• May 1, 2006
  • By Marshall Lager, founder and managing principal, Third Idea Consulting; contributor, CRM magazine

Market Focus: Systems Integrators: VARs Vary in Customer Care

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The hero of most CRM implementation stories is usually the integrator that recommends the best course of action, installs and customizes the applications, and trains personnel in their use. So, what happens when the integrator is the one with the problem? It happens a lot more often than you might think. The Forrester Best Practices report "How To Select A CRM Professional Services Provider" paints a surprising picture of the systems integrator (SI) and value added reseller (VAR) landscape. Of 119 organizations using CRM obtained through an SI, four of 10 would not recommend their integrator to others. In a business where referrals and testimonials are bread and butter, that level of dissatisfaction is a sign of serious trouble. Dissatisfaction happens in any industry, but the stakes are high where CRM integrators are concerned; failure can be a disaster for the client as well as the SI. Forrester expects to see $3 billion in new CRM licenses worldwide in 2006, with total spending (including vendor services and maintenance) reaching $8 billion. But those figures alone are misleading, since it's estimated that only 25 percent of the new license market is comprised of the actual cost of software licenses--the rest is spent on SI services and new hardware. Thus, the 60 percent of integrators that are not meeting expectations are throwing away a lot of money. Why should this poor state of affairs in customer relationships exist, when the goal is to improve such relationships? William Band, principal analyst of enterprise applications at Forrester and report author, was surprised by the results the study reveals in a mature industry stocked with pragmatic people. "There appear to be three contributors to the disillusionment," Band says, not just the VARs. "There's still much dissatisfaction with the software players, and client companies too often don't take a proper leadership role in working with an SI, or they have unrealistic expectations and demands," he says. The SI community got slammed when it came to being easy to work with, and the results it produced were likewise not well received. Finding an integrator that was easy to do business with after the contract was signed was a fifty-fifty shot, as was a client getting good value for the investment. Just 38 percent of respondents to the Forrester poll felt the CRM provider helped the client achieve business results that met or exceeded expectations. Band's recommendations are also basic, though crucial:
  • The integrator's CRM technology skills must be solid. "The most important capability required of professional services providers is competence [in the] CRM solutions that you seek to implement," Band writes. Clients should make sure each individual consultant is certified and has appropriate skills, and that the firm uses accepted quality control standards.
  • Seek a partner that you can work with easily. "CRM success is not dependent only on technology," Band writes. "You need a consulting partner that can work effectively with your people." Skills transfer, good communication between consultants and your staff, and clear accountabilities should rule your decision.
  • Require that your budget be respected. Forrester recommends fixed-price contracts with regular and transparent reporting of time and expenses; clear statements of project change procedures will prevent expanding scope.
  • Demand value from your consulting partner. Require references from your SI, preferably with results and performance metrics from the new integration, not just a record of schedule and budget adherence. "Companies continue to invest heavily in CRM," Band says. "It's ironic that the consultants who implement it aren't able to engage their clients as effectively as they should." DO IT YOURSELF A systems integrator tweaks SalesLogic Every month, CRM magazine delivers case studies of how a company identifies procedural or strategic gaps and fills them by implementing CRM solutions or related technology. Extremely Productive (EP), a Sage Software VAR partner, could be one of the integrators featured in such an article. This time, however, EP is just as much the client as the integrator. The company is a virtual, distributed workforce, spread across the United States and serving a diverse clientele. "The home office is in Georgia, but 90 percent of our customers aren't from here," says Josh Ovett, founder and president. "And 80 percent of our customers, we've never met, seen, or been on site with. We have weekly virtual water cooler meetings just to keep in touch." The untraditional nature of the business, as well as the broad range of customer types, puts heavy requirements on EP's CRM systems. "We used to use ACT!--stretched it to its limit, in fact," Ovett says. "When Sage SalesLogix came around, we saw what it did for our customers, and decided we needed to have it ourselves." Having CRM and really using it are two very different things, though. "If you just implement SalesLogix out of the box, you have the most expensive Rolodex in the world," Ovett says. Just as it had done for numerous customers, EP examined its business processes and customized the software to match. "You can't manage what you can't measure," Ovett says. The results of turning the CRM lens inward amount to 700 percent company growth and a 1,000 percent decrease in postimplementation service calls in the four years since adding SalesLogix to the mix, meeting with Ovett's philosophy that "If the project is up, the phone shouldn't ring." Benefits include faster project turnaround, better quality work, and the ability to manage people and projects without seeing them. EP is its own hero. "We use what we sell every day," Ovett says. "We live and die by it." --M.L.
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