The hidden dangers of replacing vertical CRM software with generic offerings

March 2, 2014 Richard Boardman

One of the big shifts we’ve seen in the CRM market in recent years is the progress that generic CRM software such as Salesforce.com, Microsoft Dynamics, or SugarCRM has made in markets that were once dominated by vertical specific CRM solutions.

As I touched on in my last post, generic CRM solutions are often able to provide significant functional advantages because the providers’ research and development operations are scaled to meet the needs of a much larger customer base.

Vertical solution providers have also come under pressure because the flexibility of the generic offerings means that they can be rapidly customised to specific market needs.

In addition, value added resellers and implementation partners have developed their own vertical solutions based on generic CRM software, in effect appearing to offer the best of both worlds – functional advantage with vertical market customisation.

While these verticalised generic offerings look attractive, there are some potential pitfalls that buyers should be aware off:

Longevity – there’s a key distinction to be made between those that develop CRM software and those that implement it. Most CRM software is implemented by accredited implementation partners rather than the original software developer, and they can often be the weakest link in the chain.

These are typically relatively small organisations and, in, what is an often competitive market, their longevity is often far from assured.  This means that there’s a very real risk that a solution purchased today may be unsupported tomorrow, because the implementation partner, for whatever reason, left the market.

Capability – from much personal pain, I’d observe that I’ve found the quality of the CRM implementation partner community to be very mixed. Just because an implementation partner has a relevant vertical offering, it doesn’t mean they necessarily have the skills, experience, or approach to deliver the desired solution.

Value for money – these verticalised generic offerings are generally charged as an additional fee on top of the base generic software cost. This clearly makes sense if it saves the customer time and money customising software, however they can sometimes flatter to deceive. Adding new fields and entities is extremely quick with the current generation of CRM software, and customers can be lured into paying fees for something that wouldn’t take much effort to develop themselves.

It’s also worth noting that sometimes customising the last ten or twenty percent of a solution that largely seems to meet the needs, can be as expensive as developing something from scratch.

Black boxes and intellectual property – another potential snag is purchasing add-on capabilities that are locked down so that only the provider can further develop them. This may not be an issue if relations with the implementation partner remain cordial, but it can be a very big problem if they breakdown, which is not uncommon bearing in mind the longevity and capability observations above. The licensing of the supplier’s intellectual property can also be problematic, with some providers reluctant to license use of their software beyond the life of the business relationship.

The purpose of this article is not to argue that generic CRM software is better than vertical offerings, or that vertical solutions, or any add-on modules for that matter, built on top of a generic CRM application, are not a valid option.  The main point is that purchasers of CRM software need to proceed with caution. All is not necessarily what it seems, and there are some particularly nasty traps for the unwary.