The Credit Crunch and CRM – More of a Direct Connection than I Thought…

So I was reading Larry Dignan’s blog today about Microsoft offering zero percent financing for its CRM and ERP systems and at first thought to myself – “ha ha, what a cute marketing ploy, I get it.” But upon looking further, it appears this isn’t being done with tongue planted firmly in cheek at all. Rather, Microsoft’s applications can be bought via traditional financing.

OK, call me naive, call me a bad analyst, but this is the first I’ve heard of applications being financed through vendors. Flexible payments, deferred payments, etc. – sure – but interest-based financing for applications is new to me. I always thought IT financing was for hardware and other big-ticket infrastructure items that were more asset-intensive than apps. (And apparently, the default level on IT financing is as bad as the housing market.)

These facts made me think. First, i thought – “Are CRM applications still so expensive that financing is needed?” And of course, for the largest enterprises, yeah they are. But Microsoft doesn’t really sell its CRM to the biggest companies, at least that I know of.

Second, what does lack of credit or at least a more difficult financing scenario mean for IT buyers? Well, if your hardware is not available, go with SaaS. But most SaaS products are even more expensive than their premise-based counterparts. Companies may be left with little choice.

To put a Sugar spin on all this (isn’t there always a Sugar spin?), the simplicity of web-based applications means that less hardware is needed versus traditional apps. Great. And the commercial open source model means costs are lower regardless of the deployment on or off site. Even better. So, with SugarCRM, you don’t need to go crazy in terms of hardware investment. And if you decide to go with Sugar On-Demand, you’re not paying an inflated premium simply because you’re not managing the application yourself.

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