He's baaaaaack.

Pat Sullivan, the CRM industry pioneer who launched ACT! and SalesLogix, has joined the board of directors of Infusion Software, effective July 19. More on Infusion in a moment, but first let's tip our cap to Sullivan for his commitment and focus on small businesses.

Recently I caught up with Sullivan, and learned he has been out of the CRM industry for the past five years. Along with working on lowering his single-digit golf handicap (he lives in the golf-crazy Phoenix, Arizona area), he has spent his time advising tech companies and serving on a few boards.

Apparently tired of trying to sink those five footers, he's back in the CRM industry. And once again he's trying to make a difference for small businesses. Infusion's president Clate Mask connected with Sullivan earlier this year at an investor meeting, and Sullivan got excited again about the small business CRM space, and the opportunity he saw for Infusion Software.

Focusing on the "S" in SMB

Opportunity? Don't SMBs already have a lot of choices ranging from big brands like Microsoft, Sage, and Salesforce.com, not to mention dozens of good solutions from lesser known vendors? Well, yes and no.

Sure, many vendors claim to focus on SMBs. Of the big brands, I think Sage (acquired Sullivan's Interact Commerce Corp. in 2000 to get the ACT! and SalesLogix products) has done the best job of staying true to its SMB calling over the years.

In the software business, however, gravity seems to pull upwards—towards the larger enterprises. Sullivan thinks many SMB vendors are more targeted to medium-sized vendors. I certainly agree that many vendors enter at the low-end, but then seem to lose interest and go after bigger enterprises. Especially if they go public.

In the SaaS market, NetSuite, RightNow, and Salesforce.com have all done this. Microsoft also shows the same up-market tendency. Just look at the press releases where the enterprise wins get all the ink.

As I've said in previous blogs, SMBs are not one homogeneous market. If you think of SMBs as spanning a range from 1 to 1,000 employees, there can be a huge difference between a company with 50 and another with 500 employees. While you can't draw a precise line where "small" stops and "medium" begins, Infusion is clearly targeting the low-end, up to 50 employees. Currently the company gets 90% of its business from the under 25 segment, according to head honcho Mask.

Integrated CRM and E-Business

OK, so what about the solution? Well, I haven't seen a demo, so don't take this as a product review. That said, Infusion Software sells an integrated SaaS-based solution, that includes all the stuff you'd expect to find in a multi-function CRM solution: contact management and automation for marketing, sales and customer service. But then also includes functions you normally have to bolt on, like e-commerce, affiliate tracking, email management, and list management.

NetSuite is probably the most direct comparison, except NetSuite includes the ERP/accounting function too. One key difference, according to Mask, is that NetSuite is targeting growing businesses that have outgrown QuickBooks. With Infusion, keep your accounting system and add an integrated CRM/e-Business suite.

I also think that with NetSuite's IPO looming, moving up-market will become an irresistible force, leaving the small biz space open for Infusion and others to enter.

Breaking Away

To break out of the pack won't be easy. Currently Infusion Software has about 900 customers across a variety of industries. Mask says they've doubled revenue each of the past three years, and expect to do $7M in 2007.

That's impressive growth, but a long way from becoming a major brand in this industry.

Fortunately, Sullivan has been down this path before, and so has Mask. Before Mask joined Infusion Software as President in 2002, he built up and sold a web company to About.com. Mask says that sales calls to VCs will be tops on his to-do list later year, to raise $5M or more to expand sales and marketing.

I think Sullivan's involvement is a positive sign that there is a real opportunity in the small business CRM market in general, and for Infusion Software in particular. It will be interesting to watch what happens in the months ahead. If VCs pump in some funding, look out!

If anyone reading this blog has had experiences with Infusion Software, or has other perspectives on CRM for small businesses, please share them by adding your comments below.