27 June 2005 A highly publicised, landmark implementation by hosted customer relationship management (CRM) provider Salesforce.com at network switch-maker Cisco has gone awry, according to US investment bankers JMP Securities.

In 2004, Cisco signed a contract with Salesforce.com for 10,000 users, the largest implementation that the CRM company has ever made public. But research conducted by JMP Securities reveals that only between 1,000 and 2,000 user accounts have so far been successfully established.

The research states that sales staff at Cisco “are not adopting Salesforce.com as quickly as originally expected because [the service] does not support many of the tools [they] feel they need in order to do their jobs.”

The report also claims that the training and integration costs associated with the Salesforce.com project have exceeded Cisco’s expectations. It said that Cisco is looking to renegotiate the contract with Salesforce.com in order to reduce the amount of licenses it receives, and also claims that some users at Cisco have reverted to using their legacy CRM application.

Hosted CRM applications such as Salesforce.com are often touted as lowering the risk of project failure than on-premise software packages: in theory they are simple to deploy. But the report from JMP Securities threatens to torpedo that assumption.

The publication of the report will be especially galling for executives at Salesforce.com who were hoping to expand its footprint in large corporations. Many may now question whether hosted applications are mature enough to support enterprise class rollouts.