As software-as-a-service (SaaS) CRM has matured, marketplace adoption and venture-capital investment have driven the introduction of cloud-based platforms and ecosystems of pre-integrated applications and utilities. These ecosystems surround and extend the leading platforms, thereby bolstering SaaS CRM’s core value proposition: rapid deployment of capabilities to support (and benefit from) customer-facing operations. As a result, assessing each platform’s ecosystem has become a vital step in evaluating the platforms themselves. The challenge of an expanded playing field is that it’s no longer a simple matter to decide who your partner — or partners — will be.
The Ecosystem
The leading attraction of SaaS CRM is the ability to deploy enterprise-caliber functionality without enterprise-scale costs for implementation and infrastructure. For small and midsize businesses (SMBs), that relatively low-cost functionality has been an unmitigated boon. [See “Are You Ready for SaaS?,” The Tipping Point, February 2008.]
For enterprise-scale organizations with hundreds or thousands of users, however, the native functionalities of SaaS CRM are often inadequate beyond the core areas of accounts, contacts, appointments, tasks, and opportunities. Because on-premises CRM applications are a viable option for these organizations, opting for SaaS CRM requires a trade-off: weighing the lower costs of implementation against the lesser range of functionality (and therefore benefits). [See the two-part series, “Trade-Offs,” The Tipping Point, May 2009 and August 2009.]
Platform ecosystems, however, can extend that functionality—from operational functions such as campaign and quote management to technical capabilities such as identity management and integration with on-premises applications. These cloud-based solutions remain true to the SaaS value proposition of “no technology infrastructure.” Demonstrations and trials are readily available, so assessment can be rapid. Application integration has already been performed, leaving little need for configuration or customization, so deployment remains quick.
The Challenge
The decision is not automatic, however. For all organizations, a key consideration for any potential partner from within the SaaS CRM ecosystem is viability as an ongoing concern. The more critical the business function involved, the more important this consideration becomes. In all cases, caveat emptor — buyer beware: Only the best vendors will withstand financial scrutiny.
Large organizations have two additional considerations when assessing vendors within the SaaS CRM ecosystem.
First, the add-on costs of the partner functionality can have a meaningful impact on the long-term total cost of ownership for the overall CRM initiative. The economics for larger companies can undergo an inflection point after five to seven years, when the steady month-over-month subscription fees for SaaS CRM finally exceed the high upfront costs of on-premises CRM applications. The point at which the inflection occurs, and its importance to decision-making, may vary, but partner add-ons will force any inflection point earlier. [See “The Hidden Cost of SaaS,” The Tipping Point, May 2008.]
Second, an organization’s vendor-management strategy will affect these decisions. Assembling multiple vendors from a SaaS CRM ecosystem would be consistent with a best-of-breed strategy, but an organization committed to vendor consolidation will not find appealing the notion of multiple partners covering its CRM functional footprint.
Conclusion
For SMBs, the options within the SaaS CRM ecosystem are exciting. For larger organizations, the options remain exciting but need to be assessed with care, because leveraging traditional on-premises CRM may be preferable to assembling multiple SaaS CRM applications. In either case, the goal is to get the right CRM applications to the right sets of CRM users at the right costs and timelines.
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J. David Lashar (dlashar@us.ibm.com) is an associate partner in the CRM practice of IBM Global Business Services and the leader of the IBM CRM Center of Excellence for SaaS.
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