Pivotal CEO Bo Manning continues to remain upbeat about his company's prospects for success in the CRM mid-market. A combined Pivotal-Talisma product offering will be even more competitive, he told CRMDaily.com, because "the mid-sized enterprise continues to prefer to buy broad, functionally rich CRM suites."

Successful Shrinking

Manning recognizes that big players like PeopleSoft and SAP will give his organization a run for its customers in the mid-market. But he thinks that the sheer heft of those software makers eventually will be their undoing in the space.

"They are bringing in a very heavy, complex product," he said, "and a very complex and high cost structure." He believes that mid-size companies recognize these big brand names as meaning the "wrong things" for their operations and that Pivotal's target customers see the makers of large ERP and CRM suites as having a business style "designed to work with large companies and big, expensive integrators.

Although large suite makers, including Siebel, are putting substantial energy into their mid-market offerings, Manning sees their efforts as counterproductive. "Why can't United Airlines build and operate a low-cost airline inside itself?" he mused, adding that it is difficult to change the nature of companies that target the high end of any particular market. "I can't think of any example of anybody of meaningful size that has been able to pull it off," he said.

Saving a Buck

At the same time that they seek deep functionality, mid-size enterprises continue to look for ways to save costs on enterprise software, Manning said. To meet that need, both Pivotal and Talisma have built significant offshore capabilities, he explained.

"You will see more and more of our professional services coming from offshore, which makes them very cost-effective both in initial implementation and in the long-term care and feeding of a CRM system."

The mid-size company, he explained, "is always trying to save a buck."

Features Versus Fuss

Despite all this, mid-size companies continue to seek CRM software that offers a wide range of features, Deloitte Consulting partner Mark Peacock told CRMDaily. The days of the "dumbed-down" mid-market CRM suite are numbered. Still, walking the line between those large, feature-rich vendors coming downstream and Microsoft coming upstream will be a challenge for Pivotal, even with the substantial financial backing Oak Investment can provide.

And no one is forgetting the threat of the hosted-CRM providers. "It's going to take some smart, nimble positioning," said Peacock. The hosted providers have their strengths in their "nice, variable costing curves," he explained. Companies can get into CRM without making a big capital investment. But, on the flip side, he said, "if you're trying to do something more sophisticated than base-level CRM, and trying to do real-time integration back into ERP systems, it can be difficult with a hosted solution."

Bo Manning had better be hoping that it will be difficult indeed -- too difficult for Pivotal's mid-size targets to attempt.