Companies are now paying CRM vendors for complete comprehension when it comes to regulatory software products.
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The parade of Enron executives heading to court continues. In December Christian Rahaim, senior director of benefits in the company's HR department, was convicted of wire fraud and now faces up to 20 years in prison. But whether you believe the scandals at companies like Enron and Worldcom are representative of all enterprises or simply the acts of a few bad apples, the fallout has had a long-lasting effect. The result is the growing number of firms now forced to comply with new disclosure and management control acts like Sarbanes-Oxley. As a result, when businesses retain the services of legal, financing, consulting, and other professional services groups, they're not just paying for vertical expertise, they're also paying for a complete understanding of legal regulations relating to or governing that service.
When professional services firms purchase CRM solutions, they want systems that are up to date in terms of compliance and adaptable enough to be altered around future laws and regulations. Software vendors have responded, and are tailoring products to better meet the needs of compliance by providing built-in flexibility. Whether compliance relates to personal privacy issues, spam, homeland security, or federal, state, or local laws, CRM solution providers need to be aware of the issues. "Compliance is a major issue. It's a new side of CRM," says Denis Pombriant, managing principal of Beagle Research Group.
Sarbanes-Oxley requires many companies to sign off on the results of financial reports, reports that are influenced heavily by income statements that come out of the sales force. That means sales and marketing departments need to take certain specifics of the law into consideration when looking to streamline workflow processes via a CRM system.
At the same time, compliance is getting easier because much of the new legislation is at the federal rather than the state level, Pombriant says. "Having federal standards for safeguarding individual persons' data, whether it's for medical or financial, makes it easier for vendors to provide CRM solutions to more than one market."
When professional services companies don't obey the law, or do a poor job advising clients how to, the fallout can result in a clamorous PR thud. Following the Enron scandal, both Accenture (formerly Anderson Consulting) and Deloitte Consulting undertook rebranding initiatives to rid themselves of the image associated with that scandal.
Currently, most professional services firms turn to specialized software providers for CRM products, but traditional CRM providers like Siebel and SAP have vertical versions of their products aimed at specific industries. That said, the adoption of CRM tools has been anything but brisk. Many companies still rely on homegrown solutions. "There aren't a lot of CRM tools that fit a particular professional services firm," Pombriant says. "Their business processes are usually quite unique," though Pombriant says that's slowly changing. Specialty vendors, such as LexisNexis Interface Software, now offer CRM solutions specifically tailored for professional services firms.
Top 3 Vendors in Professional Services:
Case Study: Jumping on SMB Oversight
SpringBoard4Business is a service provider that understands both the value of selecting a CRM system for itself and the value of using that CRM system to report financial data to higher authorities for others. "We focus on helping SMBs improve their performance by harnessing technology," says Jenny Searle, owner and managing director. "We focus on the human-technology interface."
Commissioned by one of its clients to evaluate NetSuite's viability in the SMB segment, the IT technology consultancy was so happy with the product that it promptly implemented it in-house; later, Searle decided to let her company become a NetSuite reseller. "We thought NetSuite was the best thing since sliced bread. It's the only product we resell because it's ideally suited for the SMB market."
Using NetSuite, SpringBoard4Business has cut its own overhead in half by replacing expensive offices with "virtual" offices, and in the process has saved $2,500 in bookkeeping costs and reduced its financial cycle by up to four weeks.
Among its clients that have purchased NetSuite through SpringBoard4Business, charities represent one of the largest contingents. Of particular relevance to charities is financial tracking of government subsidies and grants, where every penny must be strictly allocated and accounted for. "Most simple accounting systems fail to provide this level of tracking," Searle says. "Having an integrated suite solution that gives you access across the entire business addressed this problem for many of our clients." --C.B.
Magic Quadrant '08: With calm but constant growth in the CRM service provider space, the largest firms still lead the way.
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