August 21, 2001
Soffront Software Joins Forces With AT&T
By Karen J.
Bannan
Last week, CRM vendor Soffront Software inked a deal with AT&T that will let the software company offer its customers hosting services, frame relay, virtual private networks, and DSL. While the partnership might seem to make as much sense as a landscaper who contracts with the local cable company to sell its service, the deal may actually be smarter than it sounds.
Soffront sells an ASP help desk service that's been integrated with CosmoCom's call-center technology. Since the company is targeting small- to medium-sized companies, connectivity is an issue. Call centers need plenty of telecom lines coming into the call center, but can't afford to pay small business T-1 line rates that they'd be quoted on their own. Smaller companies are often at a disadvantage when buying basic bandwidth service because they don't have the economies of scale to drive prices down. In some cases, large telecom vendors don't even want small business customers who often need more handholding. That's where Soffront comes in.
"We did this so it would allow us to be competitive with our software," says Serge Marten, Soffront's strategic alliance manager. "For example, I've got a prospective customer I'm working with right now who wants to deploy 25 call center agents and our unified platform, but the customer is having connectivity issues. They can't find reasonably priced T-1 and 800-number service," he says. The bottom line? Without connectivity, a prospective customer will never become a paying customer. By offering telecom services at discounted rates, Marten's company can realize profits that they likely would have lost.
Once customers are sold, they pay two bills each month -- one for the ASP service, and one to AT&T -- making it easier to keep an accounting of expenditures and budget costs. Since Soffront handles support issues, the smaller business doesn't have to worry about any aspect of their installation, which a boon for the CRM vendor since it, like many vendors, makes a third of its revenues from selling service.
Soffront is the first CRM vendor to strike out into reselling telecom, says David Bradshaw, lead analyst for eCRM at Ovum, a research company. System integrators and outsourcers are more likely to resell services. However, Bradshaw says that Soffront's strategy could be a smart one, since CRM revenues have been dropping since the first of the year. "Licensing revenue is declining. After getting to a high point in Q4, 2000, it's dropped off pretty sharply," says Bradshaw. "As long as CRM vendors confine reselling to a small part of their business and use it solely in an opportunistic way, it can be a good thing for them."
But Bradsaw also warns that smaller companies who do outsource CRM, particularly in an ASP model, may not get the same benefits as their larger counterparts since companies get the most out of CRM when they integrate it with legacy systems and databases. Still, as long as a company plans ahead and has a migration path, starting small is often better than not starting at all.
|