Last week we took a look at some of the questions around customer experience management and -- as ever -- answered those questions. Before moving on, let’s take a final look at it, and some of the considerations that enterprises need to take on board before investing precious IT budgets in customer relationship management software, better known as CRM software.

There’s been a good deal written around this, but one of the better papers come comes from SugarCRM -- written by Chris Bucholtz, an IT researcher with many years’ experience writing on the issue -- entitled The 10-Step Guide to Buying the Right CRM Solution.

We found this particularly interesting in that it is relatively easy to use and offers concise, digestible bullet points on what enterprises should be looking for in a software space that is often difficult to decipher.

Bucholtz points out that, unlike many other areas of IT buying, CRM buying requires enterprises to know not only what’s available to them, but also all the processes and areas within their enterprises as CRM will more than likely reach into all IT areas. They should also look at the ways CRM is delivered and the financial implications of those delivery models.

He points out that enterprises should not focus on functionality, but rather around issues like support, or product roadmaps, as this will shift the focus from the business value of the product to issues around the software itself, which are constantly evolving anyway.

There are ten issues that need to be considered and will help enterprises pare down the huge number of solutions available to just a handful. These ten steps are, in turn, broken down into two stages in the buying process:

  • Stage 1: Knowing Yourself
  • Stage 2: Knowing your Unique Requirements

Initial Considerations

It probably doesn’t need to be said, but CRM buying is not easy, with at least 800 companies providing CRM solutions in some form or other, according to Bucholtz.

The first things that need to be looked at are issues around your enterprise. These include:

  • Company size
  • Specialized needs around sales and marketing
  • The vertical your company operates in

After that, you need to consider how this technology will affect your enterprise generally, and specifically how it will affect your IT team:

  • CRM integration with other systems
  • Method of delivery (remember there are huge numbers of systems available as SaaS
  • Hardware and infrastructure costs

And these are even aside from the financial concerns such as initial outlay, maintenance costs, total implementation costs and total cost of ownership.

Principal CRM Deployment Errors

Bucholtz has also identified what he describes as the three most common mistakes when picking a CRM for your enterprise. In this respect, he says, it is important to remember that failure rates around CRM implementations range between 40% and 80%.

The fault tends to be with the company that is buying the software rather than the company that’s selling it. The three categories of mistakes include:

1. Driving CRM

Many companies fail to identify the reasons why they need a CRM in the first place. Many executives see the need for a CRM as a response to failures on their behalf in the business arena. The result is that business problems tend to get downplayed.

2. Technology and Adoption Rates

Companies often focus too much on the technology issues and not the business issues that need to be solved. However good the technology is, if it doesn’t map onto the business problem, there will be considerable user adoption problems after implementation.

3. CRM Goals

Failure to clearly define the goals of a CRM implementation means that the goalposts will often change over the course of the implementation and lead to a situation where the original set of problems have not been dealt with. Goals need to focus on immediate problems and near future problems. The objectives need to be nailed down.

By following these ten steps, Bucholtz says, enterprises can not only expect to benefit from a successful CRM implementation, but also avoid the worst excesses of the identified problems.

STAGE ONE: Know Yourself

1. Look at Your Own Business

The first thing a company needs to do is to map processes. Companies need to know what processes are working and which ones aren’t, and which ones can be fixed by a CRM, and which ones can be dealt with without software of any kind.

The easiest place to start this is to examine the processes that aren’t working and see how changing those processes might fix a problem, but also affect other processes that may be already working. It is important to identify processes that are working to ensure that they are not negatively affected by changes made elsewhere.

Your CRM solution should map to the strengths and weaknesses of your organization. It should not demand that you alter your processes to suit it.

2. Human Resources

While executives and IT decisionmakers will clearly be involved in the decision process, enterprises should also make sure that before it is implemented, a representative of the people who will be using it should also be consulted.

Bucholtz argues that, in far too many cases, these people are not consulted, with the result that adoption rates are often not as high as might be hoped for. It’s also important to learn about any concerns, objectives and fears that could impede adoption down the line.

3. Regulatory Realities

CRM systems do not operate in a vacuum. CRM systems, like the majority of other software systems, operate using data. Enterprises need to consider their CRM in the context of compliance codes in the vertical they are operating.

In this respect, financial services must support Graham Leach Bliley, while industries like health care must accommodate HIPAA, and public companies must satisfy Sarbanes Oxley (SOX) requirements. Delivery methods, like SaaS, may make this more difficult again.

4. CRM Budgets

There is in the CRM space now two ways of paying: Cloud, or on-premises. It has been the case until relatively recently that smaller companies that were less cash-rich would go for SaaS offerings, while larger companies were able to take a longer-term view and invest in on-premises offerings.

That appears to have changed now, though, with even larger companies heading for the cloud where it is feasible. SaaS subscriptions offer the benefit of pay-per-month where the CRM systems and its integration costs are handled as an operational expenditure.

In the same way, smaller companies in fields where regulation makes the cloud difficult or impossible to use need to go with on-premises solutions.

STAGE TWO: Know Your Requirements

5. Integration Requirements

Enterprises need to ask how deep and far down the CRM system will integrate. Will it be departmental, or will it be used to improve customer relationships right across your enterprise? Enterprises should also note the integration can be expensive and time-consuming. They also need to consider the complexity of the solution: If it’s too simple to integrate with existing systems, it’s not the system for you; if it’s too complex, the chances are it is not for you either.

6. Support

The level of support offered by vendors should be one of the make-or-break factors in your decision. It is likely that users are going to need support to get themselves trained and using the system. Support can be costly, so needs to be factored. There are also some vendors that are better than others and it is usually a good idea to note who is using what systems in the vertical you are operating in.

7. Vertical Markets

Are there CRM products tailored for the vertical that you are operating in, or are you in in industry that operates off unique kinds of data with a non-standard buying path? There are many industries with tailored CRMs, but it is also advisable to look at solutions that are horizontally targeted, as it may be that, with proper customization, they will work better for your company than vertically targeted offerings.

8. Feature Requirements

While features are important, all CRM systems should have the same basic features. After that, the rest can range from the interesting to the exotic and all with the same common aspect to them -- they are never used. Enterprises need to ask the people who will be using the system what features will make their work more effective and life easier and choose a feature set based on this.

9. Financial

Having cut your list down to a manageable number, you need to look at the real costs. Remember you need to count in integration costs, upkeep costs or customization costs where needed. Bucholtz points out that, for on-premises applications, you need to add about 22% into the equation, while with SaaS you need to calculate recurring fees. You also need to cost the software over its life, and not just the initial startup costs.

10. Vendors

Once you have cut your list down further again, you need to assess whether your vendor has over-sold itself. Your enterprises need to do an independent assessment of track record and examine whether the chosen vendor will be in business next year, whether the product will still be about next year and whether you still are able to get support in the future.

Buying a CRM solution involves a complex series of decisions, but it also requires an intimate understanding of your own business, which in itself is a useful exercise. If you are interested in more on this, check out the full paper ; there’s a lot in it and its well worth a read before starting down the road to a CRM deployment.