White Paper: Choosing a CRM Vendor

INTRODUCTION2) Send the RFP to possible vendors
This paper describes a tough, disciplined process forIt can take weeks, or even months of hard work to
choosing the right CRM vendor for your company. Itproduce a detailed, probing RFP.
does not push a predefined laundry list of functionality,But it's all for naught if you do not get responses that
but describes how to define your own set ofare equally detailed and it can take a long time to
requirements and find out which vendors really meetrespond to a detailed RFP. If it has been sent to 50
them.vendors, the only ones that will take the time are those
This paper addresses the following key selectionwho are desperate and/or planning to recoup their
criteria:costs once they have you locked in as a customer. Of
Functionality: Why it is essential to gather quantitativecourse, they will need to recover not just the cost of
information from potential vendors and how to find themaking the sale to you, but also of all the sales they
right questions to ask.failed to make. That is why most vendors will simply
Responses: How to obtain detailed responses fromignore such an RFP unless you follow the enhanced
the best-qualified vendors and avoid wasting time withprocess.
non-starters. 
Demos: The fatal flaw in most demos and how toEnhanced process:
avoid it.First narrow down the list of potential vendors with a
Pricing: How to negotiate pricing with potential vendorsmini-RFP that asks your top ten questions. It should be
and set realistic expectations about ongoing costs.possible for the vendor to respond to this document or
Before discussing the selection of a CRM vendor,online form, in 20 minutes or less. The exact questions
let’s spend a moment to review why it is sodepend on your needs, but they should certainly
important. The reason is pretty simple - the failure rateinclude: How much will it cost over the next couple of
for sophisticated CRM implementations rangesyears, how long will it take to implement and can you
between 25% and 80% and the difference is not sotry the system before committing to a purchase?
much in the facts, just their interpretation.The answers should enable you to narrow down your
If you only include the most abject belly flops in thelist to 3-5 vendors and by taking the time to respond
definition of failure, the success rate probably is 75%,they will be partially committed. Now tell them that they
but if you include major cost overruns, productionhave made the short-list and hit them with the full RFP.
delays, failure to meet expectations and soaringKnowing that they have a 25% chance of making a
post-production costs, the failure rate may actually besizable sale, they should be willing to respond.
higher than 80%.3) Ask each vendor for a demo that illustrates the
Choosing the wrong vendor is both the biggest singledesired system.
reason for the failure of CRM implementations and theAt this stage, many companies tell the vendor what
easiest to avoid.the finished system should look like, ask them to
SELECTION STYLESimplement as much as possible and schedule a demo
There are several styles that companies use toto see that they have accomplished.
choose a vendor and these can broadly beThe problem is that this process does not measure
characterized as: Safety in Numbers, Standardhow efficiently the vendor's software can be used to
Analysis, and Enhanced Analysis. Let’s take a briefcreate the system you need, but how much time and
look at each of them.effort they are willing to spend chasing the business.
Safety in Numbers:As a general rule, the more a company is planning to
In this approach, the buyer simply looks for thecharge you, they more they will be willing to spend to
vendor(s) with the biggest market share. It aims forget the business.
safety, but can actually introduce severe risk factors. InIn brief, the standard method will result in your choosing
particular:the company that is planning to hit you with the highest
The larger the vendor, the less likely they are to listenpossible costs over the life of the contract.
to your needs.Enhanced process:
Vendors typically achieve a large market share byThe solution is simple - do not tell the vendors exactly
concentrating on selling to the typical customer. If yourwhat you want to see in advance, but hit them with
company does not fit that profile, the solution will not fityour detailed requirements during the demo itself and
either.ask them to demonstrate, live, how they would
Given two vendors with similar resources, the one thatconfigure the system to meet those needs.
spends money on marketing will, at least over theYou should be upfront about this - warn them in
short term, achieve a higher market share than theadvance that you will be asking them to configure the
one that spends the money on developing a robustsystem during the demo so that they can have
product.technical resources standing by, but do not accept
Market leaders charge a price premium preciselyexcuses during the demo itself or give them
because so many companies take this buyinginformation they can use to prepare the system in
approach.advance.
Of course, the long term viability of the vendor is aThis may sound brutal, but you are betting your
critical consideration and will factor into your evaluation.reputation and quite possibly, you company's future on
Vendor size, profitability, years in business and ofmaking the right choice. Making life easy for their sales
course product quality are linked with viability. Further,team is simply part of your job description and you
these factors do not compete with, but arecan also use this exercise to measure their honesty.
complementary to the analysis techniques describedSuppose your RFP asked two vendors how long it
below.would take to create a custom table, the first
Standard Analysis and Enhanced Analysis:responded "5 minutes", but struggled to actually get in
The basic steps for Standard Analysis and Enhanceddone in 15. The second responded "25 minutes", but
Analysis are identical, but the details of how they arecompleted it in 20. You might consider the second
implemented provide completely different, evenvendor a better potential partner, or at least adjust the
opposite, results. Let’s start by summarizing eachfirst vendor's RFP responses in light of the
step.discrepancy between their promises and reality.
1) Produce a detailed RFP4) Negotiate pricing
2) Send it to possible vendors and narrow the listSome people seem to delight in getting a deep
down to 3-5 strong candidates based on theirdiscount on expensive software and would rather pay
responses.$75,000 for a $200,000 system than $50,000 for a
3) Ask each of them for a demo that illustrates the$75,000 system.
desired system.The problem is that unlike buying a house, the
4) Negotiate pricingimplementation and ongoing costs can easily exceed
 br /> DETAILSthe initial purchase price. Once you are locked into the
1) Produce a detailed RFP and send it to a wide range$200,000 system, the vendor has all the leverage and
of vendorsyou can look forward to paying full price for
The Standard approach is to talk to the administrators,implementation services, support, upgrades and
managers, users and other stakeholders, find out whatadditional licenses. In fact, they probably already have a
the need and describe these in a document.strategy for recouping the $125,000 "discount" with
For example, the a manager may note that theinterest.
business is continuously changing and anticipatesEnhanced process:
having to manage additional information in the future,Be realistic. Look at the list price and assume that after
leading to a line item in the RFP such as: "The systemany initial discounts, this is close to what you will be
must allow the creation of custom tables"paying.
This is fine as far as it goes, the problem is what theWhen negotiating a discount for the software, try to
requirement has been stated in purely qualitative termsget one that will cover additional licenses and upgrades
and omits critical information. For example:for the first year or even longer if possible.
How long does it take to create such a custom tableAsk for a fixed price bid on the implementation itself.
and what expertise is required?You may not get it, but it can make for an illuminating
The answers can range from 30 minutes to 3 monthsconversation when a vendor who estimated 2 weeks
of consulting time from specialists who charge $200in the RFP response will not commit to actually doing it
per hour. The latter answer will cost you over $100,000in 2 months on a fixed price basis. If they estimate that
per table and CRM companies will not warn you ofit will take 2 weeks, but request payment for 2 years
this in advance. In fact, they may make most of theirfor a fixed price implementation, then assume that it will
revenue from such services.take 2 years. REMARKS
Do custom tables behave like native tables?This paper may seem antagonist to CRM Vendors but
If the answer is “Yes”, you should follow up withthat is not the intent. The evaluation process in
more detailed questions to confirm the truth of thisnecessarily tough and you need to safeguard your
statement, such as: Can you create links betweeninterests, but the goal is to find the right partner for a
custom tables and native tables? Can you search onstrong long term relationship. Your tactics throughout
fields in custom tables? Can you create reports andthis process should be tough, but transparent and
business rules on them? Are they included in exports?ethical. SUMMARY
Does the presence of custom tables create anyChoosing the right CRM vendor is a tough job and
obstacles to upgrading your system?requires an equally tough mindset, but by following a
The additional cost of upgrading a system with customdisciplined approach that focuses on your needs and
tables may range from zero to exporting all the data,demanding detailed quantitative as well as qualitative
redoing the entire custom table from scratch,information from potential vendors, you will make a
re-importing the data and praying that nothing goeswell-informed decision that maximizes your chances of
wrong.success. The result will be relationship that is built on a
As we see from this example, the quantitativestable foundation and a technology that fits your
answers can show whether a given feature providesbusiness.
essential functionality that your company needs toComplete product information, as well as demos and
grow and adapt to changing conditions or is simply afree CRM software trial downloads, are available at
useless checklist item designed to satisfy RFP's from.
naïve customers.White papers on customer relationship management
The above example focuses on a single item, but thesoftware are available at ABOUT
same general principals apply throughout and here's aENTERPRISEWIZARD INC.:
simple trick for finding out what questions to ask:With headquarters in Silicon Valley and resellers
If you are not sure what quantitative questions youworldwide, EnterpriseWizard, Inc. is the leading provider
should ask, contact the vendors who support theof powerful, affordable, and easily deployed 100%
desired functionality and say: "I am pleased to see thatweb-based business process automation (BPA)
you support feature X. What questions do yousolutions for organizations of all sizes.
recommend I ask the other vendors who areOur company has attracted customers from industries
competing for this sale to determine how fully theywith vastly different needs, ranging from startups to
support it and whether there are any limitations orFortune 500 companies such as Chevron, Merrill Lynch,
additional costs associated with their implementation"?and NEC since we were founded in 1991.
Then sit back and watch as the vendors fall overBased on its award-winning predecessor product
themselves to supply you with the questions thatSupportWizard, EnterpriseWizard CRM is a top-rated,
expose weaknesses among their competitors.out-of-the-box J2EE solution for issue tracking,
Sometimes, they will even expose their ownhelpdesk, customer support, sales, email, and marketing
weaknesses.automation. Organizations can get up and running
Enhanced process:quickly with its default templates, and easily enhance
A standard RFP just asks whether a vendor canand extend the application through an intuitive
meet the requirements but the enhanced process willbrowser-based interface. Clients have adapted the
arm you with additional quantitative information:a) Howsystem for Sarbanes-Oxley and Government
long it will take to implement this feature?b) What areRegulation, Project and Time Management, Change
the immediate and long-term costs associated withManagement, and other specialized applications.
using it?c) Are any limitations in the resulting solution?