Most people seem surprised to hear I am making a CRM application. Their usual response is in the lines of “But there are many CRM tools out there and they come in all flavours. What more do you have to offer?”.

I don’t understand why people think it’s a bad idea making something that already exists (crm, project management) when we have so many examples of this happening outside the IT field. Don’t food companies offer new chocolates or new milks all the time? Even well established companies offer new products that seem competitive to other products they make. And quite often, these products find their place in the market.

Of course things in real life are never so simple. A product’s market share is dependent on thousands of factors, but just because other products exist, doesn’t mean a new one is doomed.

Then there are other reasons to choose an existing market. This excellent article by Erik Sink analyses some in more detail. The main reasons are:

• It’s hard, if not impossible to create new markets.
• Competition can be beaten, if chosen carefully.
• There are unhappy buyers, even in saturated markets. It may be difficult to find out what these people want, but it can be done (targetting a niche of the market).

So for these reasons I strongly believe that entering a well-established market is the best thing for a company starting out.

… CRM software!

In case you are not familiar with CRM software, here is a very basic description of some things you can do:

• Contact management: Records of all companies and persons your business interacts with. This includes customers, partners, competitors etc and the relationships between them.
• Sales automation: Management of leads (persons that may lead to a sale), campaigns (which generate leads), opportunities (interest of a company in buying your products / services).
• Issue tracking: A light help desk module, allowing you to record your customers’ problems and the solutions provided.
• Scheduling: This is a more or less standard PIM (Personal Information Manager) keeping track of meetings, to-do lists and other events or tasks.

The CRM market is huge, as literally every business has such needs. People were performing most of these tasks before computers appeared, so everyone can understand why such software can be useful. Of course it wasn’t always called CRM / SFA (salesforce automation) but it was always about the same thing: making sales and keeping customers satisfied.

Moreover I will happily work on such a product, although it sounds boring. I find it helpful (if not necessary), I have experience on the domain and I can find problems with most existing solutions I have seen (and I have seen quite a few).

It’s early to start talking about the specific things I want to put into my product and what niches I am after, but I will as development goes on.

As you probably noticed I don’t have a name for my product. So ProductX will have to suffice for now ;-)

As I have already written, I am developing the first product of my company. It took me about 3 months to finally settle on a product. I searched for, downloaded and tried tens of products from each market I evaluated. Here is the list of products/markets I rejected:

• Project management (01/2005): This would be targeting consultants (contractors) and help them keep track of their clients, projects and current contracts. Moreover it would function as a simple deployment tool (helping with versioning, source control, deliverables etc). Finally it would help keeping historical data for old projects (imagine a post mortem for each project, describing what went good/bad, financial data, testimonials etc). I still think this is a good idea and I would probably buy such a product myself. On the other hand, a consultant can always use a generic project management tool and be 90% satisfied. And I didn’t want to get into the (generic) project management market.
• Enterprise Image Cataloguing (01/2005): Entering the enterprise arena (in this case we are talking about newspapers, media companies, publishers etc) usually means a large salesforce and good contacts. Moreover I couldn’t find many companies producing such products, which was a little unnerving.
• Photographer software (02/2005): This would be Cheez on steroids and marketed to photographers. I wasn’t very fond of this idea, mostly because most photographers I talked to weren’t very interested in parting with their money for buying software (before listening what this software would do for them).
• Internet/Cyber Cafe Management (02/2005): Too much competition, too many difficult problems to solve. I had some probably nice ideas (apart from basic stuff, my software would help create communities, centered around each Internet Cafe) but I wasn’t sure if anyone would pay money for them.
• Printing companies (02/2005): Companies offering printing services (business cards, envelopes etc) do need custom software. But I don’t have a lot of domain knowledge and would be hard pressed to come up with good, useful software.
• Drug stores (03/2005): The major problem here would be to come up with software that would cover the needs of drug stores in different countries. I am not even sure this can be done and what laws are involved in each country.
• Software for lawyers (03/2005): I didn’t much like the idea of selling to lawyers and a little research confirmed my suspicions: most lawyers don’t get the “specialized software” thing.
• Helpdesk (03/2005): I still think this is a good market. Lots of competition but a big market. It should be full of niches and opportunities.

Soon I will write about what I decided to build and the reasons that lead me to believe it’s a good idea.

While reading “Running your company on web apps”, which is about using ASPs for almost everything (Project management, Bug tracking, Information management, Help desk and things like DNS, Subversion etc), I had some uneasy thoughts about some aspects of this whole thing.

Note, that these things apply to “pure” ASP products, like Basecamp and Jotspot, where you don’t have access to the source code or DB:

• Do I own my data? I guess I do, but can I have it locally whenever I want? Do all these services provide solid, full exports in a convenient format (XML, CSV or maybe database dumps)? Otherwise I am locked with these companies for life, which makes me more than a little uncomfortable.

  Checking Basecamp left me a little disappointed. I can export messages and comments but not my projects, todo lists, milestones (which is the core information stored in a Project management system).

  I also checked Salesforce, a well known CRM provider. I couldn’t find any Export functions, although you can get some of your data through reports (which is difficult and leaves out lots of information, like links between accounts and contacts).

• Usually you pay a per month fee to use these solutions. Which is fine. Until the prices change. And when that happens, you have no option but to continue paying or search for an alternative service (which can be tough - data export/import, learning curve etc). With one-time fee products, you always have the option not to pay for an upgrade or new version and your product continues to work.
• ASP solutions offer the same features for everyone. New versions / features affect all customers at once (which is basically a good thing) but there is the occasional unwanted feature, which you have to accept no matter how much you hate it. Again you don’t have the option to continue using the old version.
• ASPs must be good at two different things: software development and hosting / administration services. Which is not easy.

Of course, ASP solutions have a lot of advantages too, like no installation and system administration, online access (since we are talking about web apps), better prices etc. But I wouldn’t feel comfortable in using one, unless these concerns were somehow addressed.

I think shrinkwrapped web apps combine the best of both worlds. You pay a one-time fee and install the app either on your servers (if you have the know-how) or at a hosting company (which you can easily change at any time). You buy upgrades / new versions if and when you want and sometimes the vendor is willing to do custom work for you, to accommodate a special need.