Choosing CRM software – the dangers of recommendations – an addendum

February 22, 2014 Richard Boardman

In my last post I wrote about the dangers of recommendations when selecting CRM software, and I just wanted to add a few points that I didn’t cover last time out.

Firstly, the post was very much in the context of the dangers of recommendations from other users of CRM, but I think it’s worth noting that as CRM requirements will vary from organisation to organisation based on their unique needs, caution should be exercised whatever, and however informed, the source. While consultants, analysts, and other ‘experts’, may have a wealth of experience and knowledge, their advice will only have real value when it’s provided in the context of a set of fully detailed and documented functional requirements.

The second point is that the dangers of recommendation seem to be particularly endemic where there is an established vertical solution for a specific market sector. I was chatting with a clearly frustrated IT director at a social event a few months back, who was bemoaning the fact that a CRM procurement exercise his company had run, selected a CRM package that he felt was considerably functionally weaker than competitive offerings, but the decision had been driven by some key members of the selection panel who had used the chosen package at previous companies, and felt comfortable with it.

The pull of ‘we need to buy product x because everyone else uses it in our industry’ is understandable, but nonetheless dangerous. Significant gaps can open up between the functionality of the entrenched industry product, and new, more advanced offerings, and these can often be exploited by more visionary businesses, or new entrants to the market, to seize considerable competitive advantages.

This is particularly pertinent in the current CRM market. Functionally advanced CRM applications that meet the needs of a wide range of sectors, are steadily displacing vertical solutions. The research and development operations of these generic CRM providers, scaled to meet the needs of tens of thousands of customers, allow them to develop capabilities that a vertical provider, with perhaps hundreds of customers and consequently smaller R&D operations, will struggle to match.

In addition, while vertical providers compete by providing market specific capabilities that generic applications can’t provide out of the box, this barrier has been eroded as the flexibility and ease of development of the generic solutions has increased.

The last point I wanted to make, is that given the significant up front time and costs involved in any CRM project, it’s not something organisations choose to do too often. I’ve not seen any statistics on the average life of a CRM system, but I’d be surprised if it was far short of ten years.

Technology purchase decisions need to be made with this horizon in mind. In the previous post I noted that recommendations tend to be backward looking. A recommendation may well be rooted in a decision made five years previously.  The software may have been the best then, but it may not be the best today, and in ten years may be a very long way behind, and its users at a huge disadvantage to competitors running more advanced systems.

The differences between CRM technologies aren’t abstract concepts. While I’m the first to note that technology is only part of the story, the difference between a strong and a weak application can have huge implications for the bottom line. Taking the time to understand your requirement and to properly assess the available technology options can have a big pay back over a prolonged period of time.