PeopleSoft's Tale of Two Markets

Once staid and virtually neglected, the small and mid-size business (SMB) segment of the CRM market is suddenly the chief object of affection of scores of CRM companies. Just about every firm that is active in CRM is targeting this space one way or another. Perhaps the most interesting development has been the move by enterprise vendors to start paddling downstream.

CRM Buyer Magazine spoke with PeopleSoft Mid-Market vice president and general manager Jeffrey Read about his company's plans to expand its mid-market base. He emphasized that PeopleSoft is not a Johnny-Come-Lately to the sector -- its mid-market division is five years old. But he pointed out that the company's mid-market CRM application, Accelerated Solutions, has passed a number of milestones in the past year and is poised to reach a few more in Q3.

Mid-Market Economies

PeopleSoft mid-market "has more than 1,100 customers this year, which is just over 25 percent of PeopleSoft's total customer base. In addition, over a third of PeopleSoft's new customers are from the mid-market," Read said.

"But the most significant development is that at the end of Q3 we went from being just a U.S-based mid-market program to one that is active in 10 other countries." In August, PeopleSoft mid-market expanded into Canada, the United Kingdom, The Netherlands, France, Australia and New Zealand. In Q1, Read reported, it will expand into Germany, Switzerland, Italy and Spain.

Going global puts PeopleSoft mid-market on a new growth trajectory, he said. "Once you get out of the United States, most countries are really mid-market economies. In Canada, where I am from, once you get below the 250th company you are into companies with CA$300 million in revenues."

Tale of Two Markets

CRM Buyer: There are almost as many definitions for "mid-market" as there are vendors targeting the mid-market. What's PeopleSoft's definition?

Read: The short answer is that we define 'mid-market' as companies with US$300 million in revenues or less. Half of our customers are companies with revenues below $100 million, which is the true sweet spot of the mid-market.

But I have to say there is almost a fixation about defining 'mid-market.' Oracle (Nasdaq: ORCL) will say $1 billion or less, Microsoft (Nasdaq: MSFT) might say it is $800 million. But these are really figures to avoid sales conflicts within vendors' sales operations. Mid-market is basically a tale of two markets: companies with simple business requirements and companies with sophisticated business requirements.

In Pursuit of the Sophisticated Buyer

The sophisticated companies have requirements that are the same as any multinationals. Their challenge is that while their business issues are complex, they don't have the budget and staff to try to implement a large global ERP (enterprise resource planning) or CRM solution.

Companies in the simple market tend to have a point problem that needs to be addressed, and they are not interested in integrating it with other components.

Our solution, which starts at $50,000 per module and includes all the implementation, installation and training costs, is primarily aimed at the sophisticated buyer.

CRM Buyer: Who are your primary competitors?

Read: We mainly see J.D. Edwards, Oracle, Siebel and Microsoft at the low end of deals.

Preconfiguration for Lower TCO

CRM Buyer: Some critics charge that the enterprise-size vendors are scaling down their products and basically repackaging the same applications to target the mid-market. How does PeopleSoft's Accelerated Solutions address specific mid-market needs, especially since it is based on the same codeline?

Read: We have preconfigured our business solutions and actually mapped out the functionality in our products to audits we did of the first 380 customers that implemented PeopleSoft CRM. Since then we've done another 200 audits.

Customers get all of the preintegrated points included so they don't have to worry about that issue when the start integrating into a supply chain or back-office system.

We've also partnered with IBM (NYSE: IBM) to provide those implementation skills. IBM also has built a preconfigured eServer to sit underneath our Accelerated Solutions. This provides a much lower TCO for the customer.