Guide to using SaaS (Software as a Service) for CRM. Sabine Kirchem ec4u expert consulting ag

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1 Guide to using SaaS (Software as a Service) for CRM Sabine Kirchem ec4u expert consulting ag

2 Contents 1 Increasing the customer service focus in current CRM methods High growth in the SaaS solutions market major advantages of SaaS minimum requirements when evaluating the SaaS market Avoid typical problems with SaaS Self-Check: Which individual goals speak in favor of SaaS? About ec4u expert consulting AG

3 1 Increasing the customer service focus in current CRM methods Businesses believe that the importance of customer management has not changed in the current economic crisis. A survey conducted by ec4u expert consulting AG revealed that measures to improve customer service are at the center of investments. As a consequence, there is a heavy focus on customer service, which was considered a high-priority issue by about two thirds of the almost 300 companies surveyed this year. The cost of ownership associated with CRM systems is also a high-priority for the majority of companies asked whilst well over half of the companies are pursuing ambitious goals to improve profitability. Obviously, customer management is an issue that is strongly influenced by the current economic situation, says Kerstin Diefenbach, Leader Strategy & Business Consulting at ec4u. Now in particular it is important to engage more strongly with your customers while dedicating to pursuing new methods where possible to improve reaction times with a simultaneous improvement in cost control. Despite the air of crisis in the economy, the requirement to proactively support customer acquisition and retention with the help of sophisticated technology solutions remains unchanged, Diefenbach comments. However, he is observing a clear trend in that the question about cost efficiency is being asked with increasing frequency. There is almost always a cost savings potential of anything from 10 to 25%. However, in order to leverage this potential, they must pull the right levers, says the CRM expert. And businesses planning to invest in new customer management solutions are well-advised to consider SaaS, which has meanwhile become a highly established alternative solution. 2 High growth in the SaaS solutions market Unlike the other IT industry segments, the CRM market has largely been spared by the economic crisis. Already last year the CRM market in Germany exhibited a strong 7% growth according to a study carried out by the market research company IDC. For example, businesses that had already introduced CRM solutions back in the 1990s invested again last year. Telecommunications companies and financial service providers in particular spent more money on CRM projects. Not only did they optimize the existing systems, but new vertical solutions and functionals in particular were introduced. These enabled enterprises to get rid of applications that require a lot of effort to maintain, as well as personally developed customized applications and enhancements. Although the CRM market is also feeling the recession, IDC is nevertheless expecting a growth of 3,7% this year, says Joachim Benner, Research Analyst at IDC. The market will develop more rapidly once again in 2010 and gain momentum. He emphasizes that the demand for SaaS solutions in particular will also increase significantly. The Gartner market analysts have come to similar conclusions. Their studies have shown that the SaaS solutions, also referred to as SaaS, have given the strongest impetus to the CRM market of late. For 3

4 example, nearly 20% of the total CRM software revenue in 2008 is attributable to the SaaS segment. A year before, this share was only 15%. According to Gartner the market for SaaS CRM solutions will continue to grow at an annual rate of 20% until Consequently, 30% of new investments will account for this software subscription model. Gartner points out that these solutions are the driving forces of both the international and the German CRM markets. 3 5 major advantages of SaaS 1) Rapid rollout instead of long-term projects: Immediately after signing the contract the user company can access a standardized CRM solution. The lead times of SaaS projects are often shorter than 3 months, because functional changes to the user interfaces can be made quickly. Only complex systems integration will lead to extended project run-times. Businesses can focus on marketing activities and customer management processes, involving and training their employees. 2) Little IT involvement required: Making the CRM application available online requires less technical implementation effort. This saves on human resources not only when setting up the system, but, by contrast with in-house applications, the company can save on resources in the ongoing technical assistance on things like operations, implementing updates, providing support, etc. 3) Clear, calculable operating cost: Fixed prices per user and month always ensure a transparent and predictable cost situation. Even CRM software updates and enhancements are included in the monthly fixed charges. 4) Considerable cost savings: The Gartner analysts calculate that businesses can reduce costs by 25 to 40% by using CRM applications based on the SaaS model when their selection is close to the standard solution. This is because with SaaS, there are no investments in hardware and software required. 5) High flexibility: Doing without costly internal system implementations enables businesses to flexibly respond to the invidual market needs in the event of changing functional requirements with little delay, which is not the case with in-house systems. However, system integration remains compulsory to ensure the functional benefit. Additionally, faster access to the CRM solution is possible on an national and international level Minimum requirements when evaluating the SaaS market SaaS offerings can vary considerably in terms of functional range depending on product philosophy and target groups. In addition to an individual agreement regarding data security the minimum requirements should be: 1) Functional profile that satisfies requirements: In addition to planning and launching campaigns including marketing this includes, above all, the management of prospects, accounts and activities as well as reporting. 2) Available for immediate use: The solution must ensure that after entering a user name and password employees can access essential information on opportunities, accounts, contacts and activities within minutes. 4

5 3) Seamless migration of data: It must allow the smooth migration of contacts, new accounts, opportunities etc. stored in other systems into a SaaS solution via easy-touse tools. 4) Uncomplicated back-office integration: The usefulness of the CRM application essentially depends on its complete integration into the existing IT architecture. Therefore, the CRM vendor should deliver XML-based webservice APIs to ensure easy integration. 5) Multilingual capabilities of the application: In order to use the options for international purposes, the SaaS application should be offered in different languages. This includes the full support of all currencies and internationalization features to create data fields for invoicing and shipping addresses as well as phone numbers. 6) Easily map existing business processes: The CRM solution must be easy to integrate into operational processes. Therefore, predefined procedures for individual configurations are required, and ideally users should be capable of performing them without assistance. 7) Intuitive and easy-to-use interface: It would be advantageous if the users of the SaaS application could be provided with an interface that is similar to the environment of their desktop applications. This reduces training time and increases user acceptance. 8) Intelligent user support: In order to make sure that employees efficiently use and fully accept the system it is an absolute necessity that context-sensitive help systems, integrated learning programs and unlimited phone support is offered by the CRM vendor. 9) Scalable solution: Businesses are very dynamic organizations with a high degree of ongoing changes. This therefore requires a scalable CRM solution for the flexible enhancements and changes required by users. 10) Option of later migration to an in-house model: This ensures that the corporate user can easily move to a traditional in-house solution, in the event of a strategic repositioning or any other reason. This can be achieved using Oracle CRM on Demand, for example. 5 Avoid typical problems with SaaS Without a clear strategic goal even SaaS projects may get stuck down one avenue. It is very easy to talk about a CRM strategy in theory, however, real CRM projects very often lack the necessary specific focus. For example, there is often no precise description of the benefits of CRM, and just as often the total cost of ownership is not calculated. However, a cost-benefit consideration is of fundamental importance in order for a SaaS project to succeed. It is also a basis for evaluating changing scenarios at a later stage. Complex requirements should not be reduced to minimal requirements specifications. Businesses that ensure there is a detailed description of the actual functional requirements at the beginning of a project, without neglecting the specific needs of individual users, will avoid the consequences of a vague planning and decision-making process. The more general and less precise the goals are, the more likely it is that sources of error and imprecisions will be encountered in all the activities that follow, which can even affect the design of CRM processes. 5

6 Negligences to avoid when choosing a SaaS solution: The requirements specification is of enormous importance even when evaluating the SaaS market, because it reflects the functional profile. If the specification is not detailed or complete then it will be difficult to compare products and vendors with one another, and businesses will run the risk of making the wrong choice, which may in turn have a negative impact on the whole project. Objective standards must be developed in order to evaluate a SaaS solution, so that a well-informed and documented purchasing decision can be made. When evaluating different solutions, aspects such as strategy, functionality, cost-benefit considerations and technology, are to be considered separately and summarized in the overall picture. However, as far as SaaS solutions are concerned, the vendors software is important, but their capacity for innovation, flexibility, customer orientation and a culture of partnership is of equal importance. Acceptance and constructive participation are critical success factors that are often undervalued: Competent contact persons from all affected functional and technical departments should be informed as soon as possible and involved in the project. But even managers should have a common understanding of the vision and goals and actively support them. Additionally, the conditions for an open and pragmatic collaboration should be created and based on solution-oriented and open discussions following the following principle: first faceto-face, then telephone and finally communication. The capability to respond quickly and de-escalate are also critical success factors. The SaaS approach does not mean that you can do without tailored CRM solutions: Even the electronic access to the applications hosted by the software vendor requires in the interest of a value-added use that the enterprise s customer management processes are efficient. In this respect, SaaS is an alternative to the in-house solution and is almost a plug and play solution from a functional point of view, but perfectly designed CRM processes are required in order to reap the full benefit. In particular, the front-end activities are very dependent on requirements and processes because standard version software on-demand does not offer much better customization capabilities than in-house CRM solutions. Weaknesses of project management: Complex projects cannot be handled without sophisticated and rigorously applied project methodologies. The statement may sound like a matter of fact, however, in practice, requirements that are critical to success are too often ignored. Precise guidelines are essential and users should master and use the tools. This is particularly important in the case of shorter project durations (SaaS projects). In addition to risk management and quality assurance, the project management should further include monitoring based on the remaining workload (earned value analysis). Only by meeting these requirements can a SaaS project be brought to fruition in a time and resource-saving manner. In addition, integration planning should also be taken into consideration. In the case of approach additional time should be allowed for negotiating the contract and technical modalities. In the case of SaaS projects, the costs for the integration components can rapidly exceed the costs for the front-end. Testing and rollout are left out of planning: Not in theory, but under the most realistic conditions possible it is possible to determine how functional requirements have actually been fully satisfied and whether users are able to understand the system. This requires a detailed test concept and coordination of the test to ensure requirements are satisfied. In addition, there should be enough time for testing under real conditions so that processes can also be tested. When it comes to rolling out the system, businesses should also tactically consider which user group they should start with. Ideally, the business should begin with a 6

7 less complex user group chosen, which however should at the same time show a high level of acceptance for SaaS. Support after system-setup is often not considered in the planning stage: We know from experience that the first three months after implementing a SaaS solution are the toughest. However, this aspect is usually not factored in when planning the project. This holds particularly true of SaaS solutions because SaaS implementations differ from standard implementations to a lesser extent than in-house CRM solutions. Usually, even budgets do not allocate resources for optimization. In practice, it means that insufficient support is provided and users feel unsupported and that their ideas will not be considered. In this case, SaaS is not a living system, so there will be limited user acceptance. 7

8 6 Self-Check: Which individual goals speak in favour of SaaS? Considering the business-specific scenarios, the expected benefits of a SaaS solution can vary a lot. An assessment of the following goals can help you make the right decision: Yes - No Significantly reduce costs compared with an internal solution. Considerably improve CRM-related cost transparency. Reduce decision risk when choosing a product. Faster roll-out of the new CRM solution without setting up a technical project and involvement of IT. Places little demand on the integration into the system landscape. Less products and resources required. Ongoing concentration on the application and the CRM processes instead of keeping the system running. Greater flexibility in the case of changes and enhancements through scalability of the CRM application at any time. Implement CRM organization models more easily. Accelerate the CRM innovation process through ongoing version/release changes. Ensure higher added-value effects through ongoing CRM innovation. Leaner IT structures by foregoing the set-up of an in-house system. Better failover abilities of the applications thanks to professional operation by the SaaS partner. 8

9 7 About ec4u expert consulting AG ec4u expert consulting AG is based in Karlsruhe, Frankfurt, Munich, Pfäffikon and Zurich and is one of the market leaders of services and software for Customer Relationship Management (CRM), Business Intelligence (BI) and Business Communications Management (BCM) in the European market. ec4u offers its clients the best practices in the fields of Oracle Siebel CRM, Oracle CRM on Demand, Oracle Business Intelligence (BI) and Real-Time Decisions (RTD), Oracle Application Integration Architecture (AIA) and Service-Oriented Architecture (SOA) as well as Oracle Master Data Management (MDM). Additionally, ec4u offers strategic and process consulting services (marketing, sales and service) as well as the ec4u software solution C4 Business Communications Management ( C4 - Business Communications Management is a software platform for developing and managing intelligent and process-integrated corporate communications across all channels ( , fax, SMS/MMS, mail/printing facility, internet, call center, IVR etc.), from an individual letter to complex offers/contracts and personalized campaigns or standard letters. More than users in businesses such as Deutsche Telekom, Swisscom, Deutsche Bahn and RWE already optimize, automate and personalize their daily customer communications by using C4 ( 9

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