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Avoid disaster when picking your CRM vendor

SAN DIEGO -- Try to pick a CRM vendor and you'll run head first into a dizzying array of products and promises. So, how do you separate vendor hype from actual software success? At ITxpo, SearchCRM caught up with Michael Dunne, vice president and research director at Stamford, Conn.-based analyst firm Gartner, to help making your vendor decision a bit easier.

When it comes to picking a CRM vendor, where do you begin?
It's planning and having a selection process. Any structured methodology will help because a lot of it is reconciling agendas and setting expectations. The circle of participants involved in the selection has increased. It's no longer just an IT person saying 'Hey, here's some cool technology' or some finance guy saying 'How much does it cost and why?'

With CRM [the selection] gets complicated because you're trying to automate processes and a lot of people get ahead of themselves because they think that by buying CRM they can just buy a product. In fact, we tell people to step back, go through a needs assessment to help understand the compromises and remind them that they're using technology as an enabler. Is it a good idea to choose a CRM vendor who is also your ERP provider?
I wouldn't. I'd say this is one of the first things we emphasize. Work on the requirements, work on the framework and then look at the vendors. That way you don't have a predisposition; you have a fairly honest litmus test to see functional equivalencies. We think the vendors in the ERP realm are starting to introduce products with functional equivalency that for their install bases probably would be more appropriate, especially since an expansion of a relationship tends to be less costly.

SAP-types of CRM initiatives are often tied to order management as an early area of interest and grow out from there to sales force automation. We see with PeopleSoft, more of a push on the help desk or customer service support products. How is making a CRM vendor decision different than choosing another type of software provider?
It's more like ERP. The target users also have an influence and they're going to say 'How does this affect my job?' When they start seeing the gaps of what they need to do with their business and what the applications are capable of, services [becomes] the second most important issue after functionality -- in terms of having to integrate these applications with a myriad of other applications. Back-office to front-office integration, a lot of custom work has to be done with mainframe integration, also integrating with other front-office applications because until about two years ago no vendor did everything. Even now the suites coming along are lumpy. How much should you expect your CRM vendor to demonstrate ROI?
I think you ought to take their promises and match them with a reference interview. I'd say with a lot of issues the ROI responses you get from those interviews will be vague because they're so new. We talked with one insurance firm and they said it was like going from a caveman to a space shuttle for the simple fact that they had standard interfaces, standard access to information and greater velocity in addressing client issues. So you get softer [ROI] measures. Also remember -- until recently -- a lot of products needed a lot of customization. So how much of the ROI is from the base product and how much is from the customization? What are your recommendations when it comes to picking a vendor that has a specific vertical-market CRM offering? Are these suites always a better option?
They are a lot more immature than expected. Siebel had shown the vision of attacking that earlier. The two verticals that are solid for them are financials and telecommunications. I think we need to hear more from references in terms of their automotive, apparel and government [offerings]. [We're starting to see] some cases where the vendor might not have an application that's completely 'verticalized,' but they might have the expertise and the client base that backs up that experience. They might have human resources within the organization that understands the business. You do see that with Clarify under Amdocs. They've always had a large telecommunications install base and they understand call center applications. SAP for manufacturing and utilities [makes sense] because they own the back end. If you had to name names, are there CRM vendors you'd place above the pack when it comes to satisfying their customers?
I think Siebel benefits from having such an extensive consulting network that they can throw bodies at [customers]. They've built out an internal organization pretty nicely, quietly, over the past two years. If you notice now their revenues are about equal from services as they are from licensing. They win in terms of resources. We've also seen good references from some of the small vendors that give kisses and hugs to their small number of big clients. On the flip side, they don't have as many resources. They can get impacted by growth deficits. You brought in too many contracts and you can't consume it. Onyx tends to fall in that camp of small vendor that knows how to take care of their customers and if there were issues they'd come clean. And who seems to fall short?
Oracle has done a good effort at trying to support implementations but part of it was they had been going through a whole new development cycle. So they didn't get bad reviews, but it was more like [the software] was kind of a work in progress.

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CLICK to: Locating CRM vendors in your Buyer's Guide Gartner was the first to really highlight all the CRM failures out there. How many those failures can be attributed to poor vendor selection?
I think it's two things: over ambition on the project and then poor vendor selection in terms of setting expectations. A lot of people went through selection and thought something was a good product and didn't have a consistent approach to why they made a decision and then went into an implementation not so well prepared.

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