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Is it Time to Defect?
Switching CRM vendors is a tough, but often wise, decision.
For the rest of the March 2003 issue of CRM magazine please click here
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Choosing a CRM vendor is like selecting a life partner. An organization should look for a vendor that understands its needs, will grow and change with the company, will be there to offer help and support, and will provide both short- and long-term payoffs. But if the CRM love affair goes sour, companies are faced with the tough decision of throwing more money into a solution that isn't working for them, or scrapping everything and starting the painful selection process all over again. Both paths are filled with unique challenges, but some say starting from scratch has worked for them. There are a variety of reasons for switching CRM vendors: The solution is not meeting company needs; the current CRM leader is replaced with someone who champions a solution from another vendor; a company is sold or acquired and is forced to make a change. Most of these reasons for switching seem plausible, according to Denis Pombriant, vice president and managing director, CRM practice, at Boston-based market researcher Aberdeen Group, but the decision to switch is difficult and rare. "In these economic times systems cost so much, and there is so much time and cost associated with customization and installation that most companies must have a really, really compelling reason to switch," Pombriant says. "Some modules within CRM are more happy-provoking than others, but overall we are not finding that people are dissatisfied with their CRM products." He adds that in a recent survey about half of those surveyed say they are completely satisfied, while the majority of the remaining half of respondents claim to be somewhat satisfied. "That would suggest to me that the reasons for switching are not overwhelmingly due to dissatisfaction with the product," Pombriant says. Going, Going, Sold Butterfields Auctioneers Corp. was forced to switch CRM vendors when its parent company, eBay Inc., sold the San Francisco--based auction house and all Butterfields' software licensing agreements ended. But that didn't faze Barbara Stephenson, director of client services for Butterfields. She was charged with deciding whether to renew the company's license with Kana Inc. or to opt for another vendor. "We were using Kana because that is what our parent company used. We had no choice," she says.
But now Stephenson had a choice. She wanted a Web-based system that was designed to manage large volumes of email and email campaigns. Butterfields uses email to connect with clients for auctions, presales, postsales, and during the registration process. Butterfields selected Neotonic Software, a provider of mid-market eCRM solutions. Neotonic's Trakken is Butterfields' online customer service system. Trakken's advanced email response management features, integrated knowledge base, and reporting and analytics functions enabled Butterfields to significantly streamline customer service efficiency, reduce costs, and provide better customer service. Stephenson has only anecdotal evidence to back up her claims of increased productivity, because the previous system had no reporting tools. "I now have greater visibility into the system," she says. "I can see how efficiently email is answered. Productivity is up, because the system is Web-based--people can work outside the office." Customers are also noticing a difference. They are getting faster response times to inquiries. Stephenson says that with the previous system it took two to three days to respond to customers, while the current system can do it in less than 24 hours with the same number of people. There are other benefits to switching as well. Stephenson says that Trakken is highly customizable, and its flexible queues and routing rules help ensure that email gets to the agent who can most effectively service it. ASPs Simplify Switching Nearly everyone interviewed for this story was hesitant to say anything remotely negative about their previous CRM providers. Still, most of them could not contain their pleasure about using their new systems, and say they have no regrets about switching. However, one company had reservations and switched back. Last November NetLedger Inc. announced it had taken more than 30 customers from Salesforce.com--some named publicly, including HandyAll.com, a Web-based provider of home repairs. NetLedger even issued a press release quoting Alain Ghiai, CEO of HandyAll.com, as saying, "After looking at many options, including Salesforce.com, Salesnet, and NetLedger, we decided that NetLedger's NetSuite is the best way to go...and we can safely say that NetLedger's NetSuite is going to save us $300,000 to $400,000 in the first year of operations." But within 24 hours after the NetLedger announcement, Ghiai discovered no outbound email management or sales opportunity management features in NetLedger's offerings. So he cancelled his NetLedger subscription and stayed with Salesforce.com. That is not a scenario that would have been possible in any environment other than the hosted CRM space. "One of the things licensed CRM software companies try to do is lock a customer in with huge 'sunk' investment costs," says Laurie McCabe, an application service provider (ASP) analyst at Summit Strategies Inc., a research and consulting firm based in Boston. "High switching costs have generally been perceived as good for the vendor, but not good for the customer." "It is potentially easier to switch with an ASP," Aberdeen's Pombriant says. "However, many of those ASPs are selling only [SFA] over the Web. So, while a hosted solution makes it easier to switch, there is not enough of a selection to make it a truly fluid situation." He added that recent research from Aberdeen states that nearly everyone who has tried a hosted solution would be willing to try another one. Twenty five percent of the people surveyed are using a hosted solution and 55 percent say they would consider trying an online CRM application. To Each His Own Peter Riddell knows about switching from one CRM ASP to another. Riddell, vice president of sales and marketing for HomeDirect USA, was using Salesforce.com for two years before switching to Salesnet. HomeDirect is a nationwide home delivery service that has 61 distribution centers and specializes in large consumer products from Restoration Hardware, Neiman Marcus, WalMart, QVC, Cosco Inc., Home Shopping Network Inc., and Lands' End. Riddell says he inherited Salesforce.com and it was "cumbersome, complicated, and drove me crazy." For Riddell the decision to change was quick, and he claims that cost was not a factor, since he was paying just $50 a month for Salesforce.com. "In the beginning there was some resistance, but that quickly turned to excitement with the new product," Riddell says. Andy Williams, senior vice president of sales at Javelin Technologies Inc., an electronic trading technology provider, opted for Salesforce.com after buying a solution from Siebel Systems Inc. that "sat in a box" as the company attempted to figure out how to install, implement, and integrate it. "When I joined Javelin about a year ago, the CRM solution the company had invested in was still sitting on the shelf unused," Williams says. "The task of implementing and embedding it within our organization both technically and culturally simply took too many resources away from our core responsibility of selling and supporting our customers." Chuck Phillips, managing director and enterprise software industry analyst at Morgan Stanley, estimates that $130 billion worth of enterprise technologies purchased in the past two years has not been implemented, and that 40 percent of all enterprise software purchased is never installed. Javelin opted for Salesforce.com because it could be implemented quickly and easily. And since it's a hosted CRM solution, Javelin didn't need to shift current employees to maintain the product. It's All About Flexibility For Deb Morton, director of business systems at McData Corp., a storage area network solutions provider, switching CRM software was all about integration and the flexibility to adapt the CRM system to a changing business environment. McData was using software from SAP for its ERP applications, but had made the switch to Oracle ERP. So, the switch months later to Oracle CRM from Siebel Systems seemed less daunting than getting Siebel and Oracle ERP to integrate, because McData had a good handle on what a change of that magnitude would entail. Besides, according to Morton, it would make more sense to run Oracle for both its front and back ends. Morton says the Siebel application was up and running for several months, but that when the time came to implement more functionality, McData started having problems. "There were basic issues. We were not happy with the configurator in the Siebel product," she says. Prior to signing the deal with Siebel, McData was the original equipment manufacturer of storage systems for two primary customers: IBM Corp. and EMC Corp. But then McData's business changed: With the addition of new products came new customers, and the company needed a system to accommodate the changes. In addition, Morton says, all the company's core information in the CRM applications started in the ERP system. McData had nearly 20 years of data in its ERP system, and was maintaining the rules for the configurator in two systems. "It was either that or pull data into the ERP system and manually populate the Siebel system," she says. Morton says the situation became a cost concern and it was determined to be more cost effective to abandon Siebel than to purchase the middleware and integration tools and hire the staff needed to link the Oracle ERP system to Siebel. "Because all the data was in the Oracle ERP system, it had gotten more powerful and more important over time, so we needed something that would work with that," Morton says. The need to have a flexible system that integrated well with its Oracle ERP applications is what drove McData to switch to Oracle CRM. Morton admits that making the decision was difficult, but a relief. "It was painful getting to that point, but once the decision was made to switch we realized that we had been trying to force something that just wasn't working," Morton says. "That is very obvious by how smooth things are running for us now." Contact Senior Editor Lisa Picarille at lpicarille@destinationCRM.com Happy or Trapped? Overall IT decision-makers' loyalty to their vendors: 47 percent of IT staff, decision-makers, and influencers indicated a desire to continue doing business with their current suppliers. 29 percent felt trapped in that business relationship. 21 percent said they plan to dump the vendor for someone else. 30 percent of IT staff said they can't walk away from existing systems. 36 percent believe the vendors they do business with are highly ethical. Source: Walker Information Inc. Top Reasons to Switch CRM Vendors 1. The solution is not meeting company needs. 2. The CRM advocate is replaced with someone who champions another solution. 3. A company is sold or acquired. 4. The solution is too difficult to implement or too complicated to use, so it becomes shelfware. 5. Lack of proper integration becomes costly to overcome, or hinders business processes.
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To contact the editors, please email editor@destinationCRM.com
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