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Customer Relationship Management
March 2001


Selecting And Buying CRM Software


[Go right to Solving The Puzzle Of CRM Solutions]

The first thing to realize when embarking on a project to select and buy customer relationship management (CRM) software is that preparation is key. Make sure that you communicate your CRM package selection efforts internally. Successful package selection requires senior leadership commitment. The executive view around automating the sales and marketing functions using CRM are more recognized as a business tool than as a technological tool. A communications plan that describes the types of package selection accomplishments that support the business strategy and proves that automation delivers the information required to make the key decisions will enable the business strategy to be realized.

At the outset, I must stress the importance of the people, process and technology integration required for a successful CRM package selection initiative. Although important, the technology component often takes on a disproportionate emphasis in selecting your CRM vendor to the detriment of the overall success of the initiative. Keeping this warning in mind, let us now turn to the methods you should consider in deciding on which CRM system vendor to use.

Carefully form a package selection team consisting of the project lead, an executive sponsor, a business lead, a technical lead, a marketing lead and a customer service lead. Call upon the project team or upon heads of the sub-project teams to provide the package selection team the required analysis.

Initiate Due Diligence
Ask vendors questions about their active customers in your industry, and their willingness to provide you with the names and contact information of these customers. Answers to these types of questions will allow you to conduct your own due diligence concerning how well the CRM vendor in question has met the needs of a live, industry-specific customer.

Also, educate yourself about the companies in which the management team members were previously employed. Are those companies thriving or are they no longer in existence?

You may even wish to send one or more members of your project team to one of the many available CRM seminars at which audit implementation details are discussed and you can meet members of industry who may share experiences with you that will assist in your package selection.

Conceivably, the most important aspect of a CRM software offering is not the software functionality, but the related support services offered by the software vendor. Potential customers should make sure that vendors provide access to user group meetings/forums, technical newsletter updates, electronic bulletin board system (BBS), fax-on-demand and/or e-mail technical updates or Internet Web sites with news and information that will allow the package selection team to assess their effectiveness for ongoing support.

Critical to the selection process, evaluation of the vendor's "hands-on" system administration training courses and user training courses is paramount. These should be combined with a review of certified systems documentation and context- based systems documentation. Evaluate the vendors' advanced technical training courses, including "train-the-trainers" classes. They should be combined with monthly training check-ups to ensure appropriate use of the software. Make sure to trial run telephone, Web self-service or on-site technical support to system users, through a set of references provided by the vendor. Measure the value of round-the-clock help desk support and the vendor's general support for its CRM software package. These related services are as important as the software itself, and in some cases, even more so. Related vendor services are the key difference between CRM software providers.

Features To Include In Your System
Effective CRM starts with a CRM vision, strategy and requirements-gathering exercise, which identifies the business functions that need to be automated and lists the technical features that are required in the CRM system. While there are several different methodologies available, I recommend one that contains questionnaires, face-to-face interviews, visits with sales representatives in the field, facilitated vision, strategy and requirements gathering sessions, quantitative metrics, forced rankings and a final set of deliverable documents

You can hire a CRM consultant to conduct the vision, strategy and requirements, or you may want to conduct them yourself. If you choose the internal route, be sure to start by assigning a project team composed of internal and/or external personnel who are familiar with all aspects of your business, sales, marketing, technology and the operational characteristics of each of your enterprises.

Regardless of your approach, the requirements-gathering step is critical. If the vision, strategy and requirements are not performed properly, you will most likely be unable to select and implement an effective CRM system. In my experience, companies that took the time to gather requirements properly have more easily and quickly selected and realized the benefits of CRM than companies that did not. Companies that neglected requirements are paying the price in terms of wasted time, effort and money.

Determine The Functions To Automate
Automating an inefficient business process can be a costly mistake. To ensure that you automate what needs to be automated, your CRM vision should address a "wish list" of how salespeople, marketing personnel, customer support staff and management would like to improve their work processes.

Define Package Selection Methods And Criteria For Evaluation
Adopt a clear package selection methodology that ensures the selection team stays on track and within scope. This should include identifying selection criteria, match against needs and create a ranking system that is properly weighted to complete your selection. As you begin this next stage, documenting selection criteria will become the critical success factor. Ask yourself which customer-facing or front-office components seem to make sense for your company's CRM automation desires and in what order. Some examples are time management, sales, sales management, field service support, marketing, business intelligence, telesales or customer service and support.

An example of components that comprise both business and technical issues are enterprise portals, e-business, multimodal access, ERP integration and data synchronization. They are, by definition, industry-driven, and with the dramatic speed at which enterprise application integration is moving, should be carefully considered.

Develop selection criteria around some number of industry-driven features, vendor-related information, business vision and functions, agreed-upon pricing characteristics, a set of technical features, user friendliness/human factor requirements and support metrics. After collecting the results from the previous exercise, use the selection criteria to compare components, features, functions and technological capabilities that meet your requirements.

Selection criteria can be subjective and objective. You can try to identify both tangible and intangibles benefits during this exercise. Following are some examples of what might help define criteria.

Ask Yourself
Below are some questions to consider during the purchase decision phase.

  • Where does the vendor rate on customer service and does the application support enhanced self-service via the Web?
  • Does the application support Web-based training and conferencing?
  • How long has the vendor been in business, and what is the history of the business?
  • Does the vendor have experience with customers in your particular industry?
  • What is the vendor's technological direction (e.g., Web strategy, CRM modular approach)?
  • Who are the members of the management team and what are their backgrounds?
  • How are they financed?
  • Is source code included with the product?
  • What training do they offer?
  • How do they support their software (e.g., what are their service-level agreements)?
  • What is included in their maintenance agreement?
  • What is their warrantee period and what is their bug-fix policy during this period?
  • How do they implement their software?
  • How important is this piece of business to the vendor?

Technical Selection Considerations
Use of object-based architectures. The object-oriented design approach of using COM/ DCOM and CORBA technologies like ActiveX and JAVA controls facilitates integration with third-party software to obtain additional data and functionality.

Groupware integration. Look for groupware products for functions such as single-user and group calendaring/scheduling, task lists and e-mail communication. Even those software vendors that continue to offer their own activity scheduling functionality are now offering variations of bidirectional integration with groupware products. While MS Outlook appears to be the vendor's groupware product of choice for time management and scheduling functions, we are witnessing a reemergence of vendors integrating with Lotus Notes.

Computer-telephony integration (CTI). CRM software vendors are increasingly offering an interface with PBX/telephony switches using this trend. It is driven in part by the increased integration between the customer service component of CRM with other functions such as sales or marketing.

Handheld devices. Of particular significance, these increasingly sophisticated handheld devices are able to synchronize and store CRM information.

Package Selection Method, Next Steps
Interviews with customer-facing personnel will allow the package selection team to gather observations and these will serve as input for the visioning session and the needs analysis questionnaires.

The package selection team should conduct structured visioning sessions with between 2 and 10 percent of personnel (e.g., sales representatives, marketing and sales managers, executives, customer service managers, IT specialists) to uncover any functional requirements for the CRM target application. These participants are typically chosen as part of the project team that will participate in further CRM activities and should be stakeholders for the eventual CRM target application.

The package selection team should customize a needs analysis questionnaire and administer it to between 10 to 20 percent of potential users of the CRM system. There are typically three different questionnaire types sent to three different decision-making groups, namely customer-facing personnel, managers and executives. While the three questionnaires ask several of the same questions, they also ask separate questions that take into account the different decision-making responsibilities of these three groups. The questionnaires serve to confirm and consolidate findings revealed during the field visits and the visioning session, as well as force the respondents to do a preliminary prioritization of the business functional needs, technical features and user friendliness issues.

The package selection team reviews the business processes to highlight existing business process issues as well as business process requirements, and recommends a step-by-step approach for mapping business processes to the workflow features of the system from the applicable CRM vendor.

Based on the results of the field visits, the visioning session, the needs analysis questionnaires and the business process review, the package selection team identifies the prioritized business functions for use in alignment with vendor package features. In view of your priority business functions and the results of your technical platform review, the package selection team identifies which vendor has the appropriate technical platform alternatives for CRM software, hardware and communications.

Once you have selected the vendor, the package selection team can assist you in implementing your CRM project by enforcing the original set of requirements, primarily in the areas of quality and systems assurance.

Once you have received answers to these questions, you will then need to apply business judgment as to which of these questions are most applicable to the success of your CRM automation project prior to deciding which software vendor best meets your needs. What you need to determine is the fit between your CRM project and the vendor.

Pitfalls In CRM Package Selection

  • Lack of a sales and marketing strategy
  • Lack of corporate commitment
  • In-company politics
  • Lack of proper training 
  • Lack of knowledge 
  • Resistance by sales and marketing

Third-Party Considerations
Many vendors use third parties to implement some piece of the puzzle, which without very specific terms in the statement of work can produce mixed results at best. Third parties may not be as familiar with the software (or more importantly, with the customer's business environment and processes) as they should or need to be. It is a joint responsibility between the CRM software vendor and the customer to carefully manage the success and quality of a third party's work. If it is left to the vendor to manage the third-party integrator, risk to the project increases.

These third parties work closely with some or many CRM vendors, helping these vendors to implement their software. Integrator services range from project management to software customization or systems integration. However attractive, this approach can create substantially higher costs for a CRM implementation. This may have a negative impact on the vendor's ability to maintain the sale and should be carefully considered before proceeding with negotiations. It should also be considered that if the integrator fails to do the work effectively, the conflict of interest would rest with the vendor. To address these potential pitfalls, customers need to carefully explore and negotiate the integrator/vendor relationships for successful CRM package selection and implementation.

A Few Other Things To Consider
Package selection teams need to understand the dynamics of today's CRM marketplace, where we are witnessing one CRM life cycle (client-server technology) butt heads with a new, Web-based CRM life cycle. The life cycle based on client-server technology largely supports employee-facing CRM systems (aimed at helping internal sales, marketing and customer service personnel), whereas the new Web-based, eCRM life cycle supports more customer-facing CRM systems (where customers use Web browsers to access company-specific information and services). Moreover, the increasing availability of new Web-based tools has helped to accelerate the impressive growth of the Web-based life cycle.

ASPs are capable of providing a variety of services that can assist vendors to sell their CRM software. As CRM software becomes increasingly complex, and in-company IT departments lack the necessary skills to maintain and support the CRM initiative, the ASP model may be an increasingly attractive alternative.

There are two pricing camps emerging within the CRM software industry. One camp sets a price for their software and does not negotiate from this price. The other camp sets an inflated list price for their software and then discounts up to 70 percent from the list price.

While both camps have their benefits and drawbacks, increasingly buyers understand that there is considerable negotiation room in CRM software vendor prices. This includes substantial discounts for a per-seat basis, substantial discounts for server software, site license deals, delayed maintenance charges, gratis technical and/or end-user training, etc. CRM vendors should be ready to explain their pricing policy clearly to potential users and then to win the order based on value-added services and not the price of the CRM software alone.

Ernie Megazzini is consultant for North Highland Management and Technology Consulting Services (www.northhighland.com).

[ Return To The March 2001 Table Of Contents ]

Solving The Puzzle Of CRM Solutions


Choosing a CRM solution can be a daunting and frustrating task. There are literally hundreds of CRM options as well as vendors who claim to contribute vital pieces to the CRM puzzle. As companies attempt to solve the puzzle, they find that the pieces may not function properly, blend together seamlessly, or reply in a timely manner. These setbacks can cost companies precious time and money. One way to minimize these problems is by looking at the present needs as well as the future growth potential of the business and constructing a CRM blueprint.

The Need For A Blueprint For CRM Strategy
The Internet has drastically restructured the communications upon which business relationships depend. The old maps are no longer adequate. To understand the impact of the new environment, management must figuratively step outside the company and look at it from the perspective of their customers who now have new, much higher expectations for the level of service from their suppliers.

An objective understanding of the company's current and planned CRM needs is a vital prerequisite to choosing the systems that will enable the company to deliver on these expectations. It is essential that a company hire someone who is experienced in CRM in the Internet world, one who is capable of helping the client avoid a number of potential mistakes that will cost the company dearly.

Evaluating The Total Supplier-Client Relationship
The totality of the buyer-seller relationship is composed of many different relationships, including outbound marketing, sales inquiries and fulfillment, the process of customer acquisition, initial sales transactions, routine customer service, complaint handling and the automated delivery of marketing literature. Perceiving the company from this viewpoint of a single total relationship is at the heart of the preparation needed to assemble the CRM strategic blueprint. However, the converse element is the key to a successful implementation: every customer-facing employee, from front-office to back-office, must be able to see the same single view of the customer. Changing the culture of the company to become customer-centric is the objective and CRM is the tool to achieve it.

Surmounting The Lines Of Demarcation
This total view of a supplier-client relationship translates into a need for the CRM system to integrate all of a company's communication channels, internal and external, electronic or legacy, into its business functions from sales, marketing and service, through fulfillment and finance, to product development. Achieving this objective enables a company to have a complete and integrated view of all its internal and external relationships and to focus them on achieving total customer satisfaction. The plan must be inclusive across organizational and functional boundaries.

Hidden From View
A common problem in the CRM planning process is that of underestimating the effort that will be involved. Changing a corporate culture is a difficult and resource-hungry task. Resources will also be stretched in every area as day-to-day activities compete with the deployment effort needed. While anticipating the resource challenge is a normal management responsibility, one aspect of the change is frequently hidden from view until deployment is well under way: the existing IT infrastructure is often unable to handle the new technologies that will be necessary. Almost certainly, the existing structure will not be capable of integrating not only legacy applications and new technology, but also future enhancements or new, as yet unconsidered, applications. In the dynamic world of e-business CRM, the lack of future proofing can quickly become a serious Achilles' heel for the company.

Measure For Measure
When it comes to CRM solutions, one size does not fit all. Only install what you need, no more and no less. Too much solution wastes IT dollars and crucial time in its installation. Too little will leave critical gaps in the system that will damage rather than enhance customer relationships. The implications of this apparently simple objective are technically challenging. Whereas traditional company IT systems may consist of independent, stand-alone applications and databases, the totally customer-facing structure requires that all customer-affecting applications and data repositories can interact fully and freely with one another to provide an integrated relationship to service the customer. As a result, the most important technical decision management must make is choosing the infrastructure that will be the integration platform for new and legacy applications and data.

The Best CRM Demands Best-Of-Breed
A common mistake to avoid is accepting that any one application vendor, or any one application service provider (ASP), can provide the optimum technology across multiple applications. In a market where evolution is rapid and continuous, to deploy the best possible CRM, a company must be enabled to use the best available technology from whatever source, and to incorporate new or replacement technologies as they arrive. Products that were not designed to work together must be integrated into a single, seamless service. What is more, deployment of new systems, upgrades or replacements needs to happen while maintaining an uninterrupted and full service. This new approach requires a new way of looking at CRM...a new business model. One model that has emerged to address this need is the business solution provider (BSP) model. Unlike the ASP, which hosts applications, the BSP oversees the entire business process. By outsourcing the most complex challenges facing companies, the BSP can provide specific expertise, often addressing problems that the organization may not be able to solve on its own.

The BSP Business Model
In planning for CRM, some large and small enterprises are turning to BSPs for their outsourced services for the deployment of business infrastructure.
BSPs provide the more obvious benefits such as capital preservation, rapid deployment and packaged expertise, but can also assist during the selection process. Following is a checklist to use when considering using a BSP.

  • Does the BSP host multiple vendor-supplied products?
  • Does it provide custom products and content where necessary?
  • Is deployment guaranteed within a fixed period and cost?
  • Does the BSP offer domain-specific expertise?
  • Will the deployed solution provide a common data management and business analytic platform?
  • Will it provide a common management and administration

Many analysts who have studied the needs of companies who are embracing e-business agree that in the new financial environment brought about by e-commerce, the BSP model is a good paradigm to consider for outsourcing critical business infrastructure.

It is not too extreme to state that the impact of the Internet has fundamentally altered the customer environment in which businesses operate. But before responding by deploying CRM technology, it is essential that management ensure that they fully understand how extensive and pervasive the effects of this change are, and then apply this understanding to the particular needs of their company.

Rene L. White is senior vice president of marketing at eConvergent (www.econvergent.com), a company which offers a pre-configured, completely integrated electronic customer relationship management (eCRM) solution to customers as a service.

[ Return To The March 2001 Table Of Contents ]

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