Mid-market CRM vendors are partnering with consultants to get your business. Here are 10 tips to help you select the right consultant for your needs.
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A mid-market phenomenon is brewing, bringing about Big Five--like consulting services at mid-market prices.
Whether previously focused on accounting software, networking, sales force management applications, or the telecommunications industry, droves of tech-savvy advisors known as solution providers, systems integrators, and value added resellers (VARs) are restructuring their services offerings to become mid-market CRM consultants. "We are seeing options in the mid-tier that haven't been there before," says Scott Nelson, vice president and research area director at Gartner Inc. So substantial is this movement that Nelson says these mid-market CRM consultants could help "kick [the CRM market] back into gear."
It is no secret that the CRM market in the large enterprise space has been losing steam as it nears a worldwide penetration level of 35 percent, Nelson says. Yet, despite the slowdown in technology spending among large enterprises, CRM vendors found a beacon of hope in the grossly underserved mid-market, which Nelson says is only 20 percent penetrated worldwide.
The growth potential of the mid-market has piqued the interest of large enterprise CRM players. Vendors like Oracle Corp., PeopleSoft Inc., SAP AG, and Siebel Systems Inc., have already gone downstream to offer CRM software for the higher end of the mid-market, and for divisions of large companies. Some, such as Onyx Software Corp. and Pivotal Corp., are betting their farms on this upper mid-market segment. There are also vendors that cater to the lower end of the mid-market, some of which include Best Software Inc., Applix Inc., and FrontRange Solutions Inc. Further, a new slew of price-sensitive mid-market vendors are coming out with solutions that compete in both the upper and lower part of the mid-market. Some of these new kids on the block include Microsoft Corp., with its highly publicized MS CRM, as well as CRM hosting companies like Salesforce.com Inc. and UpShot Corp., with their low-cost, monthly subscription model approach to CRM. All of these options can make the CRM selection process quite daunting for mid-market decision-makers. In fact, many mid-market companies are confused about which products fit their business, says Benjamin Holtz, president and CEO of Green Beacon, a mid-market CRM consultant based in Watertown, MA. "This is exactly why we decided to go into business."
Vendors are anxious to partner with these new mid-market liaisons. Within months of announcing the launch of MS CRM, for example, Microsoft signed up 500 consulting partners. Even such hosting companies as Salesforce.com and NetLedger Inc. have initiated partnering programs to recruit consultants. NetLedger expects to match Microsoft's 500 consulting partners by the end of this year, says Zach Nelson, NetLedger's president and COO.
Why is the CRM industry seeing a sudden surge in partnering programs for consultants? Mostly it has to do with reach. The smaller size of the mid-market companies makes them harder for vendors to find and sell to. The local solution provider, however, can act as an extended sales force for the vendors they work with.
"It's about access to market," says Sean O'Connell, senior manager of product marketing for the mid-market at Genesys Telecommunications Laboratories Inc. To increase its market share, Genesys needs more feet on the street, and "resellers have great relationships with mid-market companies," O'Connell says. To that end Genesys has been recruiting partners for the past year for its Genesys Express mid-market contact center offering, and already has more than 50 reseller partners worldwide.
Vendors benefit from their relationships with third-party consultants, and so do customers. CRM consultants can help customers navigate through the clutter of CRM vendors to select the right product and to mitigate the risks associated with CRM projects. There is one caveat, of course: Picking the wrong consultant could magnify those risks. Following is a list of 10 tips for selecting the best mid-market consultant.
1. Know your needs.
Industry pundits vary on their definition of a mid-market company. Some define the upper and lower mid-markets by the number of seat licenses or employees using a CRM product. Others define it by revenue, which can be as high as $2 billion and as low as $10 million. Yet a $10 million company may have very different needs than a $2 billion company, so it is important to understand whether your organization has upper or lower mid-market needs.
According to Green Beacon's Holtz, lower mid-market companies want just applications, whereas upper mid-market companies look for both application and infrastructure solutions. Also, lower mid-market companies are often more concerned about price. Holtz advises researching the consultants' backgrounds. If your needs match those of the upper mid-market, for example, find a consultant that has knowledge of and experience with upper mid-market vendors and their hardware and/or software solutions to help get the software in place. If your company has lower mid-market needs, it may only be necessary to have a consultant help you select and install the right software, and have a tech-savvy employee handle customization work.
2. Seek help early.
"A [consultant] should be involved early with strategy and technical infrastructure advice to make sure you don't get caught in a dead end," Gartner's Nelson says. Question consultants to find out how well they can help you map out a business case for using a CRM system before selecting a CRM vendor's software, says Barton Goldenberg, president of ISM Inc. Then, he says, the consultant, IT staff, business leaders, and any employees that will be directly affected by the CRM solution should develop a mutually agreed upon set of goals against which they can measure the success of the CRM project.
3. Find a fair price.
In addition to weighty software costs, some mid-market companies are blindsided by hefty implementation and maintenance costs. "The average billing rate in the industry is $175 per hour," Holtz says. The rate can go up or down from there, depending on the level of the consultant's expertise. However, Holtz suggests mid-market companies can find consultants that charge as little as $125 per hour, and he advises looking into different kinds of payment options. Instead of an hourly charge, for example, some consultants offer weekly contracts at discounted rates for unlimited 24x7 customer support, so maintenance charges for large projects are kept in check.
4. Look for experience.
CRM is about much more than simply technology. Gartner's Nelson advises finding a consultant that has a mix of technical product experience, as well as business process experience. That experience should match not only your technology needs, as discussed in tip number one, but should also match your type of business, market, and industry.
5. Examine add-on products.
Besides providing CRM solutions, Holtz asks, what types of value-added solutions does the consultant bring? Does it offer add-on products? Green Beacon, for example, offers additional software tools like lead capture, forecast manager, relationships manager, and organizational charting capabilities. Research whether the consultant has any proprietary solutions that can easily fit into your environment, and whether the integrator can customize applications to fit your vertically focused needs (e.g., financial services, high-tech, telecommunications, retail, manufacturing).
6. "The technology has to run itself," says Jim Glueck, CEO of Quality Call Solutions Inc. (QCS), an 11-year-old mid-market call center systems integrator that partners with companies like Genesys and IBM Corp. This is especially true for lower mid-market companies with fewer tech-savvy employees. Therefore, Glueck advises checking with several consultants and selecting one that does not trap you into large service contracts.
7. Train the users.
A little bit of training can go a long way to ensure the technology runs itself. Look for consulting firms that offer on-site training, advises Douglas Turk, executive vice president and general manager of the products business for mid-market consulting company Inforte Corp. "Companies should have people who are power users and who can do some of the embedded capabilities in terms of reporting and configuration. The complexity is in integration requirements, such as pulling data from one source to another. But in terms of business functions you should have the capabilities on staff. Maybe a $2,000 training class will train someone to do 70 percent of the reporting work."
8. Get references.
Don't simply take their word for it--call their customers. Check references to see whether the consultant has been on time and on budget consistently for past clients.
Also, according to Holtz, companies pose as CRM experts when in fact they are not. The CRM industry in the mid-market space is so new that many of these companies, or their CRM practices, are no older than two or three years. "Look for combined ERP and CRM experience," Holtz says, adding that although companies do it, "you can't give an ERP guy a week's worth of CRM training and say, 'Go do CRM.'"
Gartner's Nelson concurs: "Integrators are notorious for saying 'We can do anything you want us to do,' when in fact you're the first one they're doing that for. You don't have to be the guinea pig."
9. Plan for quick ROI.
Midsize companies are breaking projects into smaller, more manageable chunks, and looking for a faster ROI. While each situation is unique, Glueck and his team at QCS aim for a return for his clients in three to six months. Inforte's Turk breaks it down further, and suggests looking for a consultant that can meet the following deadlines: implementation success for clients in eight to 10 weeks, user adoption in 10 to 14 weeks (which translates into operational success that supports business processes in the same amount of time), and financial success where there is a change in sales in 14 to 24 weeks.
If you have offices in more than one location, look for consultants that have offices close to your remote offices or offer contractors in the area. "We have seen some [companies] that have consultants work all over the country, so you don't have to pay as much to move them around," Gartner's Nelson says.
The future looks bright for CRM in the mid-market, analysts say. AMR Research Inc. expects the small- and medium-business market combined with divisions of large enterprises to reach $44 billion in worldwide sales over the next 10 years. "CRM really works in the mid-market. AMR Research has spoken to many customers using SalesLogix, Applix, Onyx, Pivotal, Goldmine, Salesforce.com, and the consensus is that the project lived up to expectations and delivered value across multiple departments," says Rod Johnson, vice president and general manager at AMR Research.
However, one of the bottlenecks is perceived risk. Johnson says the way to reverse CRM's negative trend is to help mid-market companies eliminate financial, implementation, and product risk. And that's what consultants are for.
Contact Senior Editor David Myron at dmyron@destinationCRM.com
Preventing a Costly Mistake
Two years ago Tripos Inc.'s top-line growth soared 70 percent and last year it was still maintaining double-digit growth. With sales climbing, 50 percent of which were coming from outside the United States, Tripos "needed better management of opportunities and a broader knowledge of opportunities that exist across the globe," says Jim Rubin, CFO of Tripos, a computational solutions for drug discovery research provider.
So last year Tripos went shopping for a CRM solution to help deliver on its sales process to its roughly 1,000 customer organizations in 46 countries. The company had already implemented several customizable software solutions for applications to pharmaceutical R&D drug discovering processes, and was fully aware of some of the pitfalls of implementing new systems solutions, Rubin says. "That's why we're fairly critical of whether they'll be successful," he says.
Even so, Tripos executives did not want to chance it on their own. They went hunting for advice. That's when they met Barton Goldenberg, president of ISM Inc. and a cochairman of and regular speaker at DCI CRM Conferences and Expos. Goldenberg had been giving advice to Tripos openly and it did not take long before Tripos executives knew they had found the man for the job, Rubin recalls.
"We felt comfortable with [Goldenberg's] depth of content. Also, ISM is technology agnostic. We appreciate that. We believe that vendor-agnostic consultants can give their customers the fairest representation of which vendor to choose," Rubin says.
Add that to a proven track record along with significant international experience, and Rubin was sold on ISM, he says. Additionally, Rubin says, ISM is not only focused on the software solution. "[ISM] also factors in process and implementation along with the solution. Few other consultants understand existing processes and how they need to change in the new generation of developing CRM, and we strongly believe that is a necessity. When Bart spoke in that way it mapped well with the Tripos culture." In fact, Goldenberg's advice helped Tripos avoid a potentially costly implementation mistake.
Goldenberg identified one area where Tripos needed to change its existing processes: writing a business case at the outset of a CRM project. However, Rubin's experience in software systems implementations taught him not to set a business case for projects. According to Rubin, a static business plan can pigeonhole an organization into an undesirable situation. "Nearly every company I've been in is not static. You need a business plan that takes that into consideration. If we change our business, you can't track that against your business plan, because you're comparing apples to oranges," Rubin says.
Goldenberg didn't see it that way. "[Rubin] was heading for a shipwreck," Goldenberg says. As Rubin's consultant, Goldenberg suggested Rubin was missing a critical early step in the implementation process by not writing a business case for the CRM project. Despite resistance, Goldenberg insisted that writing a business case with smaller, more attainable goals over a shorter period of time would yield better results. "I can't claim that I fully respected Bart's approach on this when we retained him; however, doing it in stages and demonstrating the benefits to each stage is critical to the success," Rubin concedes.
Having only launched the project two weeks before press time, Rubin was not able to comment on a return on investment, but he says, "I'm excited by the positive response we're seeing from the sales and marketing people."--D. M.
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