Can You Really Do CRM Yourself?

Updated: July 31, 2007

Rewind a few years back and CRM (Customer Relationship Management) software, like most enterprise applications, took its knocks — the gripe being it was unwieldy, expensive and required too much heavy lifting from highly-paid consultants.

Fast forward to the era of hosted or on-demand CRM and you hear a lot less of those complaints. CRM is now relatively easy to get up and running. The on-demand flavor requires no upfront investment in enterprise software licenses and there's no need for complex server networks or even an IT staff to administer the software. The vendor is responsible for all of the infrastructure and upkeep to run the applications, which are accessed via a basic Web connection. For this, vendors charge a predicable, monthly subscription fee, based on the number of users. Oftentimes, the fee covers standard technical support, freeing up internal IT personnel from the headaches of day-to-day troubleshooting.

Within this seemingly pain-free software delivery scenario, companies now have access to whole lot of CRM. Led by pioneer Inc., on-demand CRM offerings have evolved from basic customer contact databases or free-standing SFA tools into full-blown suites that deliver productivity, analysis, and collaboration capabilities in the areas of sales support, marketing functions, and call center operations. Over the years, hosted CRM offerings have also morphed from being a one-size-fits-all system to allowing a higher level of configuration to meet unique business requirements.

The number of on-demand CRM providers has also multiplied. Along with, NetSuite Inc. and RightNow Technologies Inc. have been delivering hosted CRM for some time. Industry heavyweights like Microsoft Corp. , SAP AG and Oracle Corp. (via its acquisition of Siebel Systems Inc.) have also jumped in, announcing plans for or releasing on-demand versions of their CRM products.

Whether the software is hosted or installed on site in a traditional license, the premise of CRM remains the same: To help companies deliver products and services that better address customer needs. An integrated CRM platform, therefore, should enable companies to learn more about customers' needs and behaviors in order to foster closer relationships. As a result, companies can facilitate more effective cross selling of products, empower their sales staffs to close deals expeditiously, promote better customer service and ultimately, increase revenue by retaining existing customers or discovering new ones.

This vision of CRM, as a high-level corporate strategy, not just a software implementation, is where the do-it-yourself promise of the on-demand model sometimes falls short. For small companies or large enterprises pursuing a departmental implementation, the hosted flavor, for the most part, lives up to its expectations. Things get more complicated when companies try to scale their CRM initiatives. Expanding the roll out to multiple, geographically dispersed business units, customizing the software to some unique business practice or integrating it with core systems like ERP (Enterprise Resource Planning) can turn what was a relatively turnkey deployment back into an initiative that requires some IT and business process handholding.

"For a long time, on-demand CRM was more like a standalone technology — there wasn't enough there to do a lot of integration," explains Denis Pombriant, founder and managing principal of Beagle Research Group, LLC , a front-office analyst firm and consultancy, in Stoughton, MA. "Now on-demand has reached critical mass and there's enough there to require integration. The need for consulting hasn't gone away."

The need may still be there, but it's certainly changed. Companies will no longer tolerate unlimited consulting engagements, where projects are off-schedule and over budget. Instead, they're looking for phased implementation services that tackle specific CRM problems like call center management or marketing automation individually. And they're also mindful of different pricing arrangements, including fixed-price engagements where the parties agree to the scope and deliverables of a project for a specified fee.

Traditional system integrators and consulting giants like Accenture , IBM Corp. , Deloitte Developement LLC , Capgemini Service SAS and BearingPoint Inc. have honed their CRM services to address these needs as well as the requirements of hosted CRM. There is also a growing community of new CRM consultancies focused primarily on the on-demand flavor, including Inforte , Astadia Consulting LLC (a merger of GrowthCircle and MW Advisors), Theikos Inc. and Bluewolf Inc. , among dozens of others.

On-demand vendors are also taking on more of the integration and customization burden to try to keep the software as turnkey as possible., for example, offers the AppExchange platform and Sforce Web services API, which provide a standard architecture for integrating applications, while NetSuite's NetFlex architecture provides similar capabilities. also recently announced Apex, a programming platform for customizing and extending its CRM offering with custom-built applications.

The bottom line: While hosted CRM is more accessible, it isn't necessarily less complex. And that means there may be times when help from an outside consultant still makes sense.

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