CRM software upgrades: Building a business case

Contributor and expert Richard Smith explains how to build a business case for a CRM software upgrade. Find out about the key points of an upgrade business case, including justifying the upgrade, the related financial implications and building a consensus for the upgrade within the organization.

Three steps to building a business case for a CRM software upgrade:

Justifying the system upgrade
Financial implications of the CRM upgrade
Building consensus

CRM expert contributor Richard SmithRichard Smith, vice president, CRM strategy for Green Beacon Solutions
Richard Smithis a founding partner of Green Beacon Solutions with more than a decade of experience in the high-tech market in project delivery and product management. Smith previously worked for Breakaway Solutions as a delivery partner, managing the full-lifecycle delivery of CRM and e-commerce implementations for the financial, high-tech and Internet commerce markets. He's been involved with the design and implementation of hundreds of successful CRM implementations.


Benjamin Franklin said, "In this world, nothing is certain but death and taxes." If he lived today, he would surely add software upgrades to the list. Upgrades are a mixed blessing, offering new features and functionality in return for significant work migrating existing data and customizations.

For more on CRM software upgrades
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You'll hear expanded information on the CRM upgrade process, including shopping for vendors, using consultants and training end users.

The new bells and whistles that are advertised by a CRM vendor can, at first, appear to justify an update to the CRM system without a business case. Businesses that take this off-the-cuff approach to an upgrade tend to face significant issues during the upgrade project as costs and timelines that were not initially evaluated become evident. A business case develops a common understanding about the risks and benefits of the software upgrade, the anticipated financial impact and the impact on individual business units. Then the organization can make an informed decision about when and how to approach the upgrade to truly benefit the organization.

There are three core areas to address when building a CRM upgrade business case:

1. Justifying the system upgrade

As part of the justification and assessing process, there are several key questions to consider that can help determine whether to implement now or wait for a future release.

Functional improvements: Changes in the new version of the software that improve productivity and address current implementation issues can be a powerful upgrade justification.

  • Are there issues that users are experiencing that have been resolved in the system upgrade?
  • Is there new functionality that will help users be more effective or that will simplify complex tasks and reduce training costs?

    Implementation age: Depending upon how recently you deployed your software, it may make sense to accelerate or postpone the upgrade. For example, if you just deployed the first phase of CRM, consider allowing users to get used to the new system first.

  • Did you recently deploy the solution, or has it been up and running for several years?
  • Is your current version still supported, and have you had any support problems?

    Version maturity: Different products have varying degrees of stability upon release. Some customers refuse to implement a .0 release, preferring to wait for a service pack or a .2 or .3 release.

  • How long has the new version been available?
  • Will you be one of the first to upgrade your system, and if so, what is the advantage of doing so? Have others upgraded, and what has been their experience?
  • What is the availability of patches and professional support resources for the new version?

    Business readiness: Ask whether now is the best time to undertake an upgrade. Some organizations have defined windows -- the end of a month or quarter, for example -- when no new functionality can be deployed. Identify also the impact the CRM upgrade might have on other systems.

  • When should the upgrade be deployed, and what impact could this have on the business?
  • Are there other systems integrated with CRM that will be affected by the upgrade, and can those systems be updated efficiently?
  • Will there be impacts on reporting, data warehouses or analytical applications?

    The goal is to determine whether the CRM upgrade is in the best interest of the organization at the time. This may be a simple decision, if the updated software offers much-needed functionality or ensures continued support. But the impact on the business, users and even other internal applications may suggest an extended timeline for considering the upgrade.

    2. Financial implications of the CRM upgrade

    Most CRM software companies require an annual software maintenance fee that includes access to support, patches and functional downloads, and even new versions. So the real cost of the CRM upgrade is based more on the services required (by internal resources or external professional services partners) than on the cost of the upgrade. Generally, the more the application has been customized and the longer the organization has gone without an update, the more costly and time-consuming the upgrade will be from the services perspective.

    Cost justification: Some CRM companies offer customers incentives for being among the first to upgrade to a new release, including discounts on additional software, services or training. There is also a cost to the business, from potential impacts on revenue performance to impacts on other systems and integrations.

  • Is it more cost effective to do the upgrade sooner rather than later? Are there incentives that make it less costly now?
  • Will the business be affected negatively, and is this inevitable, irrespective of deployment timing?

    Internal resources: Any upgrade will require dedicated time from internal staff. Determine whether staff will be able to devote the time required to implement the upgrade, and who will manage the process, especially interaction with users.

  • What internal resources do you need for the upgrade? What is their current workload, and how much time can be assigned to the upgrade?
  • Who will manage scope during the upgrade project, making decisions regarding what is in or out?
  • Who will be managing training?

    Systems: In most cases, major upgrades are a good time to reevaluate existing hardware and determine whether it can be used for the upgraded software. Many organizations opt to upgrade their hardware every three to four years, reusing the older hardware for development or staging environments, or re-commissioning the hardware for other internal use. This is especially the case as organizations start leveraging virtual environments for development.

  • Will new hardware be required?
  • Should the hardware be leased or purchased, or hosted off-site?
  • What software licenses need to be upgraded? Do you need to upgrade other applications?
  • What is the implication of the upgrade on other related systems? For example, will upgrading to a new version of CRM, SQL Server, and IE require upgrades in corresponding internal systems like your ERP, time and expense, reporting, intranet or others?

    Understanding the true cost in terms of internal resources, training, partner staffing, hardware and software upgrades, and even migration can help the organization determine whether the upgrade is in its financial best interest or whether to budget for the upgrade in the future.

    3. Building consensus

    All of the business stakeholders who will be affected should agree with the decision to upgrade, understanding both the risks and benefits of the project.

    Business users: The daily users of CRM will want to see some benefit from the new version. That the upgrade includes enhanced workflow capabilities means little to a business user; hearing that the improved workflow will streamline complex processes like credit checks is sure to get attention.

  • What are the key "wins" that the business users will realize because of the upgrade? Are there new features that directly benefit users?
  • What indirect benefits can the users enjoy with the upgrade, such as streamlined processes or quicker calculations?
  • Will the upgrade simply guarantee that they don't lose any existing functionality?

    IT staff: The IT staff will be motivated by how the upgrade can reduce their workload. Often, the upgrade can provide new tools that make it simpler for IT to respond to user feature requests; or the upgrade can help IT standardize on a common platform (i.e., one version of SQL Server) or consolidate several tools into one common toolset.

  • What new tools are provided in the upgrade that will enable IT to respond more quickly to users' requests? Does the upgrade allow end users to answer their own questions (queries, reports, views of date, etc.)?
  • Will the upgrade help to standardize the organization and make it simpler for the IT staff to support?
  • Can IT realize any savings from consolidating hardware? Consolidating software licenses?

    Management team: The management team is typically most concerned that the upgrade is affordable and will not negatively affect the overall revenue stream. Sales, Marketing, and Support managers will look for tools that will improve the productivity of their employees. CEOs and CFOs will look for cost savings to the organization.

  • Will the upgrade reduce maintenance and support costs? Will it affect software license or hardware savings?
  • What is the expected time frame for a return on the investment? In what time frame will the benefits of the upgrade overtake the costs of the current system?
  • Is the upgrade scheduled for a time that is convenient for the business?

    Building consensus is critical both for justifying the upgrade and for keeping the project on track when scope begins to creep or other projects arise. For any major release, the core business stakeholders should be aware of the challenges and risks – as well as the benefits, financial and otherwise – before the project so that consensus can be maintained during difficult decisions that arise in the course of the project.

    Browse the other installments in this business case series
    * Outsourcing the call center: Building a business case by Richard Snow
    * Customer satisfaction surveys: Building a business case by Richard Snow
    * Remote call center agents: Building a business case by Donna Fluss
    * SaaS and on-demand CRM: Building a business case by Dan Merriman
    * Web self service: Building a business case by Allen Bonde



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