How To Evaluate A Crom Software Product

Transcription

1 Evaluating CRM Applications, Both On premise and Off Michael Dunne Research VP

2 Evaluating Solutions in Today s Market Buying centers are confronted by a market scarred by significant consolidation amongst traditional CRM application companies, the debut of new entrants and the growing prominence of application hosting offerings. A comprehensive evaluation methodology will help buying centers better manage processes and understand prospective solutions.

3 Client Issues 1. What are the principle criteria to consider when analyzing a set of CRM vendors and associated products and services? 2. What methods can be employed to ensure a comprehensive and effective review of prospective vendors, technologies and services? 3. What factors significantly influence decisions to either purchase prepackaged software or rent capabilities from ASPs

4 A Moderate, Erratic Recovery is Occurring Market dynamics greatly complicate evaluations Buyers Persistent caution Tactical focus Greater scrutiny Abridged time frames Suppliers Smaller opportunities Consolidation of vendors New product delivery models New Competitors 6,000 5,000 4,000 3,000 2,000 1,000 - CRM Software, Worldwide Historical and Future New License Revenue 2002 to 2008 ($ in millions) Sales Customer Service and Support Marketing Total CRM Source: Gartner Dataquest (August 2004)

5 The Vendor Landscape Traditional Vendors Independent Vendors Epiphany Amdocs (purchased Clarify) Onyx Acquired Vendors Pivotal (Chinadotcom) Saleslogix (Sage Software) Enterprise Software Vendors SAP Oracle The Bellwether Vendor Siebel Entrants Specialists SAS Institute Small to Midmarket Microsoft (SFA) Application Service Providers (ASPs) Saleforce.com Rightnow Technologies Netsuite

6 The Criteria Utilize six criteria when investigating solutions to ensure comprehensive investigations of the benefits and risks. Functionality Available features that automate specific tasks or processes Technology The overall design of the system, and incorporated tools and innovations that enable delivery of capabilities Cost The necessary expenses to gain access to capabilities and maintain value Services The professional skills and general support infrastructure required to establish and maintain value of a purchase Viability The strength and stability of a vendor from financial, organizational and market presence perspectives Vision the long-term strategies of a vendor to improve products, services and overall competitiveness of the organization

7 Use the Hierarchical Approach Establish a hierarchy to organize the criteria, explore issues and assess prospective vendors and solutions. Confirm the objective: Goal Use six perspectives to perform due diligence: Functionality Technology Cost Services Viability Vision Thoroughly explore the critical underlying factors in each area that will impact success in achieving the stated objective Sales Standards Initial Costs Professional Financial Product Marketing Scalability Ongoing Costs Ongoing Support Organizational Service Service Integration Market Corporate

8 Weights for Traditional Packaged CRM Applications for the Enterprise Product and pricing issues address only about half of the decision for on premise, enterprise scale initiatives. Vision 7% Functionality 24% Viability 18% Services 20% Cost 15% Technology 16% Key Upward trend for weightings Downward trend for weightings

9 Weightings for CRM Midmarket and ASP Scenarios Basic functions and pricing dominate decisions on small, simple deployments and ASP relationships. Vision 5% Functionality 20% Viability 18% Technology/ Data Center 15% Services 13% Cost 29% Key Upward trend for weightings Downward trend for weightings

10 Complete the Development of the Evaluation Framework The needs assessment effort should represent an iterative process until a practical level of detail has been reached. SFA Standards Initial Costs Professional Services Financial Health Product Vision Marketing Scalability Ongoing Costs Ongoing Support Organization Stability Service Vision CSS Integration Market Viability Corporate Vision The depth of the framework should be determined by the following indicators: Management concerns are anticipated Interests of the stakeholders are satisfied Confidence established that an accurate view of the competitive solutions can be attained

11 Craft Score Cards for Rating Vendors Marketing Automation Example: Marketing Campaign Management Content Management Web Marketing For each bottom-level criterion, specific requirements organized as score cards should form the foundation of the needs assessment and data collection effort. RFI Questionnaire 1. Quantitative metrics: Does the system support the ability to create based campaigns? Out of the box, through customization or third-party parties? 2. Qualitative metrics: Describe partnerships used to support this. Tell us your story. 3. Raw data: How many implementations of this capability have been completed?

12 Benefits of This Approach Benefits from using a structured methodology and hierarchical framework include: Produces a comprehensive review Reduces complexity Facilitates consensus among stakeholders Encourages objectivity Helps organizations discover valuable intelligence

13 Functionality: Define the Scope of the Initiative Confirm the capabilities necessary to satisfy both immediate and long-term requirements when considering solutions both packaged or hosted Sales Automation Marketing Automation Customer Service Opportunity tracking Sales configuration Sell-side e-commerce Order management Telesales Managing campaigns Web-based marketing Content management Telemarketing Call management E-services Knowledge bases Field services Contact Center Technologies: CTI, IVRs, Predictive Dialers, Universal Queues Data Warehouse Technologies: Analytics, Reporting Tools, ETL Tools, Data Marts

14 Functionality: Understand the Value Presented Determine the value of a solution in supporting both the current initiative, the strategy for the initiative over the long-term and associated initiatives. Biases favoring: Packaged Apps Biases favoring: ASPs & SMB Apps Differentiating Best of Breed Broad Suite Process-centric Industry-specific Long-term Commodity Time-to-Market Point Solutions Standalone Placeholders

15 Technology: Advantages to Both Options The technology criterion should determine the fit between the design of the prospective solutions and the demands of the target environment. Technology Platforms Architecture Scalability Integration UI Tools ASPs - Satisfy many platform issues; based on Internet standards; offer great user interface designs and high usability Packaged Applications - More experience with complex integrations, customizations, mobile deployments and installations of large scope Issues to consider: Reliability of ASP data center infrastructure in managing disaster recovery, growing volume and complexity of client activity; Ability of ASPs to accommodate customizations; Ability of both options to adopt wireless computing

16 Cost: Beware of Pricing for Integration Upfront costs often preoccupy project teams and can distract them from examining overall implementation and post-implementation costs. Costs Initial Ongoing Pricing models Prices Consulting fees Training costs Cost Implementation Ratios New hardware Payment schedules ASPs offer compelling advantages in simplicity, low upfront costs, marked by consistency with subscriptions ASPs need to better detail potential costs for current and future complex customizations and integrations Maintenance Annual Subscriptions Additional training Additional consulting Year-over-year increases

17 Cost Analyses Tips Still a Buyer s Market Understand the key areas that underpin the pricing competitiveness of proposals. Software Licenses Pricing remains competitive. Seek discounts on purchases (preferably greater than 35%). Consulting Fees Maintenance Future Rights Review per-hour pricing per consultant based on title or role. Confirm required man hours. Target a blended rate of $170 to $200 per hour. Contain maintenance costs. Target 18% to 20% of discounted software license prices for 24 7 support. Place a five-year cap on increases. Lock in concessions for purchases during the next three years; establish protocols for terminating relationship (secure access to source code, return data, etc.).

18 Services: Still Significant Project complexity will determine requirements for services. A review of associated service resources is critical when assessing the potential value and costs of a solution. Services Professional Ongoing Availability of resources Maturity of practice areas Vertical industry expertise 3 rd party consultancy (ESPs) partner network Global support model Customer-centricity The simplicity of ASP offerings often remove the need for many implementation services As ASPs seek to generate further revenues, they will need to deepen industry expertise and address integration and customizations issues Availability and quality of help desks Quality of ongoing knowledge transfers Customer service focus Efficiency with bug fixes Efficiency with upgrades

19 Vendor Viability Evaluation Criteria The consolidation and slow growth in the overall CRM market combined with the emergence of relatively new ASPs require a thorough review of the competitiveness and stability of a vendor. Financial Results Viability Organization Stability Market Presence ASPs Many are in start-up mode, but the ability to maintain momentum as well as manage expansion needs to be carefully assessed Packaged Applications Most are experiencing weak sales, reorganizations, modifications to plans; compelling broad suite providers and best of breed survivors need to be carefully delineated Review: Cash position Revenue and profit stability Management track record Stable workforce Release schedule history Sales effectiveness Market commitment Market position/share

20 Vendor Vision: Deserves Reviewing As buyers have become more conservative, vision as a criterion has diminished in importance. However, project teams will still need to understand how a vendor intends to attain or maintain competitive advantages that benefit the buying center. Product Vision Vision Service Vision Corporate Vision ASPs Need to expand from single domain, commodity offerings; develop services to enhance relevance and reduce post sales costs; outline strategy to remain viable in five years Packaged Applications Need to increase usability of offerings; deepen process and vertical support; reduce implementation requirements; turn around license sales Review: Does a vision exist? Is the vision credible? Is the vendor a pioneer? Is the vendor a follower? Innovations being pursued? Are services a priority? Will ESPs be attracted? Plans to improve finances? Good, long-term partner?

21 Recommendations Success in selection will directly impact project success. When evaluating CRM solutions: Employ a formal evaluation process Confirm the scope of the functionality necessary for both the initiative and the overall strategy Remember that you are buying not only a product, but also relationships Understand that services can make or break an initiative, and can incur the significant costs Do not ignore vendor viability

22 Evaluating CRM Applications, Both On premise and Off Michael Dunne Research VP