Five Best Practices for Implementing SaaS CRM

Software-as-a-service CRM has gone mainstream, says Forrester Research. A new report identifies five key strategies and tactics, including building a business case and negotiating a good service contract, that companies have discovered and used to realize CRM SaaS success.

CRM software-as-a-service (SaaS) applications have made the big leap, claims Forrester Research in a recent report. SaaS CRM offerings "have moved beyond their previous status as a specialized deployment option and into the mainstream," write Forrester analysts William Band and Peter Marston in the May 2008 "Best Practices: The Smart Way To Implement CRM" report.

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The analysts back up their assertion with recent Forrester survey data. A late 2007 survey of 1,017 software IT decision-makers at North American and European enterprises found that SaaS adoption is growing at double-digit rates. In addition, nearly two-thirds of those surveyed said they were already using, or were interested in using or piloting, SaaS software solutions. CRM, in particular, was being used by 36 percent of respondents. (For more on SaaS's CRM allure, see "On-Demand Software: CRM's SaaS Appeal.")

"With more frequent upgrades, faster deployment, lower upfront costs and high acceptance by employee end users," Band and Marston write, "customer demand for CRM SaaS applications shows no signs of slowing down."

For the CRM best practices report, Forrester spoke with 16 CRM professionals at buyer companies, professional services providers and software vendors. Included in the list of the buyer companies were: Citizens Financial Group, Equifax, High 5 Sportswear, IAC Search & Media, Polycom, Seagate Technology, Shaklee and Symantec.

Out of those interviews, Band and Marston identified five critical strategies that have enabled these companies to "capitalize on SaaS," they write in the report. (See "The Truth About On-Demand CRM" for an in-depth examination.)

1. Build the Right Business Case.

Organizations and their CRM chiefs who are evaluating deployment options should weigh both SaaS and traditional on-premise solutions "against criteria more comprehensive than just cost tradeoffs alone," advise Band and Marston. "Depending on the business models and economic drivers, differences in business benefits, flexibility and risk are important when comparing these deployment options."

The analysts advise decision makers to "dig deep" to understand the total costs of a SaaS CRM—which should include software license fees, internal labor implementation costs, professional service fees, user training expenses, mobile and offline/online system access, industry-specific functionality, storage capacity fees and premium help desk support.

Two other areas to closely examine are whether the SaaS vendor's technology will allow a company to migrate to an on-premise application set in the future, and the viability and long-term prospects of the selected SaaS vendor. (For more on SaaS integration and migration issues, see "CRM's Integration Blues.")

2. Negotiating the Right Contract

The individuals responsible for choosing to a SaaS solution are often business users, notes the report, not IT people or solutions sourcing professionals—the director of sales and marketing or the director of customer service, for example. (See "Will SaaS Have a Friend in CIOs?" for more on this topic.)

"As a result, they may be unfamiliar with the more technical aspects involved in choosing a SaaS application and thus may not know to include key items in their contracts," write Band and Marston.

In addition, the analysts point out that most SaaS vendors don't provide a formal service-level agreement (SLA) to "avoid risk and responsibility when selling directly to business users. Instead they rely on a 'best efforts' agreement." And if it's not in writing, SaaS customers have little recourse.

Band and Marston write that companies need to protect themselves from these contracting pitfalls:

1. Hidden cost drivers. When the amount of data and transactions increase on the SaaS application, so too will the costs on the overall deployment.

2. Unexpected service outages. Most of the users interviewed by the Forrester analysts hand no complaints about the typically 99.5 percent guaranteed uptime built into their SaaS SLAs, "but few contracts include planned maintenance windows into that uptime—and few users track actual uptime," Band and Marston write. "Although some SaaS providers claim to track outages proactively, users generally shoulder the responsibility for tracking and requesting payouts [and service credits] themselves."

3. Declines in customer support. Some users pointed out that they were satisfied with the initial customer support and help desk responses from the SaaS vendor. However, over time, the ease with which they could get support from senior-level and key developers has decreased. One customer claims "to be stuck behind two tiers of technical support," states the report.

4. Obscure disaster recovery procedures. "Although the SaaS providers can talk at length about their security and disaster recovery capabilities, we find that users have generally far less conviction when asked what security and disaster recovery clauses are included in their SLAs," write Band and Marston. "Make sure to perform due diligence around disaster recovery prior to signing the contract."

3. Follow the Right Implementation Approach.

The analysts point out that SaaS solutions "are typically easier to implement than on-premise offerings, but customization is more limited."

However, whether a company implements and administers the new CRM SaaS solution in-house, rely on the vendor or use a vendor's third-party professional services partner, "successful implementation and integration requires that you follow sound practices," states the report.

Band and Marston advise these best practices: Define your objectives ("before you begin the rollout, take a step back and reconfirm the critical business objectives that the CRM SaaS solution will support"); Build a team (these four roles are key: an executive sponsor, a steering committee that includes a user group representative, a CRM SaaS solutions administrator, and a CRM SaaS vendor developer or consultant); Define the timeline ("CRM SaaS professional services providers tell us it is a best practice to define a timeline upfront that outlines the major tasks, milestone dates and accountabilities for implementing the solution"); Configure the solution for user relevance ("the final step is to configure the CRM SaaS solution to the specific needs of the users in your organization").

4. Adopt the Right Data Security Procedures.

One of the most common fears among companies rolling out SaaS CRM programs relates to data security and management.

Band and Marston advise SaaS customers to require data protection guarantees and compliance with industry standards. You should insist that SaaS vendors provide detail about security levels of data centers, disaster recovery capabilities, and how each customer's data is protected," the analysts write. "If your applications are hosted by a third party, get your hosting provider to detail its security and redundancy capabilities and conduct a site tour to verify its claims."

Next, be sure to clearly define role and access rights. "The role and access rights for business and IT users are exactly the same as for on-premise solutions," notes one CTO interviewed by Forrester, "and we administer these centrally." In addition, SaaS customers should establish vendor data integration, conversion and exit blueprints. "If you are concerned about how easy it is to integrate the solution into your environment," write Band and Marston, "ask for a list of partners that have integration expertise that you can leverage."

5. Establish the Right Support Structure.

The analysts point out that SaaS solutions usually have easy-to-use, point-and-click tools so that business users can set up and configure solutions with little technical knowledge and minimal specialized training. "However," they state, "a clear governance structure is still required to make sure your organization achieves the benefits intended."

To that end, the analysts advise companies to decide how SaaS will be managed, who will be responsible for meeting IT standards, where the support resources will come from, and how IT will work with third-party providers. In addition, the support staff needs to be clearly identified for users, help desk and training support offered, and backup procedures established—just as any company would with its in-house systems and support procedures, note Band and Marston.

Two other support pitfalls that the analysts point out, include:

1. Abdicating all support to the vendor. "It is true that one of the key attractions of the SaaS model is that software upgrades, hardware, data management and ongoing support is mostly assumed by the vendor," Band and Marston write. "But final accountability for the solution in the eyes of end users is still with the IT shop in most organizations. Therefore, IT managers must make sure they know what elements of support they must provide, in addition to the vendor."

2. Not anticipating changes in SaaS vendor ownership. "The SaaS solutions space is filling with many new players," note the analysts. "There have been numerous acquisitions of solutions providers. Make sure you are comfortable with the fact that your selected vendor might become part of another company at a later date."

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