Selecting And Buying CRM Software
BY ERNIE MEGAZZINI, NORTH HIGHLAND
[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
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
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
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
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.
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
- Does the vendor have experience with customers in your particular
- 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
- 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
- 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
Handheld devices. Of particular significance, these increasingly
sophisticated handheld devices are able to synchronize and store CRM
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
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).
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