CRM Vendor Evaluations in a Recovering Market

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CRM Vendor Evaluations in a Recovering Market

• Michael Dunne

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CRM Evaluations
Enterprises need to better manage CRM evaluations
during this economic recovery success in
selection will directly affect success with
implementation. A comprehensive evaluation
methodology will help buying centers discipline
procurement processes and better understand
prospective vendor relationships.
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Client Issues

• 1. What factors will have an impact on CRM
  application evaluations?
• 2. What methodologies can be employed to improve
  the management of CRM evaluation processes?
• 3. What criteria should be considered when
  evaluating CRM vendors?

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A Moderate, Difficult Recovery Is Taking Place
Unfortunately, market conditions are still
greatly complicating vendor evaluations

• Buyers
• Budget constraints
• Greater caution
• Tactical focus
• Greater scrutiny
• Abridged time frames
• Suppliers
• Smaller opportunities
• Market volatility
• Consolidation of vendors

CRM Software, Worldwide Historical and Future New
License Revenue 1998 to 2008 ( in millions)
4,500
4,000
Total CRM
3,500
3,000
2,500
Customer Service and Support
2,000
1,500
Sales
1,000
Marketing
500
-
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Source Gartner Dataquest (March 2004)
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Remaining Focused on the Three Basic
Responsibilities

• Responsibilities
• Identify requirements
• Comprehensive review
• Key potential trade-offs
• Determine framework
• Consolidate disparate criteria
• Apply appropriate prioritization
• Understand vendor performance
• Client references
• Peer networking
• Analyst community

• Consequences of Oversights
• Time more than 6 months
• People more than 5 full-time employees
• Money
• A bad decision
• No decision

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Use the Hierarchical Approach
Establish a hierarchy to organize the issues and
assess the prospective vendors and products.
Goal
Confirm the objective
Use six perspectives to perform due diligence
Technical Architecture
Functionality
Cost
Services
Viability
Vision
Thoroughly explore the critical underlying
factors in eacharea that will impact success in
achieving the stated objective
Professional
SFA
Platforms
Initial Costs
Financial
Product
Ongoing Support
Ongoing Costs
Marketing
Scalability
Organizational
Service
CSS
Integration
Market
Corporate
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Establish Weights to Prioritize Criteria
Product and pricing issues address only about
half of the decision.
Functionality 23.6
Vision 7.1
Viability 17.9
Technical Architecture 16
Key Upward trend for weightings Downward trend
for weightings
Services 20.4
Cost 15
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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.
Professional Services
Financial Health
SFA
Platforms
Initial Costs
Product Vision
Ongoing Costs
Ongoing Support
Organization Stability
Marketing
Scalability
Service Vision
Market Viability
Corporate Vision
CSS
Integration
The depth of the framework should be determined
by the following indicators

• Management concerns are anticipated
• Interests of the stakeholders are represented
• Confidence is established that an accurate view
  of the competitive solutions can be attained

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Craft Score Cards for Rating Vendors
For each bottom-level criterion, specific
requirements organized as scorecards should form
the foundation of the needs assessment and data
collection effort.
Marketing Automation Example
Marketing
RFI Questionnaire 1. Quantitative metrics Does
the system support the ability to create e-mail
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?
Campaign Management
Content Management
Web Marketing
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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 realize valuable intelligence

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Functionality Define the Scope of the Initiative
Confirm the software capabilities that you
require. Limit the risk of investing time and
money in investigating functionality that may not
be immediately utilized or is outright
unnecessary.
B2B Discrete Manufacturing
Goal
Function
Cost
TechArch
Services
Viability
Vision
Customer Service
Sales
Marketing
B2C Financial Services
CPG
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Determine the Vendors Functionality Footprint
Understand how well a vendors core strengths map
to your needs.
Sales Automation
Marketing Automation
Customer Service
Managing campaigns Web-based marketing Content
management Telemarketing
Call management E-services Knowledge bases Field
services
Opportunity tracking Sales configuration Sell-side
e-commerce Order management Telesales
Contact Center Technologies CTI, IVRs,
Predictive Dialers, Universal Queues
Data Warehouse Technologies Analytics, Reporting
Tools, ETL Tools, Data Marts
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Technical Architecture Criteria
The technical architecture evaluation should
determine the fit between the design of the
competing products and the requirements of the
target environment.
Goal
Function
Cost
Services
Viability
Vision
TechArch
Middle-Tier Support
User Interfaces
Dev. Environ.
Platforms
Scalability
Integration
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Cost Evaluation Criteria
Software licensing issues often preoccupy project
teams and can distract them from examining
overall implementation and post-implementation
costs.
Goal
TechArch
Function
Services
Viability
Vision
Cost
InitialCosts
OngoingCosts
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Cost Analyses Tips Still a Buyers Market
Understand the key areas that underpin the
pricing competitiveness of proposals.
Software Licenses
Prices remain depressed. Seek discounts on
purchases (preferably by more than 35).
Consulting Fees
Review per-hour pricing per consultant based on
title or role. Confirm required man hours. Target
a blended rate of 170 to 220 per hour.
Maintenance
Contain maintenance costs. Target 18 to 20 of
discounted software license prices for 24?7
support. Place a five-year cap on increases.
Future Rights
Lock in concessions for purchases during the next
three years secure access to source code in case
of product discontinuance.
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Service Evaluation Criteria
A review of available service delivery resources
is critical when assessing the potential of a
product purchase to benefit a CRM initiative.
Goal
TechArch
Function
Cost
Viability
Vision
Services
Professional Services
Ongoing Support
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Understand Who Does What and Why
You will always require outside help ascertain
which services are best to source from the
vendors or third-party consulting practices.
ESP Leading Strengths
Vendor PSO Competencies
Software Installation Tactical Training Product
Knowledge Application Extensions Version Upgrades
Business strategy Project management Change
management Implementing multiple
products Enterprise integration
Software installation Tactical training Product
knowledge Application extensions Version upgrades
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Vendor Viability Evaluation Criteria
The significance of many CRM decisions and
volatility in the software markets require a
thorough review of the competitiveness and
stability of a vendor.
Goal
Function
Cost
Services
TechArch
Vision
Viability
Financial Results
Organization Stability
Market Presence
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Vendor Vision Evaluation Criteria
As buyers have become more conservative, vision
as a criterion has diminished in importance.
However, users will still need to understand how
a vendor intends to attain or maintain market
leadership.
Goal
Function
Cost
Services
TechArch
Viability
Vision
Product Vision
Service Vision
Corporate Vision
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Recommendations
Success in selection will directly impact success
with implementation. When evaluating CRM software

• Do your homework and follow a formal evaluation
  process
• Remember that you are buying not only a product,
  but also relationships
• Understand that services can represent the
  greatest risk and most-expensive part of an
  endeavor
• Do not ignore vendor viability

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CRM Vendor Evaluations in a Recovering Market

• Michael Dunne