CRM systems: How to vet vendors and select a solution

13th Jan 2014

Choosing a CRM solution is no picnic. Not only is there an extraordinary number of solutions to pick from, but they come in many different flavours, with all manner of different functionality. The problem is that this is a high-stakes game – picking the wrong tool can undermine your entire customer strategy and prove to be a very costly mistake.

“How do you choose a vendor/solution? Much more carefully than one might imagine!” says Mike Muhney, CEO of VIPOrbit. “The cost of doing it wrong and never realizing the full benefit can be so disruptive and damaging to the viewpoint from sales that the task would only escalate toward realizing success. I recommend extreme due diligence.”

To further complicate matters, you shouldn’t rely on the software vendors themselves for guidance.

“Just be wary - vendors exist to sell you software at the end of the day, they are not necessarily going to represent your best interests,” notes Richard Boardman, founder of Mareeba Consulting. “They are going to sell software and then move onto the next person and sell some software to them. So be mindful of that. You must think through what you’re doing very carefully. Get advice if you need it. But don’t just assume that selecting a vendor is going to take you where you need to get to. It is much more complicated than that.”

So how can you ensure that you end up with a solution that’s a perfect fit for your needs, rather than an expensive round peg for your square hole?

Planning and strategy

Firstly, ensure that your strategy is in place so that you’re crystal clear about what you’re trying to achieve with your CRM system.

“The biggest mistake firms make is not having a clear idea of why they are implementing CRM and what the business objective is,” says Boardman. “There is often a fuzzy notion that CRM technology is just going to miraculously generate some business value simply by purchasing it, so the focus just tends to be on the technology the whole time, meaning there isn’t actually that much focus on what the company is trying to do with it from a business perspective.

“Are you trying to retain more customers? Are you trying to improve customer service? Are you trying to manage your leads more efficiently? Are you trying to cross sell products and services to your customers better and increase sales? That precision about objectives is often missing. Bear in mind that CRM can be used by companies from the same industries in entirely different ways so it is not as if CRM does just one thing. There are lots and lots of different ways in which you can use it to beneficial effect. But one thing is for sure – you won’t achieve anything unless you’re clear on what that objective is.”

Requirements gathering

Your next priority should be determining precisely what your company’s requirements are, including which departments need to use CRM and how many users there are likely to be.

“For companies that are intending to use their CRM primarily as a sales tool, a simple out-of-the-box deployment which will only be accessed by sales, marketing and customer service is likely to be more than adequate,” says Mike Richardson, managing director at Maximizer Software. “However, if it is likely that you will require extensibility to other business units: check with potential vendors if such options are available.”

Requirements gathering is an important part of the vendor selection process, but one that is traditionally done quite poorly by most organisations, according to Boardman, who suggests that what it typically produced is just two or three pages of bullet points that essentially equates to a list of functionality. i.e. ‘I need email marketing campaign management, I need...’

“Because businesses don’t do the requirements in any great detail vendors don’t have a clue how long it will really take, so they price it at what the buyer will buy rather than what is necessarily appropriate for the project,” he explains. “Firms end up purchasing from prospective vendors with no real concept of what the end price is going to be because the vendors can’t quote accurately due to the lack of sufficient detail. What tends to happen is that they sign up to a vendor and after it does its detailed requirements specification it provides a vastly higher quote. And if you’ve committed to a vendor at that stage it is a difficult thing to get out of.”

Boardman recommends that businesses draw up very detailed specifications up front, to ensure that you can get firm prices from vendors so that you can buy your technology a lot cheaper with no surprises downstream.

“Firms should think about it in terms of process. Hopefully the planning has been done well and we understand what the objectives are, and we now have to say what are going to be the processes to achieve those objectives and how those processes will be accommodated in the system. It is only when you start to detail out those processes that the complexities start to appear.

“Businesses need to think from a process viewpoint – and when you do you realise there is a lot to think about in terms of how the processes operate and how those processes are going to operate within a system, and what fields should be captured in order to support those processes and what functionality would support it as well.”

Choose a technology platform

As part of the vendor selection process, businesses should also dedicate serious consideration into the kind of platform that is most appropriate for their environment.

“You have to ask yourself broadly, what kind of technology platform you’re comfortable with or planning to standardise on,” says Bill Band, VP and principal analyst at Forrester Research. “A lot of people make their decision based on whether they’re a .Net or Microsoft shop, or an SAP shop, or on Java or Oracle technology. So sometimes people make the distinction based on the basic technology stack that they’re working on.”

He adds: “And then you have to ask yourself whether you’re comfortable with Cloud. And that’s a major decision point, because Cloud is not best for everybody.”

Software-as-a-Service solutions now represent around 40% of CRM total software revenue according to CRM, with organisations of all sizes replacing legacy systems with easier to deploy alternatives. However, whether or not to go on-premise requires some thought.

Richardson notes: “On-premise might be a good option for companies concerned with data security (e.g. law firms) or ones willing to pay more upfront in order to avoid greater total cost of ownership later. However, a start-up without a big budget might opt for a Cloud-based solution, as the initial cost is much lower. If a company is likely to evolve and require changing functionalities, making adjustments is easier in the Cloud than on-premise, but at the same time, it offers reduced capacity for integration with other systems. A careful and contextualised analysis of the pros and cons of both options is necessary to make the right choice.”

Elaborating on the issue of costs, Band adds: “Cloud has become popular because on the cost side you don’t have to pay a lot of money upfront, you buy it on a subscription basis, and many people naively thought that as you don’t have to pay a lot upfront, Cloud is cheaper. But now we’ve done a lot of total cost of ownership studies and in fact the TCO for Cloud can actually look pretty expensive. Yes you’re not giving Oracle $10 million upfront, but cost is not so straightforward. It’s not who is the cheapest, but what is the total cost of ownership and what financial model the company is operating under.”

Other factors

Other things to take into consideration when choosing a CRM solution include integration and mobility.

“Another area to investigate is the possibility to integrate the CRM with applications already in place (e.g. your email client or accounts software),” emphasises Richardson. “If you’re an investment bank, you’re more likely to need a complex, tailor-made solution with customised forms and connectivity between various external systems. Yet, a small family business definitely doesn’t require such complexity and associated costs.”

He continues: “In order to leverage the data in your CRM system as fully as possible, you may also need to integrate it with other sources of information. The nature of your business will determine the connectivity you require and some of these options may be available out-of-the-box. This is often the case with widely-used software, such as marketing or accounting programs; in other cases, a tailored customisation might be inevitable. A chartered surveyor, for example, will need to integrate their CRM platform with a GIS (geographic information system) to visualise location data. With every business having its specific needs, looking into which vendors provide extensive customisation support is key.”

Band says: “Mobility right now is really the top of most people’s minds. Since a lot of the capabilities are similar, a lot of people are saying they're making a decision about CRM based on who’s got the best mobile solution from their point of view.”

Richardson adds: “Mobility is the buzzword of today and not without a reason, but it doesn’t mean that every business requires the same level of mobile access. Are your organisation’s operatives often on the road? Do you encourage home-working? Would your CRM system need to be updated in real-time and would the company benefit if managers could control it anytime, anywhere? A certain degree of mobile accessibility tends to have a positive impact on sales and customer service and productivity, as employees can make the most of their time whilst away from their desks. If a prospect or customer cancels an appointment, for example, the salesperson can view other customers and prospects in the vicinity via the CRM and visit them instead, ensuring no time is wasted.”

Boardman has one final piece of advice regarding the vendor selection process, concerning the product demonstrations that vendors deliver.

“CRM software companies are very good at demonstrating software and very good at showing the best parts and avoiding the bad parts. So if you’re not careful you end up making a decision primarily based on how the software looks on the screen and how you got on with the sales person. And that is a problem with a lot of these purchase decisions, they are not based on real functional comparison, they are based on how they felt about the salesperson on the day of the pitch. And that can get people into a lot of trouble.”

By following the steps outlined above, you can ensure that you are clear about objectives, functionality and platforms, and will give yourself the clarity of vision to avoid falling for any sales spin. 

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