Cloud CRM applications guide

CRM systems running in the cloud, or on-demand or Software as a Service (SaaS), as it’s known, are becoming more popular as more companies consider these alternatives to full on-premises systems.

Typically available through subscription fees, cloud CRM leaves much of the overhead (such as servers and data maintenance) to the company hosting the infrastructure. Companies are more likely to consider a SaaS or cloud CRM system, thanks to the potential for lower costs in areas such as the contact center.

The relatively quick implementation time (as little as a few weeks), is another reason companies consider SaaS CRM software.

That said, not every company will realize cost and time savings with SaaS. For example, companies may find that comparing on-premises and on-demand CRM applications is a bit tricky.

"[Some SaaS vendors] do not allow you to dial down the number of users," said Rob Desisto, an analyst with Gartner. "Not only are you committed, in many cases you've paid up from the anniversary of year one."

Cloud CRM software evaluation and implementation

Although Salesforce.com was one of the earliest vendors to enter the SaaS CRM market, a number of other companies continue to update their on-demand CRM offerings to stay competitive. For example, SAP has recently retooled its CRM OnDemand offering, starting with Sales OnDemand. Oracle also added features to CRM On Demand, such as enterprise-level security. And NetSuite created a new developer network (SuiteCloud Developer Network [SDN]) and an application marketplace to rival Salesforce's offerings.

The possibility of hosting CRM software in the cloud provides an alternative to SaaS. For instance, Sage and Consona both have cloud-based CRM software based on their on-premises versions -- Amazon hosts and manages the infrastructure. Tim Hines, vice president of product management at Consona, calls this approach “SaaS 2.0.” That said, it brings up the question of whom to contact in case of an outage or service issue -- Sage/Consona, or Amazon?

Another question for organizations considering SaaS/cloud CRM software is the integration with the existing ERP system.

"[Integration] still is the weak point, but it may not be as big a problem as you think when you get down to what you need to integrate with," said Bill Band, senior analyst with Cambridge, Mass.-based Forrester Research.

It is important for the business to involve the IT team in CRM integration projects. Although the lower costs and easier deployment of SaaS CRM systems might entice the business to make such a software decision on their own, not involving IT in the decision can lead to integration issues later in the project.

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Cloud CRM and social CRM

Along with the growth of SaaS and cloud CRM systems, social CRM is becoming more important to companies. So how do SaaS systems integrate social CRM functionality? According to Salesforce CEO Marc Benioff, the three essentials to social enterprise are (1) offering social networks with your customers, (2) internal social networks for employees and (3) making applications social.

Salesforce has introduced the unusual concept of a product social network, starting with Toyota. The company is rolling out a private social community of car owners, dealerships and Toyota employees based on Salesforce’s Chatter.

Microsoft is also working on integrating social CRM with Microsoft Dynamics CRM Online. Activity Feeds allow users to organize discussions around CRM data by projects, products, services or customers with a Facebook-like format allowing for posts, links and likes.

In addition, Oracle CRM On Demand supports RSS, mashups and widgets. It has a centralized message center where team members can post updates to projects.

As an example of integrating social CRM with CRM in the cloud, South African Tourism uses Twitter and Salesforce's Service Cloud 2 to interact with interested travelers. It also offers an iPhone app that uses the Salesforce Ideas portal to allow visitors to access and share information about locations, hotels and other relevant feedback through a connection with its call center.

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Cloud CRM industry news and trends

As SaaS and cloud CRM software continues to mature, expect to see more companies jump on board. Gartner estimates that by 2013, at least 75% of customer service centers will use some form of a SaaS application in their contact centers.

With more organizations interested, expect more functionality in SaaS and cloud CRM. For example, NetSuite provides SuiteSuccess, a SaaS CRM professional services program, with training and customer support services.

However, vendors offering SaaS CRM software will need to overcome concerns about data security. In addition, according to John Ragsdale, vice president of research at the Technology Services Industry Association, on-premises vendors planning SaaS and cloud CRM applications have several issues to solve, from adjusting to a monthly fee income model to contending with support issues from end users.

Companies considering SaaS CRM applications must also deal with a different cost model when it comes to renewals. It’s not unusual for companies to find that special pricing offered during the first term of the license is no longer available at renewal time. That, paired with the fact that SaaS vendors strongly urge their salespeople to up-sell companies at renewal (or risk losing commissions), means that companies need to carefully consider every aspect of the SaaS CRM software agreement before selecting a vendor and implementing a system -- or risk having the costly project of changing CRM systems.