"We were close to going with one of those vendors but were concerned about ROI," O’Connor says. Instead, Putnam Lovell signed on with Salesforce.com, which charges a set subscription fee of $65 per user, per month. The ASP’s sales-force automation application created a single database and allows 134 users at the bank to track client relationships by sending out e-mails automatically and automating the delivery of research to clients. O’Connor says the client research mechanism is saving the company $200,000 a quarter and, according to his calculations, outsourcing has reduced the total cost of ownership by 57 percent.

Despite the cost advantages, many shy away from ASPs because they fear the consequences to their business if the hosting company shuts down. O’Connor combats that worry by regularly speaking directly to Salesforce.com’s CFO. Hosted CRM software also suffers from a lack of customization capability, as well as integration problems. However, some of those integration difficulties are getting resolved as ASPs come out with XML interfaces that allow users to pump data from one outsourced application to another. Still, companies need to look carefully at how much customization they will require when deciding to outsource a CRM application. "When the scope is limited, a hosted ASP model is quite good," says Jocelyn Young, program manager for CRM services at Framingham, Mass.-based IDC (a sister company to CXO Media). "But if a company wants a more comprehensive solution that would allow for the integration of customer data with marketing campaigns, then an MSP model might be more effective."

Kevin Scott, an analyst at Boston-based AMR Research, adds that while ASPs aren’t the right choice for all companies?if you have more than 1,000 users, such solutions may not be scalable?they could be a good option for a division head who wants to get a project up and running quickly. Using an ASP, he says, doesn’t preclude investing in a CRM software package when the economy picks up. "Is it worth it to do a cheaper, rented application for a year then throw it away?" Scott says. "In some cases, it’s not a completely wrong choice to make."

As O’Connor and Airborne Express’s Billings found out, CIOs are now in the CRM driver’s seat. Implementations can be shorter term and relatively painless. What’s more, as O’Connor says, "CRM doesn’t have to be expensive."