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CRM Steps to Success: Finding the right vendor

Choosing the right vendor is among the most important CRM decisions that you'll have to make. Some of the top names in the industry show you how to weed out the marketing hype and get the best provider.

Companies that are selecting CRM products have hundreds of vendors to chose from and one major problem: CRM is a single acronym describing many customer-oriented business activities, and no one product supports all CRM functions.

Tool selection, therefore, is more than a matter of picking the best possible product for your current needs. Don't forget the future. You'll need to think in terms of your overall CRM strategy and select the vendor that best fits your long-term plan.


User Profile: PepsiAmericas Inc.

The Rolling Meadows, Ill.-based maker and seller of soft drinks was looking for a CRM vendor to supply it with call center software. Here are a few facts on how it made its decision.

Setting strategy: The company needed to bring pricing, routing and customer information together. It wanted to give call center agents a single view of data surrounding each of the convenience stores and gas stations it is trying to cross and up sell. Before beginning the vendor search, a small committee of higher-level decision makers interviewed call center managers to determine their needs. It documented each requirement.

Other functionality needs: Because all of its other applications were moving toward a Web architecture, PepsiAmericas wanted its call center software to be Web-based as well. Scalability was also a big concern.

Vendor search: Executives identified three vendors whose products seemed to fit the bill: Siebel, E.piphany and PeopleSoft. It met with sales reps from each company and got in-depth demos on how their software works. "Siebel is strong on functionality," said David van Volkenberg, PepsiAmericas' manager of IT applications. "But then again, so is E.piphany." Yet van Volkenberg's committee ultimately decided to implement PeopleSoft CRM 8.

The intangibles: PepsiAmericas has used PeopleSoft back-office applications since 1998. It has between 15 and 20 IT staffers who are familiar with the way PeopleSoft tools work.

The final decision: "At the end of the day, we were comfortable with our partnership with PeopleSoft," van Volkenberg said. His selection committee made its recommendation to upper-level managers, who approved the purchase.

--By Jon Panker, News Editor

"At the end of the day, technology is the tool, but it's not going to get you there any more than buying a hammer and a saw is going to get you a house," says Walter Janowski, a research director with Stamford, Conn.-based Gartner.

That's why you need to set your CRM strategy and then look for a vendor to help execute it. How should you map it all out? The following tips will help.

Begin with your business

Your needs analysis should begin with determining exactly what business problem your new CRM solution will solve, and should include any related problems that are expected to crop up in the near future.

One thing businesses should not do, says independent consultant Jay Chang, is begin with the tools selection.

"The desire is always to have the latest and greatest toys, and really from a CRM perspective it's not just about horsepower and feature/function set," says Chang, who is based in Devon, Penn. "It's really about do you understand the business?"

When it comes to how CRM software actually works, he says, most major vendor products are more alike than they'd care to admit.

The real deal on RFPs

After determining what you need, start gathering information about prospective vendors and tools. There are a number of ways to do preliminary research, ranging from Web surfing to plain old-fashioned word-of-mouth recommendations from colleagues.

The goal is to put together a list of about five to 10 vendors to whom you can go for a request for information (RFI). Once those vendors have responded, in theory, you could easily create your short list of three to five vendors for the more in-depth request for proposal (RFP).

Not so fast. Some vendors may see the RFI and RFP as a serious waste of their time and money.

"Most companies that are going to respond to an RFP effectively are going to want some assurance that you're looking at them very seriously," says Chris Selland, managing director of Cambridge, Mass.-based Reservoir Partners.

Selland recommends providing potential vendors with your feature/function list and its context in the big picture of your CRM strategy.

"The better you can prepare them for this first meeting, the better you'll be able to sort of compare one vendor to another," Selland says. "Hopefully, you'll have given a very consistent story to every vendor."

Yes, budgets matter … but price isn't everything

The upside of a down economy is that many companies are benefiting from vendors' increasing willingness to offer discounts on software licenses.

"In this environment … you can always negotiate down," Chang says.

The real challenge is to keep an eye on the other expenses -- implementation, labor costs, integration, training and support. They can cost as much as five times the licensing fees.

"You've got to look at the whole pool and decide what your costs are," Chang says. "And that's really where you need some sort of sense from a previous installation in your vertical (market) how much it costs to install [the software]."

Who are these people, anyway? Check customer references

There's no substitute for having been there, which is why you should try to talk to as many customer references as possible. You can start by calling the references your vendor offers you, recommends Jim Dickie, managing partner of Boulder, Colo.-based Insight Technology Group. He says to ask for 10 customer references as part of the RFI. Bear in mind, however, that references your potential vendor gives you will be unlikely to tell you anything the vendor doesn't want you to know. Therefore, you should:

  • Track down users who haven't been vetted by the vendor. User conferences are good for finding chatty customers with honest implementation stories, says consultant Paul Sweeney. Also good are online bulletin boards, though Sweeney cautions that the boards can present you with a negative impression of the provider and its product that is just as exaggerated as the Pollyanna story the vendor will tell you.
  • Talk to companies in your vertical market, says Denis Pombriant, vice president and managing director for CRM at Boston-based analyst Aberdeen Group. However, any corporation that might perceive you as a direct competitor is going to be less likely to cooperate with your inquiries. "The information might be seen as a strategic asset," says Pombriant. "So, for example, if you're a regional bank looking for CRM technology, you might look for case studies that involve a variety of different kinds of banks and vendors, as opposed to sticking to regional banks." Networking through professional organizations can help.
  • See the actual sales reps and their managers who are using the CRM system. Selland recommends talking to one business executive and one IT executive to get both sides of the implementation.

Vision: Beyond viability

How do you assess the viability of these vendors in a market where everyone is missing their financial numbers? Analyst Janowski says it's important to look "at vendors that tend to be driving the market, or vendors who tend to be leading the market as opposed to following it. Does this vendor have a history of innovation?"

Ask a potential vendor: What's your product going to be like in two or three years? Make sure the answer jives with your company's long-term plan.

As far as straight financials are concerned, do your homework and ask vendors to open their books, but also keep an eye on the company's customer and support base. "You want those customers paying [your vendor's] maintenance and support," Chang says. "Because that way, you know they've got a steady revenue stream coming in. They're not as dependent on making the next sale."


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