CRM survey 2008*

Using technology to improve the way you do business

By Michael Burns

*This is an expanded version of an article that originally appeared in the November 2008 issue of CAmagazine.

Welcome to our latest vendor survey on customer relationship management. As we pointed out in our September survey on enterprise resource planning (camagazine.com/ERPsurvey08), we decided to do a separate survey for customer relationship management this year instead of including it in the larger survey. The decision seems to have been a good one, since the number of vendor responses rose to 26 from 13 last year, with many of the leading CRM systems included as well as products you likely don’t know. See the online version of this article for the survey chart.

What jumps off the page in the results is that SaaS (Software as a Service) dominates over the licence-based approach to software deployment. With SaaS, the database and application are hosted as a service provided to customers across the Internet. You pay a monthly fee for each user rather than purchase a license. SaaS allows you to avoid the costs associated with managing the computer and database that goes with it. Salesforce.com led the way, but it has lots of competition (including Microsoft). Competition is good for all of us as it puts downward pressure on prices and encourages enhancements to functionality and service.

Also striking in the results is the huge variability in price and functionality. The average SaaS cost per user per month ranges from $6 to $89, with the average at $45. I tried one of the low-cost systems (Oprius) partly to see what you might get for $15 a month and partly because I thought it might be a better solution for my small company than my current system.

Oprius has a lot to offer a small company, including an easy-to-use contact management system with email, user-defined fields, tasks, calendar, workflow and lead capture over the Internet. But Oprius did not let me look up contacts based on all the fields in the system, so I passed on it for now. The company does plan to offer this possibility in the future, however.

Systems also vary in their integration capabilities. Some don’t have an open application programming interface, which provides integration with another system using the same validation and integrity checks as if the data was keyed directly into the system. Some products are already integrated with specific ERP systems and many of the ERP systems already have CRM. In September’s ERP survey, 36 of the 54 products included CRM.

The question, then, is whether to implement a best-of-breed approach, whereby you select the best system instead of opting for one integrated solution. Best-of-breed may make sense in cases where an organization’s ERP system is fine but does not have the requisite CRM capabilities. And for some small businesses, an inexpensive best-of-breed may be the right choice. If those businesses don’t have a lot of customers, they won’t have to worry about lack of integration with their accounting or ERP systems. For larger companies with many customers, however, the lack of integration between CRM and ERP could be a big problem.

In the early days of CRM, we heard about many expensive CRM failures. Today, the costs have dramatically fallen, CRM is widely implemented for both large and small companies, and there are fewer failures. A failed implementation could occur for a number of reasons, including an inadequate selection process and employee resistance.

Resistance often arises when employees do not want to share their knowledge because they see it a source of power. It also occurs when the employee is asked to update their CRM database, which takes time and interferes with getting their job done. Can you blame a salesperson who is paid on commission for not wanting to spend time updating CRM for others in the organization?

The rigour used in the selection process depends on the project’s cost, risk and scope as well as the costs of the CRM system. You should not be dazzled by hype or canned demonstrations. Nor should you select a system based solely on this article, as we were unable to validate the information supplied to us by the vendors. Mistakes can be inadvertent (confusing the number of customers with the number of users, for example), or intentional. We don’t think there will be that many intentional mistakes, partly because the vendors will lose credibility if they are caught. You will also see there are lots of “no”, “customization” and “third party” responses to our questions on functionality.

We hope you find our survey to be useful. If you have suggestions for improvement, please let us know.

The CAmagazine 2008 CRM Survey

Michael Burns, MBA, CA, is president of 180 Systems (www.180systems.com/), which provides independent consulting services, including business process review, system selection and IT audit. Contact: 416-485-2200 or mburns@180systems.com.