “thumbs-up” to the integration solution. But due to human bandwidth issues they decided to go with a fully delivered integration solution as opposed to the traditional toolset that is typically sold to IT departments.

Tying together Salesforce.com, Oracle Financials and Xactly Corporation was done in the span of four months and cost less than $50,000. Why did it take that long? Because they had to take a breather between deciding on an integration vendor and a commission calculation vendor.

Compare that with enterprise application integration projects which typically take nine months or more and cost hundreds of thousands of dollars, and you can see why Salesforce.com, together with fully configured integration solutions, are quickly becoming the “integration hubs” or systems of record for the smaller enterprise.