Developing a CRM Vendor Short-List

Unlike with other forms of shopping, companies looking to buy CRM systems often pay a high price during the “just browsing” phase of the purchase process. With limited options for getting true side-by-side comparisons of myriad vendor offerings, enterprises can invest large amounts of time and money simply narrowing the field.

To keep these prepurchase costs to a minimum, experts say companies must be methodical in the way they solicit bids and presentations. Before they even set out to accept bids, they must have a clear idea from the start about what they expect to accomplish with their new software.

“Companies selecting CRM software need to be selecting vendors that will best help them reach their project goals for the implementation and not make trade-offs based on who gave the best demo,” Giga Information Group research director John Ragsdale told CRM Buyer Magazine.

Know What You Need

Giga surveys in the U.S. and Europe found that failure to set concrete expectations remains the biggest issue foiling CRM planners. “Though the headlines have all been about the death of the economy, even budget justifications come in second to lack of clear strategy in inhibiting enterprise application implementation success,” Ragsdale said.

The solution to this problem begins with the shopping process. In their requests for information, Ragsdale encourages clients to list specific goals on issues like productivity improvement and return on investment.”Ask the vendors to answer how they can help you reach those goals, and provide customer references who have used the software to achieve the same or similar results,” he added. “This will be much more telling than picking products by feature lists.”

Smart Demos

For those ready to see CRM software in action before buying, the analyst said “boardroom demos” — where vendors set up the application for a trial period — are a great way to give and receive feedback, but not so great for picking products.

While Yankee Group program manager Sheryl Kingstone said she would not recommend avoiding the bidding and presentation process, companies can probably get a good idea of the best fit by contacting no more than three companies.

This means that buyers must be more demanding in the types of demonstrations they seek from vendors. Kingstone recommends creating a “day-in-the-life script” to ensure that the demo is as personalized as possible to the task the business is tackling.”Give them a script and make them follow it,” Kingstone told CRM Buyer. “This will show how flexible or not flexible the solution will be to implement.”

Winnowing the Field

To get the field of candidates down to three, Kingstone said companies also can seek help from one of the many enterprise research and consulting firms. Most of these companies have information on hand to help companies compare features and pricing across several vendors.

“Many enterprises already have relationships with companies like Gartner orYankee but don’t leverage it as effectively as they could,” Kingstone said. “This could not only shorten the product selection process, but also validate the initial strategy.”

For those still having trouble narrowing down large lists of vendors, Gartner senior analyst Esteban Kolsky said companies can also get information from sources like trade publications covering CRM issues.

Questions, Questions

Perhaps the most effective route, the analyst said, is to pepper the starting field of candidates with a list of questions regarding “must-have” features. This is easy, cheap and quick to do by e-mail.

Kolsky suggested that CRM buyers construct a list of 15 questions, each dealing with a specific need the company is looking to address and then send that list to as many appropriate vendors as possible.”More than 15 questions won’t be useful because a lot of companies won’t bother to answer all of them,” Kolsky told CRM Buyer. “Fewer than 10 questions won’t help you much in differentiating the vendors.”

A key for the buyer is knowing up front what answers will be accepted on certain issues, since some vendors will say what they believe the buyer wants to hear or will be too vague in responding.

Approach Gets Results

Kolsky said vendors truly looking to serve the buyer will answer the questions promptly and in detail. The analyst said this approach has proven effective in helping companies narrow down extremely large fields.”I’ve seen companies go from 30 or 40 candidates to five or six in about a week,” Kolsky said.

When the field is narrowed, Kolsky said the buyer can send the remaining candidates a longer list of questions going into deeper detail on issues covered previously.”Once they have the short list of vendors, some companies send 100 questions instead of 10 or 15,” he added.