Gartner names leaders of CRM midmarket space

May, 2003

Gartner Inc. has published its “Magic Quadrant” ratings for CRM software vendors in the North American midmarket, naming established industry player Saleslogix – a Compulan partner – within the leadership category. However, Gartner expects newcomer Microsoft, also a Compulan partner, to attain a sizable chunk of the midmarket sector through its Microsoft CRM software.

Stamford, Conn.-based Gartner defines a North American midmarket vendor as one that caters to end-user companies with between 100 and 1,000 employees, has $50 to $500 million in revenue or which is a midsized division of a larger enterprise firm. The SalesLogix division of Best Software Inc., based in Irvine, Calif., scored well among providers catering to the low end of the midmarket. SalesLogix can be implemented at a fraction of the cost of high-end CRM software such as Siebel. Garnter CRM Analyst Wendy Close said that companies seeking Siebel’s high application and implementation costs keep it out of reach for many midmarket customers. While Siebel previously offered a midmarket CRM product, Close said it was basically a "slimmed-down" version of its enterprise software that was still too expensive for most users' budgets.

Close remains skeptical of the chances for PeopleSoft, which only recently introduced a new lineup of midmarket-specific software. While the company might attract some midmarket customers, most would come from its installed base of enterprise resource planning (ERP) software users, Close said. "They may have success in the near term, but they have no references to confirm or deny whether they can deliver at low cost, and I think that will be the problem," she said.

Gartner placed a number of vendors in its niche-player quadrant, but most of these companies are shifting their business models in response to competition from Microsoft and the enterprise players, according to Close. One example is Talisma Corp., in Kirkland, Wash., which is positioning itself more as a specialist in the customer service and online chat arena than in the pure CRM space, Close said.

Some insiders have called the midmarket CRM's "sweet spot" because so many midsized companies have yet to install CRM software or are using homegrown applications.