How to make SaaS CRM a success

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Forrester Research recently concluded that CRM software as a service (SaaS) has made it to mainstream thinking. But it also warns that successful implementation and integration requires that firms follow sound practice. So what tips does Forrester have for firms looking to lay the groundwork for successful SaaS CRM?

By Stuart Lauchlan, news and analysis editor

Has software as a service (SaaS) made it to the mainstream? Opinion is divided. Some of the leading voices in the SaaS market still see their outreach to the market as heavily educational and evangelical. Marc Benioff, CEO of Salesforce.com, argues that it can take up to 10 years before a technology makes it across Geoffrey Moore's famous 'chasm' of acceptance.

Others are more convinced that CRM SaaS at least has made it to mainstream thinking, among them Forrester Research. Forrester conducted a survey late last year of 1,017 IT decision makers and US and European firms to evaluate their opinion. The study found that nearly two thirds of those surveyed were either using or piloting SaaS offerings, with CRM the most commonly used.

"With more frequent upgrades, faster deployment, lower upfront costs and high acceptance by employee end users, customer demand for CRM SaaS applications shows no signs of slowing down."

William Band and Peter Marston, Forrester Research

“CRM SaaS implementations have moved beyond their previous status as a specialised deployment option and into the mainstream," argue Forrester analysts William Band and Peter Marston in their 'Best Practices: The Smart Way To Implement CRM' report. "With more frequent upgrades, faster deployment, lower upfront costs and high acceptance by employee end users, customer demand for CRM SaaS applications shows no signs of slowing down."

But while many vendors pitch the ease of use, plug-in-and-get-going abilities of the SaaS model, Forrester warns that potential users need to consider a number of factors to ensure successful deployment and to “capitalise on SaaS”. Implementation is likely to be easier, but not necessarily easy. Whether you implements and administer CRM SaaS solution in-house, rely on the vendor or use a vendor's third-party professional services partner, the analyst firm notes: "successful implementation and integration requires that you follow sound practice.”

Business cases

First of all, make sure you have a business case in place. Do you know why you're choosing to go down the SaaS route? Is it just because others are doing so? is it just because it's supposed to be cheaper? Do you know what you want to get out of a SaaS deployment? Have you considered the on premises route? Weigh SaaS against on-premises “against criteria more comprehensive than just cost tradeoffs alone," advise Band and Marston. "Depending on the business models and economic drivers, differences in business benefits, flexibility and risk are important when comparing these deployment options."

First of all, make sure you have a business case in place. Do you know why you're choosing to go down the SaaS route? Weigh SaaS against on-premises against criteria more comprehensive than just cost tradeoffs alone.

You also need to think about how your SaaS implementation will sit with other, typically on-premise systems. No effective CRM system exists in isolation, but needs to feed into back office systems. "If you are concerned about how easy it is to integrate the solution into your environment, ask for a list of partners that have integration expertise that you can leverage,” advise Wood and Marston.

When considering cost, companies need to think about more than just the top level cost. There are other factors that will come into play and potentially bump up your costs. These include software license fees, internal labour implementation costs, professional service fees, user training expenses, mobile and offline/online system access, industry-specific functionality, storage capacity fees and premium help desk support.

Finally, have you considered that just because SaaS seems like a good idea now – because you need to get something up and running quickly or because your budget has been cut unexpectedly – are you certain that you will always want to stick wth the SaaS model? Might there come a day when you decide you want to go back to on-premise? If so - and frankly you would be mad if you don't! - then you need to know that there is a migration path in place to make such a move when necessary or when required.

T&Cs

Having thought all this through to your own satisfaction, it's time to think about getting the right terms and conditions in place so consider the contract you're going to sign with your SaaS provider of choice. One issue identified by Forrester is to do with another of the SaaS model's selling points: you don't need to be a technologists to deploy it. So you can be a CFO or a marketing director or a sales chief and so on. But that does mean that you might lack the technical know-how to ask all the right questions when it comes to drawing up the contract. "They may be unfamiliar with the more technical aspects involved in choosing a SaaS application and thus may not know to include key items in their contracts," write Band and Marston.

For the implementation itself, there are obvious best practices. First, define your objectives, then build a team which must include an executive sponsor, a steering committee that includes a user group representative, a CRM SaaS solutions administrator, and a CRM SaaS vendor developer or consultant.

You also need to think getting a formal service-level agreement (SLA). You may find that your SaaS provider will not be eager to discuss this too closely in order to "avoid risk and responsibility when selling directly to business users. Instead they rely on a 'best efforts agreement'." To get around this, Forrester advises that potential users need to consider the hidden cost drivers as when the amount of data and transactions increase on the SaaS application, so too do the costs on the overall deployment.

For the implementation itself, there are obvious best practices. First, define your objectives, then build a team which must include an executive sponsor, a steering committee that includes a user group representative, a CRM SaaS solutions administrator, and a CRM SaaS vendor developer or consultant. This team needs to define the timeline for your roll out. "CRM SaaS professional services providers tell us it is a best practice to define a timeline upfront that outlines the major tasks, milestone dates and accountabilities for implementing the solution,” say Band and Marston.

It's also important to factor in the risk and cost of unexpected service outages. Encouragingly, Forrester found that most of the survey respondents didn't have many serious complaints about the typically 99.5% guaranteed uptime built into their SaaS SLAs, "but few contracts include planned maintenance windows into that uptime-and few users track actual uptime”. Band and Marston note: "Although some SaaS providers claim to track outages proactively, users generally shoulder the responsibility for tracking and requesting payouts [and service credits] themselves."

You also need to look on the bleak side and work out whether your vendor's response to any outage or downtime leaves you with the confidence that their disaster recovery policies are fit for purpose. "Although the SaaS providers can talk at length about their security and disaster recovery capabilities, we find that users have generally far less conviction when asked what security and disaster recovery clauses are included in their SLAs," warn Band and Marston. "Make sure to perform due diligence around disaster recovery prior to signing the contract."

Data protection guarantees

Band and Marston also advise SaaS customers to require data protection guarantees and compliance with industry standards and to insist that SaaS vendors provide detail about security levels of data centres disaster recovery capabilities, and how each customer's data is protected, the analysts write. "If your applications are hosted by a third party, get your hosting provider to detail its security and redundancy capabilities and conduct a site tour to verify its claims."

"It is true that one of the key attractions of the SaaS model is that software upgrades, hardware, data management and ongoing support is mostly assumed by the vendor. But final accountability for the solution in the eyes of end users is still with the IT shop in most organisatons."

William Band and Peter Marston, Forrester Research

It's also important to make sure that your vendor is going to carry on as they start out! A number of users polled by Forrester cited unhappiness about what they saw as a decline in the level of initial customer support and helpdesk responses, with one customer claiming "to be stuck behind two tiers of technical support”. This needs to be addressed upfront as part of the SLA discussions. Companies also need to decide how SaaS will be managed, who will be responsible for meeting IT standards, where the support resources will come from, and how IT will work with third-party providers. Whatever happens, don't assume that support is someone else's problem.

"It is true that one of the key attractions of the SaaS model is that software upgrades, hardware, data management and ongoing support is mostly assumed by the vendor," say Band and Marston. "But final accountability for the solution in the eyes of end users is still with the IT shop in most organisatons. Therefore, IT managers must make sure they know what elements of support they must provide, in addition to the vendor."

Forrester leaves one last thought to bear in mind. There has been enormous consolidation in the mainstream, on-premise CRM applications market. The SaaS market is only just emerging and most of the leading players are small, start-ups. As the mainstream on-premise vendors make their own SaaS plays, these smaller firms may be vulnerable to takeovers by larger players or to having to merge into one another to survive in the face of competition. "The SaaS solutions space is filling with many new players," caution the analysts. "There have been numerous acquisitions of solutions providers. Make sure you are comfortable with the fact that your selected vendor might become part of another company at a later date."

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06th Jun 2008 17:04

There are a significant number of challenges facing SaaS providers, as you have identified in this article. My question is, how can SaaS companies overcome these challenges? I know this is a daunting and complicated question with an answer that must be customized to each vendor; so, a better question might be what resources are available to SaaS providers. I have heard of a view companies, eVapt (eVapt.com) primarily, that offer solutions for monetizing and metering SaaS ideas. Can you comment on eVapt's solutions and the general resource landscape that can help SaaS companies overcome the challenges and become more widely accepted?

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04th Jun 2008 12:24

An interesting article on ensuring you've made the right decision to go with a SaaS application, I've found the key factors in making a SaaS CRM a success is what happens during and post the implementation.

The benefits of a SaaS application is the itterative approach you can take to the requirements, design and build phase.

Business stakeholders come alive and can articulate and define requirements they hadn't even thought of when you can configure the prototype on the fly.

Any tool regardless of whether is SaaS or on premise will only be a success if it's supporting or automating an effective process, so this is another key factor.

Lastly, and possibly the most important is having continued engagement with the business users and stakeholders throughout and post the implementation.

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