Picking a CRM (customer relationship management) application is one of the biggest technology decisions you'll make for your growing company. When you consider the money to purchase it, the time to train your employees, and the ongoing manpower to keep the data it contains current, a CRM solution adds up to a huge investment. Choosing the right system for your business is crucial.
The good news: You have an array of choices available. The bad news: It's a bewildering array — from traditional "on-premise" software that you load on each employee's PC to "hosted" solutions that reside at an application service provider (ASP) that your employees access via the Web.
Ready for CRM at All?
The first step, or course, is recognizing when you are ready for a full-blown CRM solution, be it on-premise or hosted. A CRM app acts as a central repository for all your company's customer data — contacts, sales history, invoices, payment history, and so on. It also lets you keep tabs on prospective customers, as well as sales and marketing promotions and materials. Best of all, you can run reports that show you how well each salesperson is performing, by tracking the number of leads generated, the number of deals pending, those completed, revenue totals, and more. More advanced CRM solutions also interface with back-office apps such as accounting, so that you have one point of entry for many of your vital business activities.
Smaller shops (typically five employees or fewer) usually get by with some combination of ad-hoc tools, be it Excel spreadsheets with sales forecasts, an Outlook database for client information, or Post-it notes for leads and follow-up tasks. Not ideal, but the price is right. Eventually, though, you are going to outgrow this system.
So how do you know when you're ready for something more? "If there are things you can do for your customers that you can't accomplish today, or things you could do better, you're ready for CRM," says Larry Ritter, vice-president of ACT product management for Sage Software. He lists five questions a business owner should ask him or herself when making the should-I-or-shouldn't-I decision:
- Do I have a good handle on my sales funnel and a way to quickly view all my pending opportunities?
- Can I easily revisit customer contacts and interactions to see what has transpired to date and the current status of any given deal (or complaint)?
- Do I have the ability to identify opportunities that my installed base of customers and new prospects might be interested in, and can I carry out customized outreach to let them know?
- Do I have a way to standardize reports from my team?
- Can I easily put my finger on what my best salesperson does versus my least-productive salesperson?
"If these items strike a chord, you're ready for a CRM system," says Ritter.
But now it gets tricky: You have to decide between an on-premise solution (that is, software you buy) or a hosted solution. Both have their advantages and disadvantages.
Hosted CRM: Pros and Cons
If you have little or no computer talent in-house, a hosted solution makes more sense for you. Sheryl Kingstone, a director at Boston-based research and consultancy firm The Yankee Group, agrees. "The complexity of on-premise software — the updates and keeping it running — can overwhelm a small business," she says. With a hosted service, the provider updates and maintains the system invisibly (for the most part).
Secondly, if CRM is still an experiment for you, then a hosted service is the least expensive, most painless way for you to give it a try, since you won't be buying an expensive application and getting it running company-wide. If you decide it's not for you, you can simply cancel (be sure to check the terms of your contract, of course, to see if there's a minimum commitment).
But a hosted solution has its downsides. For starters, there's the monthly cost. With on-premise software, you buy it once and use it for typically two to three years (or forever, if you so choose), until a compelling new version comes along to make you want to upgrade. But with a hosted solution, you are paying on a per-user, per-month basis. Over the course of a year – or two or three – your out-of-pocket expense for the service will be several times what a comparable on-premise CRM app would have cost.
Also, committing to an hosted service provider means that your valuable business data resides with them, usually in a proprietary format. If you decide to sever your relationship with your ASP, they will certainly surrender your data to you — but it might be in a database format that you can't work with without their application.
And then there are the questions of uptime and security. Early in 2006, hosted-CRM powerhouse Salesforce.com had an unexpected outage that left scores of businesses without access to the system. And some business owners aren't comfortable with having their customer information stored off-site on someone else's servers.
But Yankee Group's Kingstone thinks these are not truly strikes against the hosted model. "There are security and uptime concerns either way, whether the app is on-premise or hosted," she says. Laptops get stolen, taking your on-premise CRM data with them. And an on-premise app can crash just as easily as a hosted service.
On-Premise CRM: Pros and Cons
As we noted earlier, the biggest advantage to an on-premise CRM app is the cost savings. ACT Premium, for example, costs $399 for a perpetual license, whereas a hosted CRM suite could easily run $70 per user, per month.
Another advantage is access: With a hosted solution, your employees need Web access in order to connect to the ASP. With an on-premise solution, the software is on their local PC, so they can continue to work even when off-line (such as on a plane), assuming that PC is a notebook. Of course, there is a tradeoff — working with a CRM remotely poses little problems for a Web-based CRM, while it may be difficult or even impossible to do the same when the on-premise CRM is tied to a computer (or computers) back at the local office.
Also, with an on-premise solution you have control over your data, and you can often implement customizations (the most popular CRM apps have a range of utilities written for them by third-party developers) that wouldn't be possible with a one-size-fits-all hosted app.
In the minus column, with an on-premise CRM app, you are responsible for keeping the system up and running — and backed up should disaster strike. And should a relationship go sour with an employee, they can walk away with all your business and customer information. With a hosted solution, you can simply turn off their access should the need arise.
Solutions to Consider
In the end, choosing between a hosted or on-premise CRM solution is a decision that's as individual as your business. On the next page, we've gathered pertinent information on leading products of both types to help get you started.
ACT 2006 lets you see an overview of each of your client companies and drill down as needed.
(Click for larger image).
ACT by Sage 2006
ACT is one of the original on-premise CRM applications, having debuted long before anyone even made up the "CRM" acronym. It is best suited for individuals and small teams of up to ten networked users. ACT lets you centralize critical contact and customer information, manage business relationships, prioritize your work to stay on top of appointments and tasks, forecast and track sales opportunities, access and report on information quickly, see a complete view of customer interactions, and more. There's even a Web-based version that you can host yourself or have a VAR (value-added reseller) manage for you.
Price: $229.99. www.act.com/estore.
Everest Advanced 3.0
Everest is an on-premise solution that provides growing small- and medium-sized business (SMBs) with end-to-end business management software to view and manage all facets of their business. It lets business owners integrate and automate all components of their operations, including inventory management, e-commerce, purchasing, accounting, CRM, and sales operations. Its handy Business Activity Monitoring (BAM) feature provides employees real-time access to critical business information, and it can be configured to automatically trigger e-mail alerts whenever any business activity occurs or a threshold metric is reached.
Price: $6,500 for two site licenses; $1,500 for each additional license. www.everestsoftwareinc.com
If you don't want to commit to a whole new CRM platform, but still need to kick your sales tactics up a notch, consider Prophet 3.0 from Avidian Technologies. This on-premise app is actually an add-in for Microsoft Outlook, leveraging your existing contact database but adding features such as enhanced contact management; a sales assistant that lets you send pre-set, timed e-mails to your contacts; a workflow engine that helps you automate sales-cycle actions and create consistent sales processes; advanced reporting options; and an opportunity-management console. And if you know how to use Outlook, you'll be able to figure out Prophet.
Price: $199 per user. www.avidian.com
If ACT isn't enough for your needs, Sage also has its mid-level Sage CRM solutions. What's nice about Sage CRM is that it is available as both an on-premise and a hosted solution. If you start with one but later decide the other model is preferable for you, you can simply switch; your data migrates over seamlessly.
Price: $595 per user for a perpetual, on-premise license or $69 per user per month for a hosted solution. www.sagesoftware.com
NetSuite Small Business
If you're looking for a hosted solution that can handle all of your CRM, salesforce automation, and accounting needs, NetSuite Small Business is worth a look. It connects all your business information — from lead generation and sales order to inventory management and invoicing — in one unified application. NetSuite Small Business also brings the concept of "dashboards" (customizable snapshot views into your business data) from high-end CRM solutions to the entry-level segment.
Price: $99 per month, plus $49 per user. www.netsuite.com
Salesnet lets you see a host of business metrics in a top-level dashboard.
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Salesnet Standard Edition
Salesnet is a hosted solution aimed at taking your sales organization to the next level. It helps you manage and document customer and prospect contacts and keeps account and communication histories centrally located, so everyone can be on the same page. You can generate one-click pipeline and forecast reports, so there are no surprises at month's end. The solution can also capture leads directly from Web sites and forms and automatically route them into Salesnet so that you don't lose sales leads or support requests. But its biggest differentiator is a patent-pending activity-based workflow that serves as a blueprint for closing higher-value deals.
Price: $65 per user per month. www.salesnet.com
Jamie Bsales is an award-winning technology writer and editor with nearly 14 years of experience covering the latest hardware, software, and Internet products and services.
This article was first published on SmallBusinessComputing.com.