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4 - Evaluating Software and Consultants

While the technology that supports a CRM program is only one of the components discussed in the previous chapter, it can have a significant impact. Applications that are difficult to use, difficult to modify, difficult to scale, and difficult to share data with other information systems can seriously hinder CRM applications or significantly impact the cost of getting them to provide the desired functionality.

The present chapter does not look into brands of CRM solutions - this is a constantly-changing landscape and the leader-board is constantly changing. Instead, the author will consider the key criteria that you can use to evaluate whatever solutions are available and proposed, as the criteria are likely to have more longevity.

The CRM Software Market

While solutions are rapidly changing, many of the applications have similar qualities and features, and as such the author will discuss some of the key variables that are common to solutions: the functional scope, deployment options, application access, and licensing model.

Functional Scope: Full CRM Suites and Specialty Applications

A typical format for CRM is a "suite" of applications that support sales, marketing, and customer service. The sales application manages leads and generates quotes; marketing functionality segregates leads and customers and coordinates communication through various channels; and service is typically a ticket management system connected to a knowledge base.

There are also a host of specialized CRM applications that target specific functions, environments, or industries. These are often less expensive than the full-suite products, though it may be challenging to get a hodgepodge of small applications to communicate with one another.

Deployment Models

On-premises is the traditional model for deploying solutions: the software is provided by a vendor to be installed on equipment (servers and clients) that is in the offices of the customer. This method gives the customer maximum control because they can install and configure the software to their own desires, and the system and all data reside on their internal network. Naturally, these systems are more expensive because they require the purchase of software and hardware as well as personnel to monitor and maintain the system.

There's a word of caution about client-only software. These can be used to manage and analyze customer data, but aren't "true" CRM systems because they are used by one employee and do not share data. While some accommodation can be made, such as storing files on a networked file server, this is still fundamentally different than a systemic solution. (EN: A good analogy would be that a word processor is not a content management system just because files are shared.) They are not without value, and can be very useful tools for individuals, but are not CRM systems.

Another option is a hosted solution, in which the software is installed on a server that exists at a third-party location. The customer may own the actual hardware, or simply rent servers, but in either case it is at an off-site location. This option generally relieves the customer of the need to maintain on-site equipment, and enables them to take advantage of the hosting provider's network, personnel, and disaster recovery plans. The drawback is that sensitive customer data is being housed in an off-site location, and that its availability depends on a network connection.

Software-as-service is a more recent model that consists of a hosting solution that is owned and maintained by the vendor, and the customer buys a license to access the software. This is generally a cost-effective model that does not require any IT resources to be devoted to maintaining the system. In addition to the same drawbacks as a hosted solution, SAS is generally a one-size-fits-all solution that cannot be customized to suite unique or specific needs, and because SaS is offered to multiple firms, you gain no competitive advantage over other firms that use the same service. The author also notes that getting out of a SAS situation "can be compared to getting out of a bad marriage" - it's messy, contentious, and expensive to break up with a company that holds a lot of your sensitive customer data in their systems.

Application Access

Another aspect the author mentions is the method by which users access the content of the system:

• Web application. The most prevalent model for CRM applications is to provide access via a Web browser. This is a very cost-effective and flexible approach, and when the central system is available via an Internet connection, the system can be accessed from any location with Internet access.
• Client application. Each user has a software application installed on their workstation, which is used to access the software and data on the CRM server. This was generally preferred because a client application can have broader functionality than a browser-based application, but web-based applications are catching up quickly, so the client application approach may become extinct.
• Mobile application. CRM access via mobile devices is becoming more and more important as smart phones and tablets are growing in popularity and capabilities. This is still relatively new, and still relatively limited in capabilities, but it's expected that it will continue to increase.
• Integrated Application. Several CRM vendors are offering functionality that integrates with other applications, such as Microsoft Excel and Microsoft Outlook, to leverage the built-in capabilities of that software

Licensing Models

There are numerous variations for license agreements, and while this has nothing to do with the capabilities or features of the software, it can have a significant impact on the cost of the software.

For example, a user license charges a fixed amount per individual employee who uses the software. When a company purchases a user license, the employee can use the same software on multiple computers (desktop, laptop, home computer) without having to purchase a license for each. On the other hand, a device license requires a separate license to be purchased for each computer on which it is installed, but may be advantageous in situations such as call centers, where three different employees who work in shifts may use the same computer.

Concurrent licensing considers the number of users who may be connected to an application server at a given time. A license that allows for 500 concurrent users may be used by 500 employees at once, regardless of who they are or where they may be.

There is also a distinction between perpetual licensing (you pay once to use the software forever, though you may have to pay again when there is an upgrade) and subscription licensing (you pay a recurring fee, such as a monthly fee, and then get upgrades for no charge).

Software providers may offer several different kinds of licenses: there may be licenses with different price points depending on whether the user has read-only or read-write access; depending on whether the application is used on-site or remotely; depending on what functions or data sources the user is permitted to access; etc.

Ultimately, the message here is that you will need to pay careful attention to licensing agreements to avoid getting a nasty surprise when the bill is presented, or an unpleasant call from the vendor indicating you have violated the terms of your licensing agreement.

Selecting the Right CRM Software

Because there are an array of solutions in the market, because CRM itself has not been around long enough to be boiled down to a finite set of tasks, and because each organization is different in its own procedures, operations, and strategy, evaluating a "best" solution often involves developing a scorecard and ranking proposed solutions against it.

Of primary importance is that the solution is aligned with your objectives. The features and functions must address the things you wish to monitor and the goals you wish to accomplish.

The solution must also suit the structure and operations of your firm. If your sales force is highly mobile, then a mobile device platform is essential. If your company is global, it will need to handle foreign currencies and even foreign languages and segment markets by nation or culture. If you have multiple locations, it must be network-accessible. It must scale to the size of your firm (users, customers, products) and accommodate foreseeable growth.

Another set of factors to consider is the level of difficulty that will be involved in customizing the system. Chances are the "stock" features and functions of the solution are not a good match for your needs, and will need to be adapted. Even if it is a perfect match for your needs today, it will need to be changed to suit changes to your business in future. If it is difficult to make such customizations, the future expense may outweigh the present cost-savings of a cheap but rigid solution - or you may be stuck with a system that does not suit your needs and does not deliver the value you sought.

Alignment with existing technology infrastructure is also a critical factor. Most firms have a number of systems in place that maintain customer data, and if the solution does not integrate with them to access and share data, you will either have to use the system without enterprise data or undertake an ongoing effort to periodically port data from one system to another. This is inefficient, but may be acceptable.

Alignment with technology standards can also be an important factor. The value of using standards-compliant solutions is that it integrates neatly with other systems that comply to the same system, which is germane not only to your current internal systems, but to your future internal systems, as well as any external systems used by vendors and partners. As such it becomes isolated and compelling it to play nicely with other systems can require a great deal of middleware programming.

The user experience factor for CRM systems is also significant, in that a major obstacle to getting people within your organization to adopt and use the new systems. Even if the system is highly functional and provides excellent value, users will resist it if it is difficult to use. In the author's words "a poor user experience has doomed more CRM initiatives than perhaps any other factor." Issues of morale aside, a poor user interface requires more training and support than an intuitive and easy-to-learn system.

The viability of the vendor is also a critical concern. Because your company is making a long-term commitment to a system that will have a significant impact on its core operations, you need to select a vendor who will likely be in business for the long haul, and for whom CRM is a significant part of their business rather than a neglected sideline. Because companies seldom exist in isolation, you should also consider their "ecosystem" of supporting products and organizations. A firm that seems solid on its own merits may be building its solution on a platform provided by a shaky partner, which jeopardizes the system itself.

The cost of a CRM application is also a major factor, but has not been mentioned until now because many of the other factors will drive the cost. The total cost of ownership includes not only the software licenses, but the hardware costs, installation costs, consulting, and training. There will also be ongoing maintenance costs, cost of periodic upgrades and updates, and the costs to customize the system to suit your present and future needs.

Cost is generally considered in relation to the return, but information about ROI is often difficult to estimate. In his experience "this is almost always a waste of time" because the analysis is very often rigged to present an acceptable ROI. There is really no telling how many more sales you will get if you coordinate your marketing communications, or how much more business you will get from a current customer if you provide better service, or speculate how many customers you might lose to a competitor who leverages CRM to improve their customer experience.

The Software Evaluation Process

The author provides an evaluation process that should be used when considering vendors so that a the same criteria are used consistently. He cautions that vendors will suggest a method, but it is naturally biased to favor their own product.

1. Identify the evaluation team. It should include managers from each business group that will use the application, a representative of the IT group who will evaluate it from a technology perspective.
2. Develop an assessment guide that enumerates the criteria by which solutions should be assessed, the rating system, and how the overall scoring will be calculated. Do this before gathering information about any of the solutions.
3. Develop a cost estimate, aside of the assessment of other criteria. You should seek to include all costs over a long period of time (five to seven years), including licensing fees, hardware fees, hosting costs, costs for maintenance staff, consulting fees, and any other associated cost.
4. Identify potential vendors. Some sources that will help educate you about products and vendors include analyst reports (Gartner, Forrester, and other firms survey industries); technology and marketing business publications; technology and marketing professional associations; financial reports; marketing, technology and CRM conferences.
5. Discovery. A superficial review of identified vendors can help weed out many in the CRM market to determine which merit more detailed consideration. You should easily be able to access information on the vendors' Web sites that will enable you to detect without much effort when one is clearly not a good fit.
6. Discovery. A second round of discovery can be done by communicating with vendors to discover more detailed information. The author also suggests a bilateral communication in which you share general information about your company and vision with potential vendors, which will allow some of them to disqualify themselves.
7. Vendor Presentations. When you have whittled down the field to a manageable number of potential vendors, schedule presentations. Various advice is given (one presentation per day, all stakeholders invited, all vendors get the same information beforehand, etc.) Of particular importance is to make sure the assessment guide and cost estimate are completed.
8. Fact Checking. After the presentation you will likely wish to check up on some of the information to verify it. At the very least, call some of the references they provided and ask questions to verify details or gather their impressions.
9. Site visit. An optional step in the evaluation process is to visit the vendors' sites. This enables more detailed conversion, verification of claims, and direct inspection of their facilities and equipment.
10. Selection. Evaluate the data in the assessment guide, the cost estimate, and information gathered from references to select a vendor.
11. Contract Negotiation. The author mentions only that this is the last step before the contract is signed and work will begin. (EN: In my experience, it's usually letting the lawyers fight. Both sides have their own contract they want the other to sign, and the process is generally hashing out the terms.)

Another suggestion the author makes is to involve vendors in smaller projects, such as pilots or proof-of-concept, before getting more deeply engaged. This can mitigate the risk of getting too deeply involved too soon (enabling you to walk away and choose a different vendor if it doesn't work out) or enabling you to work with two or more vendors when there is no hands-down favorite among them.

Selecting the Right Consultants

The author suggests that you will need to hire consultants to help with your CRM program - unless you have the resources to hire and maintain a full-time staff of experts, it is likely you will need a consulting partner who can offer skill and experience with CRM applications and avoid the kinds of mistakes you can make if you use a "learn as we go" approach.

The criteria you can use in selecting a consultant are not as involved:

• Does the consultant have experience with your selected application?
• Does the consultant have experience working in your industry?
• Does the consultant have experience working with firms of your size/scale?
• Does the consultant have sufficient bandwidth (staff) to assist?
• What is the experience of the specific team (people) the consultant provide?
• Will the consultant provide a consistent group of people for the project's duration?
• Is it important for the consultant to be located reasonably close to your own offices?
• What are the costs of the consulting service (total for project duration)?
• Can the consultant provide references from companies similar to your own?
• What is the consultant's reputation for performing on budget?
• How smoothly is the hand-off, documentation and knowledge transfer, handled at the end of the project?