ASPs offer inexpensive, quick road to CRM
CRM (customer relationship management) solutions can directly affect a company's prosperity by strengthening customer interaction, improving the purchasing experience, and creating repeat buyers. Since CRM solutions sprouted Web-based wings a year ago, the notion of implementing a CRM strategy as a service has begun to gain viability. Service-based CRM is especially compelling because, unlike an in-house solution, it can be quickly deployed without added infrastructure costs. But you should also carefully consider the downsides before committing to outsourcing your CRM.
The market for CRM services reached $19.9 million last year, according to the Dataquest division of Gartner, in Stamford, Conn. The research firm estimates that service-based CRM spending this year will more than double last year's figures.
The InfoWorld CRM Survey bears out this projected increase in service-based CRM spending: 38 percent of our 500 respondents indicated that they will often or always look outside for advice with CRM implementations in the next 12 months. The majority, 77.8 percent, indicated that they will at least sometimes seek outside advice on CRM implementations. (See our related illustration, "What types of CRM services are you likely to use during the next 6 months?" at the end of this article.)
Service-based CRM solutions are compelling on a number of fronts. For one, a service provider can implement a basic solution quickly. But more importantly, service-based solutions eliminate the worry of investing in ongoing software licensing, not to mention the infrastructure and staff needed to maintain the solution; instead, you'll just pay a monthly fee. In general, the costs are less than deploying a CRM solution internally.
If your enterprise is dispersed, a service-based CRM allows you to link large numbers of sales and marketing personnel without having to deploy and manage software in the farthest reaches of your enterprise. Most CRM services require only the presence of a Web browser.
But should you rush to adopt a service-based CRM strategy? The answer depends on how comfortable you are with having your data maintained by an outside source and on the reliability and stability of the CRM service. Service-based CRM solutions do offer some persuasive benefits, but your warning sensors should go off when you consider it as an option. Outsourcing CRM has potential risks far greater than implementing an in-house solution, so you need to weigh all of the possibly dangerous outcomes before signing off on such a strategy.
The biggest risk is to your corporate data. With service-based CRM, your company's data physically resides outside your walls.
Before giving control to an outsider, ask how the service provider will secure and protect your data. Does the provider back up your data? If so, how often? Has the provider successfully shown that it can restore data that has been backed up in its environment? You need to also know how stable and reliable your potential CRM provider is. Ask what provisions are in place to make sure you can get your data back in case the worst happens.
When considering outsourcing your CRM, also ask all of the questions you'd ask of any ASP, including about system reliability, scalability, technical support, and business recovery plans.
There are nontechnical questions to consider, too. How well does your provider's atmosphere mesh with your company's culture? Will the differences cause a disconnect between your staff and the provider's support personnel?
Find out what provisions your provider has should you decide to end the relationship. Does the company have a standard procedure in place to return your information?
Your provider should also be able to detail how it will manage technological change over time. For example, wireless and peer-to-peer technologies are expected to invade the CRM arena in the coming months. How quickly will your provider adopt these changes?
Technological change over time is an especially important factor to consider. If your company is not an early adopter of new technology and your provider is, rapid changes could cause problems for your staff as well as with internal CRM procedures. Make sure that any contract you sign outlines your expectations for technology adoptions.
Once you've hammered out all of the questions, outsourcing your CRM solution can be highly worthwhile. After all, it lets you reap the benefits of quick deployment, reduced infrastructure costs, and a fixed monthly cost structure.
The market for outsourced CRM may be growing by leaps and bounds, but supporting CRM in this way may not be for everyone. You might consider service-basing just some parts of your CRM strategy, as suggested by several InfoWorld readers polled in our survey. For example, 29 percent said they would outsource CRM support, and 18.2 percent said they would be in favor of CRM operations in a service-based model.
If you have a large number of custom requirements or major integration needs, you may find that implementing CRM internally is a better direction. Strategists need to move cautiously to protect the interests of their companies. Ask all of the questions necessary to determine if outsourced CRM is a good match.
The majority of respondents in the InfoWorld CRM Survey are moving toward a service-based approach to CRM for all or part of their strategy. If the provider's SLA (service level agreement), security practices, business recovery procedures, and other areas of concern meet your requirements, service-based CRM could be right for your company, too.