Hosted CRM: Has Its Time Come?

eNews and Views: If companies can save money and accomplish more by outsourcing, what's not to like?

Farm it out or grow your own? Its the eternal question, the answer to which has gotten a little harder to figure out in the customer relationship management space as of late.

Two companies that have offered hosted CRM solutions are transitioning away from that business. eConvergent, which built a reputation by hosting packages of CRM applications from E.piphany, Kana and others, this week released a licensed software package for customer data integration. The companys integration message hasnt changed, but the hosting aspect of eConvergents business is conspicuously absent.

Similarly, Wheelhouse is also moving from a hosted CRM software model to a packaged CRM software model. Next week, it will make the transition official.

At the same time, however, and UpShot are strengthening their hosted CRM offerings. Both are demonstrating enterprise-level software at the Demo conference in Phoenix this week. The hope is that new features will improve the integration, customization and administration capabilities of their hosted offerings. Those are areas where hosted CRM apps have long been criticized.

Its no wonder that many see hosted CRM as a big opportunity. If you can reduce some of that implementation and upkeep costs by letting someone else manage the stuff, then why not?

Small firms that dont have a big (or any) IT staff were a natural first market for hosted CRM. Most of Salesforce.coms customers are small or medium-size businesses. But despite more than a decade of software industry executives telling us that the Internet is where we are going to live and hosted applications are the wave of the future, big companies still have not, for the most part, bought into the hosted model.

With security still a major red flag it may not be a surprise that most big enterprises are not ready to trust their customer data to outside networks. But, given the state of internal network security, one wonders if that information is much more secure behind the firewall.

A shakeout seems to be coming for hosted CRM. Perhaps one of the big CRM players will make a serious move here. PeopleSoft has a hosted CRM offering but it hasnt made much noise about it for a long time.

E-mail eWEEK Department Editor John S. McCright