The CRM scrum

After years of being virtually ignored by the big players, small and medium-sized enterprises are finally seeing Customer Relationship Managmement (CRM) packages on the market that fit their needs. The options vary, but the choices are there. Which will fit your needs?

By Kira Vermond

One year ago, Dave Beetham, general manager for CPS Inc., a control panel and packaging manufacturer in Whitby, Ont., took stock of how his company was using its sales software. He knew it was time for a change.

“We had a real mishmash of different programs,” he says now. The small company was using one software program for its customer database, ACCPAC software for its financial and accounting issues, and some Excel spreadsheets for other functions. Some sales reps were using Palm Pilots and others weren’t. Integration and sharing knowledge across databases were practically non-existent. The result? Management couldn’t track its sales force. And sales reps were going into client meetings without sufficient background information.

The company turned to its IT support company, Toronto-based INVUS Systems, which promptly suggested expanding its ACCPAC software to include customer relationship management (CRM). Now CPS sales reps hot sync their PDAs each night and Beetham has a better handle on company operations.

“At any moment I can check and see what everybody’s schedule looks like,” he says. He concedes that the culture shift hasn’t been an effortless ride. Sales reps are notorious for resisting change, especially when it comes to altering the way they run their day-to-day business. But overall, Beetham says he’s happy with his CRM applications.

“Has it made the grade? Yes. Have there been some blips along the way? I think that’s more from us all learning what its capabilities are,” he says.

What is CRM really?

So what are CRM capabilities anyway? That’s a good question and one that has stumped many small and medium-sized enterprises (SMEs) investigating the relevant technology. CRM, as the latest buzz-phrase, targets everything from help desks to sales forecasts. In fact, the term CRM is so nebulous, it’s becoming hard to define.

Yet, strip away the extraneous verbiage and you remember what CRM is all about — the customer. That’s the same person that small and mid-size businesses have always done a far superior job of fostering than any larger corporate organization could ever hope to achieve.

SMEs can accomplish the goals of CRM more quickly, easily and cheaply by virtue of their size and inherent flexibility. They’re more likely to stay connected to their clients on a day-to-day basis and cultivate more personal contact. Executive management is usually more hands-on. Small and mid-range businesses are not holding countless meetings in arid boardrooms discussing the “right message” for the “right client.” SMEs know what the right message is for their clients, because chances are they just spoke to them at a breakfast meeting that morning or chatted on the phone.

But eventually businesses grow, and deals — especially if the business delves into a global client base — get far more complicated. When that happens, SMEs need automated, technical systems to coordinate their customer relationships.

But there are other reasons SMEs adopt CRM software. These systems help staff keep abreast of customer needs. And by organizing and recording information, employees can reduce customer frustration by not asking the same questions over and over. CRM also allows small companies to look big. If you want to offer 24/7 support without having the means to hire 24/7 support staff, use your CRM package to develop a self-help, automated program that answers client questions. It might not be the best solution around, as anyone who has banged their head on their keyboard in frustration at 2 a.m. can attest to, but it’s better than no service at all.

The question then becomes, how do you implement a system that effectively manages your CRM needs, especially when most products on the market are geared for a corporate clientele?

The next “killer” market

Large software vendors recently began responding to such enquiries from SMEs, and no wonder. According to U.S. analyst AMI-Partners, the opportunity in SME in 2003 was around US$300 billion. Approximately 65% of that opportunity was in selling hardware, software and services. Canadian figures are on par.

“I think small and medium-sized business represents singularly the largest opportunity for us in Canada,” says John Donaldson, business leader for the WebSphere portfolio of software at IBM Canada. “It represents a huge opportunity for growth.”

Yet reaching into that growing market has been a challenge. While all vendors desire a deeper understanding of SMEs, they struggle to successfully and cost-effectively penetrate that market. With so many SMEs in existence, the economies of scale, in terms of marketing, distribution and maintenance, are lacking.

While SMEs may generally be keen to buy IT solutions, one study says only 20% of small businesses have implemented a CRM software solution and many of these are concentrated in a few industries, such as financial services, communications and high tech manufacturing.

There are several factors holding SMEs back from investing in the technology:

• CRM implementation is time-consuming and can tie up key employees.
• Money for capital investments is often in short supply.
• Employees are often overworked and rarely have time to test drive numerous CRM products.
• IT resources are inadequate.

Gemma Young, product manager for Help Desk Technology Corporation in Mississauga, Ont., admits that SMEs can feel overwhelmed by all the choices available today. And many of those choices can be a bad fit for the company. For that reason, software vendors are trying to keep the decision process for clients as simple as possible.

“Someone can look at us and instantly say, you either fit or you don’t fit,” says Young. “That’s important. In this day, time is money and people don’t have a lot of time.”

The right fit

SMEs have been stuck for a while between overblown software intended for large corporations — with price tags to match, at around $250,000 — and poorly designed “skinny” versions of the same software. But vendors are becoming more aware of the problem with these systems.

“You can’t just take Oracle PeopleSoft, strip out a bunch of features and change the price,” says Craig Downing, vice president of products management for ACCPAC in Mississauga, Ont. “Small companies deal with foreign exchange issues as well. Small companies have national account relationships as well. Small companies make commitments to Wal-Mart and Kmart as well. Just because you’re a small company, doesn’t mean you don’t have complex issues.”

So what should SMEs be looking for in a product? While, as Young mentioned, the software must be easy to install and implement, it should also be flexible enough for complex integration issues that may arise. SMEs are notorious for running numerous, and sometimes contradictory, programs that can make CRM integration a nightmare. A CRM suite that doesn’t allow for enough customization can be useless if it won’t integrate seamlessly with other applications. But at the same time, software products that have extensive customization can drive up the price, keeping it out of reach of most SMEs. The challenge is finding the right balance.

“You really have to walk the line between an out-of-the-box solution, while making it easier for people to have the tools to integrate with other systems,” says Downing.

There are numerous products on the market today that are geared successfully at the SME space. ACCPAC software is a good start, especially for companies that already use ACCPAC software for other applications such as accounting. That’s one of the main reasons why Dave Beetham chose ACCPAC. He already had a relationship with the company and knew how it operated. He also knew that integrating the company’s CRM solution with the accounting application would go smoother.

The cost issue is also crucial, of course. Ultimately, CRM software must be inexpensive enough to offer a proper return on investment. That is becoming easier to find. For instance, some licensed programs start at under $1,000. Some companies charge per client user, others per customer service rep.

The Help Desk Technology Corporation product, HelpSTAR, is touted as an easy to use and out-of-the-box system for tracking help desk calls and resolutions. The cost starts at $2,495 for two support reps and then jumps to $600-$700 per support rep thereafter. Though it sounds expensive, it’s still a far cry from the hundreds of thousands and sometimes millions of dollars many large corporations shell out.

Cost is one of the main reasons why industry insiders are noticing one particular trend amongst SMEs — they’re buying their CRM applications in increments. A company may want to keep track of its sales reps today, then realize a month later they want data showing customer payment history, available credit or buying patterns. An effective CRM system allows for additional users and modules. It provides options to integrate with other business systems.

“You need a system that is scaleable enough that someone could go into it today and start solving specific problems,” says Downing. “But you’ve got to understand its power for when you become more ambitious.”

Dave Beetham notes that CPS Inc. had to find a solution that would grow with the company as its needs changed. The in-house solution could be built up to integrate with other systems later, while keeping the price down today.

“We’re a smaller company, so it was a big investment,” he says.

Hosted versus licensed

Instead of buying the software and installing it on site, SMEs do have the option of adopting a hosted service, which allows a third party to host your customer data on their own Web-enabled application. A Forrester Research study states that nearly 60% of SMEs are interested in outsourcing CRM applications, in contrast to only 10% of large companies.

There are pros to outsourcing CRM:

• Usually, hosted applications take only a few days to a couple of weeks to install, and sometimes can go live even faster. By contrast, on site CRM can take months.
• Hosted solutions are usually 20-50% cheaper than in-house purchases because the company bypasses the server and software license purchases. Consulting fees and IT salaries are also kept to a minimum.
• SMEs rarely have enough IT support staff to implement and maintain large solutions. In a hosted situation, the service provider manages upgrades and changes.
• A hosted application can be scaled to a company’s needs. Businesses that used a hosted solution only pay for what they need.

But  there are also cons:

• You can’t customize your applications. For small companies, this isn’t often an issue, but for companies that want to, say, integrate the customer database with the phone system so that names and purchasing data appear on the screen when they call, hosted might not be the best option.
• You need nerves of steel when handing your company information to a third party. Security is often the largest reason why companies avoid hosted solutions.
• You can’t play around and experiment with the software because the applications are located elsewhere.

Downing says, whatever you choose, don’t get locked into a situation where you can’t change your mind later. Some companies start with a hosted solution then, when their needs become more complex, they make the move to a customizable in-house solution. Try to find a company that offers both, he says.

No matter if you select in-house or hosted applications, don’t forget that your IT solution provider is one of the most important relationships you have — other than those you have with your clients. If the partner suddenly closes up shop, the results could be disastrous.

“You’re not just picking a product, you’re picking a partner,” Downing says. “Ask yourself, ‘Would I hire this person if I had an opening for them?’”

Proper perspective

Software doesn’t provide all of the answers when it comes to implementing a superior CRM strategy, says Kent Churn, senior manager in the communications and high tech industry group for Accenture in Toronto. Sometimes the problem can’t be conquered using an automated systems solution. Sometimes the focus has to be on sales force product training, for instance.

“It really requires that you step back and look at the strategy first to try and understand what is the business problem you’re looking at,” he says.

And don’t assume that if you have comprehensive customer data that your sales will suddenly blossom. The most frequent mistake companies make is to confuse CRM strategy with technology implementation. Successful CRM is all about how you decide to use that data. Coming up with the right message for the right client takes thought and research — rather than relying on hard data to tell the story of what customers want and need.

Ultimately, CRM is about the client. But having a solid business case for the CRM software investment, plenty of executive support and a firm execution plan make all the difference, long term. There will be bumps in the road, says Beetham, when mentioning the challenges CPS has experienced modifying its corporate culture to include the new CRM approach.

“It doesn’t matter what the software is or who wrote it,” Beetham says. “It always comes down to the people who use it.” n

Kira Vermond (kira@vermond.ca) is a Toronto-based freelance writer.

Top 10 features to look for in a CRM system

1. Sales cycle analysis

2. Integration to your back-office accounting system

3. Open, industry-standard technology

4. Seamless flow of information between corporate systems and remote employees

5. Real-time reporting and analysis

6. Automated workflow

7. Contact and campaign management

8. Multiple language and multicurrency capabilities to support global business

9. Ability to easily customize your solution to fit your business needs

10. Scalability to accommodate future business growth

Remember: The customer is why CRM exists. As you choose a solution, think about each feature's impact.

Source: ACCPAC, How to Choose a CRM System

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