Best Software strategizes for midmarket dominance

For a company that owns two of the most widely used midmarket software packages for sales and contact management, Best Software Inc. has been a fairly low-key competitor in the market over the past few years.

While giants like Microsoft Corp. and Siebel Systems Inc. noisily launched CRM (customer relationship management) software aimed at smaller companies, and Salesforce.com Inc. spent millions spreading its message that CRM systems should be as ubiquitous and affordable as electricity, Best stayed out of the fray. It continued on a conservative upgrade path for its SalesLogix and Act software. It spent $110 million in December to pick up another CRM technology, Accpac, but didn’t immediately address how its disparate applications would fit together into a balanced portfolio.

Now, Best says it's done being quiet. This month, the company is releasing long-awaited overhauls of SalesLogix and Act, and it's rolling out a three-tiered product strategy executives hope will make Best the premier CRM vendor for smaller organizations.

It's already a visible player: Eight-year-old SalesLogix has an installed base of 6,000 companies, and Act claims two million registered users in North America. But Irvine, California-based Best, itself a unit of British software company Sage Group PLC, built its portfolio through acquisition, and has until now had a fairly balkanized way of approaching the market.

"I don't think they're too late, but I think they could have been in a better position if they'd been more aggressive sooner," said Wendy Close, Gartner Inc.'s CRM research director. "They've been sitting on Act for years. It's like they're finally getting a wake-up call."

CRM is a broad category that can include applications serving a wide range of needs. At the smallest end of the market are contact management programs like Act and FrontRange Solutions Inc.'s GoldMine, which work well for individuals or smaller groups. One step up are systems from vendors including Onyx Software Corp., Pivotal (recently purchased by Chinadotcom Corp.) and ASPs (application service providers) like Salesforce.com, which offer sales force automation tools along with varying levels of marketing, customer service and back-office support. SalesLogix competes in that niche. The high end of the market is dominated by enterprise software makers such as Siebel and PeopleSoft Inc., which sell pricey, complex systems for running global organizations.

While enterprise software growth has slowed, thanks to saturation, the small and medium-business market is a field of untapped possibilities. Research firm Gartner expects the high end of the market -- companies with more than 5,000 employees -- to grow less than 1 percent annually over the next few years. But in the small end of the market, of companies with fewer than 100 employees, Gartner forecasts 15 percent annual growth, with companies of several hundred employees also showing significant CRM investment expansion.

It's those small and midmarket companies Best woos, by offering them a range of products to choose from. Next week, the company will launch Act's first major update in two years, adding more advanced sales features and tools intended to make Act more of an entry point to full-fledged CRM.

"Part of the overall strategy for evolving Act is to create an easier stepping-off point for Act customers to either Accpac or SalesLogix," said Joe Bergera, who joined Best in June as senior vice president and general manager of contact management solutions.