Introduction to SaaS and on-demand CRM
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|SaaS CRM software evaluation, implementation|
There are a lot of things to consider when evaluating Software as a Service (SaaS) or on-demand. Find out the pros and cons of on-demand and on-premise CRM here, and discover what you need to know if you decide to deploy SaaS CRM.
SaaS CRM software evaluation
Many businesses have had to decide whether to switch to on-demand or SaaS CRM or stay with an on-premise vendor. In the past, companies considered SaaS an option for only small or medium-sized businesses, not enterprise-level organizations. That's changing, though, as traditional CRM vendors move into on-demand territory.
In mid-2005, a predominant view was that hosted or on-demand applications may not be sufficient for enterprises with complex sales processes or those that need in-depth vertical functionality.
Just a year later, though, the shifting market allowed more possibilities for SaaS deployments in businesses of all sizes. Salesforce.com Inc.'s online on-demand store, AppExchange, expanded platform possibilities, especially when it released its Unlimited Edition.
According to a SearchCRM.com news story, "The Unlimited Edition features support for an unlimited number of custom-developed or third-party applications deployed via AppExchange, enhanced storage and customization, Platinum Support and Administration, plus the capabilities of its Enterprise Edition and the Salesforce Sandbox, its testing and training environment."
Later in 2006, RightNow Technologies Inc. released version 8 of its CRM application as rival Salesforce.com also discussed details of its winter 2007 release. Both companies talked up the usability and customization capabilities of their respective new products.
Auditing a current CRM system makes sense when evaluating possible replacement or upgraded software. Expert Denis Pombriant told a reader leaning toward an on-demand implementation that when considering a new CRM system, users should ask, "What is the mission and how has it changed over time?" Pombriant also suggested asking "what your business needs are, how they are or are not being met today, and what metrics you will use to evaluate the situation. This is a good practice and remember to apply it both to the old system you want to take out and the new system you want to replace it with."
Find out how EarthCalc Inc. used AppExchange to run its budgeting, project management and human resources systems.
Comparing on-demand and on-premise CRM
Comparing on-demand (or SaaS/hosted) with on-premise (or traditional/enterprise) CRM isn't exactly apples to oranges, but there are many aspects of each deployment model to consider. There's also the option of a hybrid CRM deployment, though success stories of large-scale hybrid deployments haven't materialized.
As Alan Winters, a former SearchCRM.com expert, explained last year, "a hybrid CRM deployment means a combination of both on-premise and hosted CRM implementations, where you have some field offices and/or headquarter campuses on the hosted version or the enterprise version of your CRM package."
Winters thought this option was becoming more popular, but not for every business -- one with several field offices might work with the hosted option, while a large, headquartered business might use the enterprise CRM model best.
And what about the ROI of SaaS vs. on-premise CRM? Late in 2006, SearchCRM.com reported that research from Forrester Research Inc. suggested that on-demand CRM systems offer a financial advantage for smaller organizations and on-premise still worked best for large companies. Larger companies have started to seriously consider SaaS CRM, though.
As for functionality, will on-premise CRM users get more than hosted or SaaS CRM users? Winters told a reader that on-premise CRM businesses probably do have more control and can make system changes faster than a SaaS CRM business could.
Standardizing processes and gaining customer insights might be possible with a SaaS CRM implementation, expert Steve Raye suggested to a reader in early 2007. Raye also wrote that whether to choose SaaS or on-premise CRM depends quite a bit on how customers are segmented; how customer service, sales and marketing processes are segmented; and whether divisions are business-to-business or business-to-consumer.
Businesses looking for call center software delivered on-demand will find many options, according to Raye. SaaS software might be especially compelling for companies just starting a call center.
"SaaS is a natural fit for smaller call centers that want enterprise-type support capabilities, including self-service," he wrote. For a business with an already-established systems infrastructure, there probably isn't anything unique about SaaS. For self-service in particular, on-premise platform options might make more sense. Call centers looking for speech analytics software might take advantage of SaaS technology without having to invest in that newly emerging field.
Read about one government agency's hybrid CRM deployment.
SaaS CRM software implementation
SaaS CRM software may take less time to roll out company-wide than a traditional CRM system, since software is normally available online and buying and installing a software product and hardware isn't necessary. However, evolving SaaS platforms mean the model is now highly customizable and can take longer than previously thought.
Raye told a reader a one-month time frame could be possible for a SaaS CRM implementation.
"Bottom line: A small and medium-size business (SMB) looking to introduce sales and/or service best practices by deploying a mostly out-of-the-box instance of SaaS CRM might implement within a one-month time frame," he said. However, for more complex requirements, users should ask vendors for customer references to create realistic timelines. Raye said several factors might extend the timeline for SaaS deployment: moving beyond configuration to heavy customization, extending the vendor's data model, integrating legacy systems, data transformation, and user adoption and training.
Preparing a service-level agreement (SLA) for a SaaS platform vendor is important for a business. Winters advised a reader on preparing an SLA for SaaS CRM. He said the SLA depends on the company's needs and how often it will require updates or changes to the CRM system.
"From a version perspective, you typically only need to update the version of the software you purchase on an annual basis," he said. "You do not want to get too many versions behind and have to go through a major upgrade (more then two to three versions at one time)."
Data integration during and after a SaaS CRM implementation can also be a major concern. SearchDataManagement.com explored the case of storage provider Brocade Communication Systems Inc., which chose Salesforce.com for sales pipeline and lead management. Brocade had to combine its Salesforce.com data with data from its internal ERP and finance systems to compile trend reports and pay pipeline-based commissions. It ended up using on-demand data integration functionality from vendor Informatica Corp. to complete its new systems.
Podcast: Listen to SugarCRM Inc. CEO John Roberts discussing on-demand vs. open source CRM.
Post-implementation issues with SaaS CRM
Outages or downtime with on-demand CRM can cause plenty of stress. Salesforce.com's outages made news in late 2005 and early 2006. The company responded to angry customers by launching a Web site to let users know about any problems with the system. The site displays the status of coverage regions and a history of the past two weeks' performance.
Salesforce.com's outages brought the issue of SLAs to the forefront. The company didn't offer a standardized SLA, or contract that describes and specifies performance criteria and service commitments.
Data security with SaaS CRM applications can also be a concern for businesses. It's often thought, according to Raye, that data is less secure with SaaS CRM, because it might not be physically separated -- as in a multi-tenant model -- and because users may depend on the vendor's schedule for upgrades or patches.
"While true in many cases," according to Raye, "SaaS CRM providers generally offer an extremely robust set of data security measures that are often more extensive than what a customer could guarantee if the application was located on-premise. These include items such as data encryption, user authentication, perimeter defense and operating system and database security, among many others."
Raye added that data security breaches usually originate within an organization, and with that in mind, SaaS data security makes sense from a financial point of view.
According to a 2006 news story, SaaS CRM is extending to remote support and providing secure data access and transactions. That SaaS vendors could provide better security because their data centers were larger and better protected than those of their customers has helped hosted CRM clear the security hurdle.
Find out how expert Denis Pombriant advises dealing with on-demand software downtime.
This was first published in October 2007