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By Carl Weinschenk
True statement: The Internet greatly increases how startups and small businesses can use customer relationship management (CRM).
It's true--but it's also an understatement. The more precise way to put it is that all but the most rudimentary CRM functions are out of reach for startups and small organizations unless they harness the Internet.
In the past, the financial and operational barriers to startup and small business use of advanced CRM packages were extraordinarily high. The result was that most SMBs ventured no further than the features available in basic email packages. This left a lot of money on the table in a couple of ways: It stopped small companies from using CRM to find potential customers and limited their ability to upsell existing clients.
Sales force automation (SFA) is a subset of CRM. A look at one SFA procedure--order fulfillment--is a good indicator of how potent CRM can be. "Data is automatically sent to an accounting application, which sees that there is an invoice," says Thomas Furr, the vice present of business development for online CRM vendor Smart Online. "[An update] is sent to accounts receivable and inventory. It says that somebody has purchased 100 widgets and they have to be shipped. When they are shipped out [an automatic] message comes back to the accounting application and says they have been sent."
Standalone software that that does all this must be integrated into the fabric of the organization. This is neither easy or cheap. Thus, enterprise-grade CRM isn’t appropriate for smaller companies or startups that have neither the money or expertise for the job.
The Net to the Rescue
The Internet fundamentally changes the equation. It the conduit for the delivery of software as a service (SaaS). SaaS shifts responsibility for the heavy lifting described by Furr from the client to the service provider. Generally, personnel at the client company access data through a password-protected portal. The need to reconfigure an operation's backend operations and train or hire operational people are eliminated. Much of the cost is wrung out as well.
It's difficult to overstate the impact. "Really, I think the magic behind SaaS for small and midsize businesses is to get potentially enterprise class software provisioned for smaller numbers of users," Rob Bois, research firm AMR's research director for customer management. "CRM is traditionally very expensive per-seat and also is very expensive to deploy in terms of services and customization."
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