Following an earlier dalliance with NetSuite, the ambitions that BT harbours for 2009 and beyond extend outside the CRM market and out into creating a full-blown software as a service (SaaS) practice.
According to BT's business head of SaaS Chris Lindsey, initial response to the BT proposition has been encouraging. “The pipeline is strong,” he says. “We are finding that where we engage we are seeing positive response. The branding is still at an early phase, but customers understand that they have opportunities with SaaS. For now the proposition that we take forward is BT Customer Manager. The customers have questions we hopefully have an answer to in our line-up. We're looking at how we integrate the various elements such as Genius and eSignature.
“The credit crunch is one of the selling points for SaaS. We tend to express the proposition around the question of risk. If you follow through the logic, then you need to sharpen up your business and the way you do business in a difficult times. Companies want to put their time and effort into servicing existing customers. They want to get better at that. The risk of going down a SaaS route to achieve that as opposed to going down an on-premises version pales in comparison. SaaS might not be recession proof, but it stands a better chance than a lot of the alternatives.”
But why BT?
But why go to BT to buy NetSuite or Salesforce.com implementations? Surely the basic idea of SaaS is that it's easier and simpler to get up and running? “There is a consultancy element,” admits Lindsey. “What we are trying to do is the opposite of what traditional software vendors do. There will always be some element of customisation and professional services with applications implementation, but our aim is to make that as simple and pre-integrated as possible. When you buy more than one application from us in the suite, we've already done the work.
“I would agree with Zach Nelson at Netsuite, that there will be an 'Accenture of SaaS'. The reason it would be used rather than anyone else is around the idea of integration and the total suite. As BT we can also do switches and servers and so on as well as applications, we can right the way through the implementation. Customers today tend to want to have one supplier. We have the plumbing. We can help customers to minimise the number of suppliers they work with. If you buy stuff from us, it's pre-integrated and with fewer hassles. If something goes wrong, then there's no finger-pointing, just one person to talk to.”
Which to pitch?
But with two rival products in the form of NetSuite and Salesforce.com, how does BT determine which offering to pitch to which customers? “From a marketing perspective I would agree with [Salesforce.com CEO Marc] Benioff that NetSuite and Salesforce.com are different products,” says Lindsey.
“It's too easy to say that they are both CRM. For example, there are different key decision makers who buy each one. For Salesforce.com, it's usually someone on the sales side predominantly whereas for NetSuite it's often a COO or a finance director. But we work with the customer to understand what they are trying to do. For some of them, this will include a top level look at what they have. Once we know that there will be certain criteria against certain things that customers will naturally slip into in and determine what applications to buy. As with other areas of the BT business, we say that based on what they tell us, customers should go down this route or that."
Beyond the CRM space, BT clearly has ambitions to expand into other functional areas with its SaaS offering. While Lindsey is committing to nothing, the obvious first two areas would seem to be HR and possibly Finance/Accounting. “For now we are concentrating on the CRM space as we want to establish confidence there,” he says. “In 12 months we should have two more practices up and running. HR has a strong position in the SaaS marketplace. There are opportunities for accounting.”
That in turn presumes future relationships with other vendors specialising in these markets? Perhaps Sage for accounting? Lindsey is careful in his response. “We have learned a lot since April,” he says. “We have been experimenting and running market trials about how to address markets. As a result, we've built up clear partner criteria that help us decide how we work with people. We have learned the hard way. That doesn't mean that anyone is on the table or off the table."
What about the rest of competitors in the market? Can BT have a genuinely successful SaaS practice without having a tie-up with Google, for instance? “Google is doing a good job of disrupting traditional revenues and traditional markets and is a very interesting player in the SaaS arena. If anyone is going to get it right over the long term they stand a very good chance,” suggests Lindsey. “Microsoft is one of our key partners. We do a lot of work with them across the range. I suppose there is enough room and differentiation in the market for lots of people to be successful.”
Of course, this is another go for BT. Five years ago the telco and NetSuite embarked on a short-lived and unproductive relationship to pitch hosted applications at the mid-market in the UK. Open Orchard, a division of BT Retail that was folded back into the company in October 2003, but not before burning up £6 million in marketing costs alone. The closure of Open Orchard was followed closely by NetSuite setting up shop in the UK independently.
Zach Nelson, NetSuite chief executive, reckons that things will be very different this time around. "Open Orchard was very early on in the days of SaaS, but BT was at least visionary enough to recognise its potential then," he says. "Frankly it was too early for such a venture in the market. But this is the right idea at the right time now, given the fact so many of the IT services SMBs consume are in the cloud.
“It was probably too early for both of us. We were just learning how to sell this thing ourselves and it was unclear then that SaaS would definitely be the future. It was unclear that the integrated suite approach would be the future. In some respects, it's a blessing in disguise that the relationship didn't go forward. The opportunity that we have now with BT is to have a much broader relationship. BT is well positioned and has a strong relationship with every SME in the UK."
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