CRM Buyers Guide CRM Buyers Guide

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1 CRM Buyers Guide If you have any questions, please call where one of our analysts will be happy to help you understand your options and find a good solution.

2 Introduction CRM solutions provide important customer information and tools to businesses of all kinds, reflecting the name, Customer Relationship Management. They are particularly useful in enforcing levels of quality and specific procedures in a uniform manner. CRM systems provide useful customer data like past contact information, past purchases, account balances, and demographic information. They can be used to manage interactions with customers and to ensure that policies are enforced when dealing with customers. CRM solutions typically include a number of sub-applications such as Sales Force Automation to provide guidance to sales staff when interacting with customers; Marketing applications to help guide campaigns, manage advertising and control budgets; Reporting and Analytics to allow sales and marketing managers to gain insight into performance and optimization; and Service and Support applications to provide prompt customer service and call center tools. Hosted Solutions Summary Hosted or on-demand (or even SaaS) CRM refers to a solution where much or all of the functionality of a CRM solution is outsourced to a solution provider that is not located on the premises of the organization. Usually this simplifies implementation since additional hardware and even software is not required and the pricing structures are highly predictable since providers charge on a monthly basis. In addition, it frees the company to focus on its core business and on making effective use of the solution. Third party research has shown that typically over 80 percent of companies that use a hosted CRM solution achieve a positive ROI. It is a particularly effective solution for smaller organizations where the costs of implementing on premise solutions can be too high a barrier to entry. However, hosted solutions do have drawbacks. The primary drawbacks are flexibility and customization. Hosted providers cannot truly integrate their solutions into existing operations, whereas on-premise CRM solutions can be tailored to the particular needs of an organization. Furthermore, on-premise solutions are easier to integrate into a company s existing business processes and applications. For small- to medium-size businesses, however, the price is right when it comes to hosted CRM tools. By paying per user per month, a company can gain access to a sophisticated application in a mere 30 days without having to burden its IT department or cut off its cash flow. And of particularly good news to growing companies is the fact that today s ondemand CRM solutions are highly scalable and easy to upgrade.

3 On Premise Solutions Summary On-premise CRM solutions involve either software or hardware and software in combination that are purchased outright and installed at the organization's location. Usually they are a software solution that runs on the organization's servers and that can be integrated with existing software to make a more customized solution. The biggest single advantage for an on-premise CRM solution is that you own it. You own the software, you own the data, you control everything and if it is what you need then theoretically there is nothing else to purchase ever again. But, like with all software, there are licensing issues and the most important ones are likely to do with support and upgrades. If you will need support, then you can expect to pay for it after an initial period and it is likely to be costly. But there are other reasons to go with an on premise solution. One is performance. With a hosted solution you are limited in control over implementation and are limited to the performance you provider can offer. That may not matter for some but if you want to be able to tune your performance and to offer things like virtualization where you might be able to scale dynamically and have much greater performance at certain times of day, for example, then an on premise solution is likely to work better. Another reason could be regulatory some organizations require complete and total control of data by federal or industry regulation. The most obvious example is the healthcare industry where patient data is strongly protected by HIPPA. While there are a few hosted solutions that can provide more expensive solutions to control data with proper audit trails, they are less certain, less flexible and could cost more. Finally, on premise solutions offer the ability to integrate and customize more than even the most flexible hosted solution. If your applications require extreme integration and customization, then an on premise solution may be your only choice.

4 Comparison of CRM Types Hosted On-Premise Hybrid Type Description Advantages Disadvantages Example Solution Providers CRM solution that is provided as a service and hosted external to the organization. CRM solution that is sold complete and runs on the organization's servers. CRM solutions that try to blend the advantages of hosted and onpremise. Market Overview and History Predictable cost, easy to implement, easy to operate. Customizable, flexible, can be higher performance. Tries to offer the advantages of both hosted and onpremise combined. Less easy to customize and integrate, slower to add new features, could have performance issues. Cost can be higher and harder to predict, can be difficult to implement, can be harder and more costly to operate. If it fails to integrate hosted and onpremise properly can be a costly failure. Can be hard to implement all features. Salesforce.com, Omnivue, Agile Wave, Oracle, NetSuite, ACT! SugarCRM, Microsoft, Onyx, Siebel (Oracle), SAP, Pivotal, ACT! Most on-premise providers now offer some form of hybrid solution and hosted providers are beginning to offer them as well. CRM has its roots in customer and contact management software. In the 1980's, tools like Goldmine and ACT provided good resources for managing customer databases and customer contacts so that companies could call or more effectively. But these tools were mostly used simply to gather existing customer information and incoming customer contacts and then treat the whole customer list as one. In the 1990s, enterprises began to need to treat their customers in a more sophisticated manner and treat customer groups differently. Early CRM pioneers started to treat enterprise management software categories as serious business. SAP, Peoplesoft and Oracle had broad solutions that included CRM solutions as part of a package and Siebel started with CRM and then added to it. Interestingly Oracle has consolidated two of these companies into itself, making it one of the market leaders. SAP remains a strong overall solution but with CRM as one module within a larger offering, which is where Oracle has taken its consolidated offerings. In addition there are many companies specializing in CRM. In fact the original contact manager companies like Goldmine and ACT expanded their offerings to become

5 true CRM. Goldmine is now part of the Frontrange suite and ACT is part of the Sage range of offerings. The biggest change in CRM, however, came about with the advent of SaaS in the 2000's. The biggest trend is the rise of SaaS or hosted solutions and the leading name there is Salesforce.com. Salesforce.com dominates the hosted CRM market and has taken a lead in making a hosted solution acceptable even to the largest enterprises. The second development is the rise of open source solutions that start with free offerings and range on up to paid and fully supported enterprise class solutions. The leader in this area is SugarCRM. Microsoft is also a player in the hosted and on premise arenas with its Microsoft Dynamics CRM solution. This brings us to the present day where there are a wide range of CRM offerings that cover a gamut from small to large hosted solutions, on premise offerings and even free CRM solutions. For anyone wishing to purchase a CRM solution there is absolutely a good solution available, but sorting out the details and making the right choice can be very difficult. Hosted Advantages The advantages to a hosted CRM solution for a business are compelling. A predictable pricing structure makes it easy to calculate ROI and predict cost. Rapid deployment can have your team up and running in days if needed. Easy and automatic upgrades can take place without your IT staff's intervention. Flexible options and a wide range of addon tools and capabilities are also available because of hosted CRM's success. Other potential advantages can include lower operating costs, greater safety because of automatic off-site backup and a lower overall IT cost. However, these advantages can be matched in many cases by a good on premise solution. Hosted Cost Hosted solutions are usually priced in two parts. The first is a setup or overall fee that can be one time or monthly and can range from free to as high as $200 per month or several thousand dollars one-off. Much of that cost depends on the size of the installation. Then there is typically a per seat per month fee that can be as little as $15 per month to as much as $100 per month depending on the solution and options. For a small business of about ten to twenty seats, a typical cost would be a $200 setup and $40 per seat per month. On Premise Advantages Many of the advantages of an on premise solution have been covered already. Since it is software that you bring in house and run on your own servers, you have full control. You

6 can choose the level of installation, the amount of integration and customization and you control the software itself and the data on your own servers. This means that you can do more customization and integration, making for a potentially more effective solution. If you already use software from a suite provider of on premise solutions then the integration may already be done and be very tightly coupled. However, you will have higher initial costs for purchase of software and hardware, higher installation costs and possibly higher maintenance costs. You may be slower to receive upgrades if you choose not to upgrade you core software as often (at an additional cost). And you are tied more tightly in to the solution you choose so your decision must be a good one. On Premise Cost The initial cost of an on premise solution depends on the needed hardware and software. While there are technically 'free' open source solutions, they still require adequate hardware and integration so they are not truly free. A typical initial cost will be at least a couple of thousand dollars and could go as high as tens of thousands of dollars. On the other hand there are no additional costs later apart from maintenance which is not inconsiderable but could work out as a cost benefit over time versus a hosted solution for a large enterprise. CRM Solutions By Company Size Size of Company Hosted On-Premise Under 10 employees Good solution, more affordable, easy to install and maintain, can grow with company. Could be expensive and difficult to install and maintain. 11 to 50 employees Good choice, predictable scalability Price could be an issue. Integration up and down, predictable cost, easy into other parts of business to implement and operate. operations could be a plus. 51 to 100 employees Price could become an issue. Predictability from a cost standpoint an advantage. Performance could be a problem. 101 to 300 employees Price likely to be an issue. Performance might be an issue. Predictability and ease of operation still a plus. 301 plus employees Price an issue. Performance an issue. Price could be an issue. Integration and customization a plus. Performance could be a plus. Price could be a plus. Integration and customization with existing systems a plus. Performance a plus. Could be issues with operation. Integration and customization clear benefits. Performance a clear benefit. Price could be a benefit.

7 CRM Solution Features The essential tools that are needed in a CRM solution include Sales Force Automation, Service and Support Solutions and Reporting and Analytics. Any good solution should provide some level of functionality in all the following areas: Sales-Force Automation Contact management the most basic function tracking and managing every contact and their information. Lead management tracking leads and contacts with leads and conversion, helpingthe sales team move leads along the sales funnel. Sales quota and territory management managing the sales team and helping split contacts and leads into territories and helping sales achieve quotas. Partner management managing partnerships, affiliates and other more complex sales arrangements. Forecasting and opportunity management prediction and monitoring to help guide managers and sales teams as to where to put effort. Sales procedure and operations management managing the operations and sales process itself guiding sales, scripting, etc. Team management overseeing feedback, helping to control the management of the sales team. Service and Support Solutions response management managing incoming and outgoing customer service request s. Self service tools web and voice self-service tools to allow customers to help themselves, browse solutions, reach out to the correct support teams, etc. IM and Chat live chat and IM tools to allow for instant interaction with a support agent. Productivity tools to allow increase service agent productivity, integration with support management and ticketing. Reporting and Analytics Regular scheduled reporting against all the management and customer metrics needed by the organization dashboards. Forecasting regular and custom forecasts to help manage future decisions and actions. Data quality tools reports and tools to look at data quality to improve all operations. Alerts preset and custom alerts to raise red flags and potential issues as soon

8 as possible. Custom analysis and reports strong suite of tools to build custom reports Role-based tools tools to build reports and analytics around both customer and staff roles. Pre-built report and analytic libraries - to help you get started immediately. Conclusions Both hosted and on premise solutions can be the right solutions for a company. The real decisions to be made are around required feature set, scalability and growth over time and how well the solution will fit into your operation. It doesn't matter how good a solution is on paper if your sales team refuses to use it. So the solution must match current operating practices, match and integrate other required functions and systems in your organization, meet your needs for growth and features to improve your sales and operations and meet your needs for cost and return on investment. To find out more about how to match these needs see our hosted and on-premise comparison guides. Contact Us You can contact us, Project Direct AB Turebergs Allé Sollentuna +46 (0)

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