Salesforce.com calls Sage to ACTion (again)

(By Anthony Miller – Wednesday 2nd September 2009 9:30am). We don’t usually mention new product releases, but news that Salesforce.com has recently launched an entry-level version of its SaaS CRM product will be yet another thorn in Sage’s side. Sage has a range of CRM products, including ACT and SalesLogix, which it acquired back in 2001. We estimate that CRM represents around 5% of Sage’s revenues. Sage also recently launched a new version of ACT to the market.

The new Salesforce.com product sells in the UK at £5 per user per month. Previously, its entry point was £25 p.u.p.m. slightly undercutting Sage’s ACT SaaS offering at £30 p.u.p.m. ACT SaaS is currently only available from its channel partners, though I understand Sage plans to launch its own ACT SaaS service ‘in the future’.

But from what I can see, Salesforce.com’s entry level service is just that – very much a cut-down version of the ‘full monty’ and restricted to a maximum of two users. But the strategy is of course clear – reel ‘em in with a low price, tie them in, then upsell. But then you might ask, why not just give the entry version away? Intuit does just this for QuickBooks Online, and even Sage has a free Invoicing package, though not online. It’s back to the ‘free vs fee’ story we have written about so many times before.

The software business model is in flux and vendors are wrestling with how to change – and how quickly to change – their own businesses without going out of business. Sage, with its multiplicity of on-premise products in multiple markets, really does have its work cut out.