August 29, 2006 CRM Software: Renting It Spells Savings BYLINE: Michael Doan SECTION:Vol. 2006, No. 0901 More companies will rent the business software they need to manage their sales, marketing and customer service records. Instead of buying and installing software packages"a big investment in many instances"many firms find it cheaper and easier to rent customer relationship management (CRM) software that resides on the Internet. CRM software makes it easier for businesses to keep tabs on various dealings with customers. It gives companies a better way to manage their customers by making it easier for everyone in the firm to track and access ordering patterns, complaint histories and other customer information. The software is especially popular with call centers. Renting CRM software"instead of buying it from Microsoft, SAP, Oracle and other vendors"can eliminate a lot of headaches for businesses, particularly small firms. "Their IT staffs have shrinking budgets and staffs and not enough resources to handle such software," says Jason Green of Emergence Capital Partners, which finances Web-based software rental services. "It's safer to turn it over to a third party." Rental firms, including Salesforce.com and NetSuite, provide Web-based CRM software to small customers for about $65 per month per employee. The tools are designed to imitate a Yahoo or Google Web page, and the software can easily be customized by users. The business of renting CRM software is growing about 50% a year, though it's still only 15% of the total CRM market. Bigger businesses are coming around to Web-based services, too, overcoming concerns about security, host-site crashes and difficulties associated with integrating Web-based on-demand software with existing programs. The cost saving is a big lure. Web-based software providers, such as RightNow Technologies, say that Web services are five times cheaper and can be installed four times as quickly as traditional methods. Today, 90% of its CRM sales to big companies involve on-demand software. Note that CRM isn't the only Web-based service catching on with businesses. Vendors now offer many human resources products online, and a number of them are free. Examples can be seen at Salesforce.com's www.appexchange.com, where its customers post free copies of their own customized software for Salesforce.com members to use. You can also read reviews there by people who have used these products. Products include software for recruiting and hiring, expense accounts, payroll, budgeting, Web conferencing, e-mail, security and 275 other functions. Customized software is available for industries such as health care, education and real estate. Microsoft, Oracle and other software sellers are also jumping into the rental business with their own Web-based products, but the innovators have a big head start.