negotiate a CRM engagement.
Posted Mar 1, 2005
In theory an engagement between a CRM vendor and a client is a business transformation partnership that transcends the dollars and cents of the investment. In practice, only a fool would simply sign anything a salesperson pushed across the table--grand business transformation plans or no. Follow these six steps to ensure that your CRM endeavor is as responsible as it is visionary.
The money's in the back end
One of the best-kept secrets of the software business is that the real money is made after the initial sale--in the form of installation and configuration services and annual maintenance contracts. Don't give vendors free rein to charge exorbitant up-front prices, of course, but focus at least an equal share of your attention on the costs you will incur after the deal is signed, just to realize and maintain the project. "Be sensitive to the fact that there are two different types of costs, and examine the cost of each category before you make a decision," says Beth Eisenfeld, independent CRM consultant.
Don't rush to bundle
CRM vendors are increasingly offering their own integration, configuration, and change management services. There are good reasons to carefully consider this option, but consider it as a separate matter from your software commitment. "You're best off having two separately negotiated contracts, because the bundles are rarely a deal," Eisenfeld says.
Choose your timing--and choose your battles
As you evaluate your options use each offer that's presented as an opportunity to learn more about the elasticity of each component of the deal among the different vendors. Leave names out of it, but make it clear when you know that a rival can provide greater flexibility or deeper services for the same cost. And remember that it's never too late--until you sign. "Your maximum leverage is the day before you do the deal," Eisenfeld says. At that point the vendor is eager to seal the deal and move on.
The devil's details
It may look like boilerplate disclaimers, but have a contract expert carefully evaluate each line of the deal. Watch for tricky wording which may allow a vendor to back out of a commitment to provide functionality fixes or upgrades as part of a maintenance agreement--by shifting a particular feature to an external module rather than improving it in the core product, for example. "Be sure to look at the terms and conditions--that's where [extra] costs lie," Eisenfeld says. "You'll often learn more about what could be expensive by reading the exclusions and the terms and conditions" than by reading the main body text.
You always have a choice
No single software vendor or business consultant is the only solution that will suit your needs. An ever-growing number of development, strategy, and support firms dedicate themselves to understanding the challenges of modern customer relationships--never be blinded by claims of uniqueness.
But you're making an investment
At the end of the day, your effort should be focused around making a long-term improvement in business performance. If your reckoning says that you can't realize a substantial return on investment with the best offer on the table, then consider if your plan is actually addressing the most significant needs of your business. Raise the issue with the vendors as well--challenge them to prove your reasoning wrong. It may be possible to structure a plan that costs the same but delivers more tangible benefit.
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