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The_CRM_RoadMap to_Success


									                                      CRM Initiative White Paper

Topic: The CRM Roadmap to Success for the Mid-sized Company

Author: Chris King, Founder and Managing Partner, CRMnow


Stop! Before you start that CRM project, before you buy any hardware, before you make that CRM software
purchase you will need a road map. Let‟s take a look at the infamous car analogy: If you decided to sign up for a
cross country car race but didn‟t know what type of race it was, where you were going, had no racing experience,
didn‟t know how long the race would be and had no map, would you immediately go buy a car and just start
driving? Of course not; unless you had plenty of time (and money to waste) on your hands and wanted to finish in
dead last place (or worse!)

The car analogy always seems to make sense and yet I‟ve heard of many stories that reflect this exact scenario.
I‟ve seen companies purchase millions of dollars worth of CRM software and hardware and attempt to roll it out to
their staff with no planning, little training, no budget and no idea of what their goals and objectives were.
Needless to say, in all of these cases not only did the project fail but these companies lost some valuable sales
people, managers and support staff. In a large organization, you take your lumps and learn from these mistakes.
However, in a small to mid-sized company, this is the kind of mistake that can be devastating. Smaller
enterprises cannot afford this kind of miscalculation.

The Road Map

BEFORE you buy your race car, you‟re going to need the road map. You could buy the most expensive Formula
One car in the world. But it‟s not going to help win the race if you don‟t know where you‟re going (or how to drive
it for that matter). The important elements of the Road Map to CRM success are:

    1. Writing a formal CRM initiative plan – This plan needs to include your reasons for the initiative, goals
       and objectives to achieve (refer to my definition of CRM for help on this one) and an announcement to the
       entire company about the plan.

    2. Top Management Commitment – If the CRM initiative is not perceived to be driven and supported by
       top-level management the initiative will ultimately fail. Notice that I used the word “perceived”. If top
       management is committed and yet the company does not perceive this position, it‟s all that matters. This
       is why it‟s so important to make a formal announcement and for senior management to stay involved
       during and after the project.

    3. Enterprise Wide Planning and Needs Assessment – If CRM is all about managing relationships
       between customers and your sales and service channels, imagine how much of your company is involved
       (or imagine how little of your company is not involved) in your CRM initiative. From Marketing to Sales,
       Customer Service to Shipping, Accounting to Finance, just about everyone will be effected and hopefully
       benefit from your project. Given this, each department must have its own business plan, workflow
       process and functional requirements in order to begin the project. This is not to say that all elements of
       the CRM plan will be rolled out at once. To the contrary, the system can be rolled out department by
       department. The order should be decided by priority.

    4. Cost Analysis – All too often, the budget for CRM is set before knowing what you can expect to spend
          on consulting services, software, hardware, internal support, training, etc. Before moving on to step 5
Copyright © 2002 CRMnow, a division of King Technology Group, LLC / / (949) 863-6924           Page 1
         (Budget and Timeline), you‟ll need to do some research and identify the goals and objectives identified in
         step 1. Budgets for CRM can usually be set by estimating total cost of ownership.

    Use the below chart to estimate and budget your costs for rolling out your CRM project

    Cost Element               T=Tangible        Comments

    Project Team               I                 Your internal project team will have to spend a great deal of time
                                                 coordinating and executing the plan. Unless everyone‟s “moonlighting”
                                                 there may be a measurable decrease in project team members‟
                                                 productivity until the conclusion of the project
    Computer                   T                 During your CRM technology selection process, most vendors will supply
    Hardware                                     a shopping list of recommended hardware to support the system. DO
                                                 NOT purchase your hardware before obtaining this list. Given the
                                                 system requirements, you may need to upgrade some systems (servers
                                                 and/or workstations/laptops)

                                                 Also take into consideration requirements for remote access (Wireless
                                                 services, Palm Pilot, Web Phones, DSL, etc.)
    CRM Applications           T                 See below for detailed discussion on Purchase versus Lease versus
                                                 ASP. Usually quoted by number of “seats”, Expect the CRM software to
                                                 be priced between $500-2000 per seat assuming the purchase model.
                                                 This cost is in addition to other required apps to support the CRM system
                                                 (MS SQL or Oracle, MS Office, Citrix, etc.) Additional costs include
                                                 annual support and maintenance (typically 20% of the software cost)
    External                   T                 A good consultant is like the conductor of the orchestra. The key is
    Consulting                                   utilizing a consultant with best practice experiences. Most consulting is
    Services                                     provided during the planning stages and during initial development of the
                                                 CRM system. Plan to spend at least $1-3 for every $1 of CRM software
                                                 purchased. Services could include CRM initiative planning, system
                                                 blueprinting, software installation and setup, software
                                                 development/customization, data migration/import, system integration,
                                                 custom reporting, training, support and maintenance

                                                 Although most CRM consulting firms can provide “ball park” estimates,
                                                 accurate quotes are very difficult unless the scope of work is well
                                                 documented. For budgetary purposes, take this estimate and add 50%
                                                 as a buffer. You WILL have unforeseen costs, guaranteed!
    Internal Support           I                 Someone on your staff (about 1 person per 50 users) will need to be
    Desk                                         allocated to provide tech support to users. This person will be your
                                                 internal CRM system “guru” and will support users‟ questions, issues and
    Internal IS Support        I                 One or more IS staff will need to be earmarked to support your CRM
                                                 hardware and apps

Note: Total Cost of Ownership can be reduced dramatically if the CRM solution can be maintained, supported
and customized by internal staff as well as outside consultants (in lieu of an army of consultants parked in your
office full time)

    Budget and Timeline – Unless you have these two items identified, you don’t have a plan. An annual
    budget and estimated timeline must be established for the initiative. Note: Subsequent annual
    budgets for CRM should be reduced but NOT eliminated. This is a continuing, evolving system.

Copyright © 2002 CRMnow, a division of King Technology Group, LLC / / (949) 863-6924                Page 2
    CRM Software – Purchase vs Lease vs ASP

    Thanks to technology and CRM vendors thinking out of the box, there are now several pricing models

                          Purchase                        Lease                         ASP (Application Service Provider)
Description               Outright purchase of            Monthly payment with          Ongoing Monthly payment for
                          software licenses,              option to purchase at         access and usage (rental) of
                          services and necessary          end of lease                  software (normally hosted off
                          equipment                       (includes software,           site by 3 party vendor)
                                                          labor and equipment)
Positives                 No additional finance           Dramatic positive             Alleviates need for software
                          charges. Ownership              impact on cash flow           installation and additional
                          ensures fixed costs             while retaining all           equipment
                                                          positives of
Negatives                 Possible large outlay of        Finance charges               No end to payments.
                                                                                        Data is off-sight, Integration
                                                                                        with other company data
                                                                                        major issue
CRMnow                    Obvious choice if cash          Leasing is a great            We would only recommend
recommendation            flow is not an issue and        way to overcome               ASP if data integration is not
                          staff/equipment is              cash outlay hurdle.           an issue and accessing data
                          readily available to                                          off site is acceptable. We‟re
                          accommodate                     In some cases, lease          concerned about the never
                          installation                    payments can be tax           ending monthly payments
                                                          advantage (operating          that will not accrue toward
                                                          vs capital                    ownership of the system.
                                                                                        In the mid-market, we‟ve
                                                                                        seen very few companies
                                                                                        where ASP was a “good fit”
                                                                                        and believe that a better
                                                                                        solution is a combination of
                                                                                        leasing and hosting if you
                                                                                        goal is to spread out
                                                                                        payments and avoid IT
                                                                                        staffing requirements.

    5. ROI (Return on Investment) Analysis – Obviously, this step is critical in putting step 4 in perspective.
       For example, if we determined that your company would increase sales productivity by 10% over the next
       year as a result of your CRM initiative and your annual sales were $ 20 million, that‟s an increase of $ 2
       million. If we then determine that the CRM initiative is budgeted at $ 250,000, this business decision
       becomes a “no brainer”.

         Make no mistake, determining ROI in business is not an exact science, but it‟s at least an educated guess
         in determining if a business investment is worth the cost. According to most studies on gaines from CRM,
         the numbers are usually hovering around 30%. I‟m using 10% as a conservative figure but honestly, if
         you have determined that you can‟t attain at least a 10% improvement you probably should not take on
         the project considering the change management that‟s required to execute the plan.

Copyright © 2002 CRMnow, a division of King Technology Group, LLC / / (949) 863-6924                          Page 3
    6. Vendor Evaluation and Selection – There are over 400 CRM vendors in the market today! Which one
       is right for you? This can be a daunting task. However, we can help you narrow down the search
       dramatically simply by answering the following eleven questions:

    Rest assured that if you focus on the above 11 questions, you will narrow your search to probably 2-3
      Question                                                     Comments
      1. Is price range within established budget                  Be sure to consider all costs (installation,
         parameters based upon ROI calculations?                   customization, training, data import, ongoing support
                                                                   and maintenance)
      2. Is the ongoing TCO (Total Cost of                         Be sure the 1 answer is not the „tip of the iceberg”.
         Ownership) within the established budget                  Talk to customers and find out what it‟s costing them
         for future years?                                         to support the solution annually

      3. Does the vendor have specific knowledge                   Beyond product features and technology lies best
         or applications in your industry?                         practice and methodology. These items will not be
                                                                   available from a vendor with no experience within
                                                                   your industry
      4. Is the vendor financially stable?                         With all the “dot bombs” and start-ups, there‟s been
                                                                   recent carnage in the industry. Be sure your vendor
                                                                   will be around in the coming years
      5. Has the vendor established a track record                 This is where the “safe choice” comes into play. Are
         of customers (at least 3000 customers)                    you an “early adopter” or one among many happy
                                                                   customers who have proven the vendor‟s ability to
                                                                   deliver long term quality products and service
      6. Is the vendor recognized by industry                      Do some research on this (Gartner, Forrester and
         experts as a leader in the market?                        others continually rank the top vendors)

      7. Is the vendor supported by local CRM                      Does the vendor work with local experts who can
         consultants/experts?                                      provide the necessary hand holding that may be
                                                                   required to assist in rolling out the application.
                                                                   According to most recent surveys, this is a critical
                                                                   part of the decision analysis for CRM success
      8. Does the vendor offer a wide range of                     Be sure your not being pigeon holed into adopting
         choices for data access, scalability,                     solutions that don‟t fit your model. If you get to the
         customization, etc.?                                      point where you are forced to “design out of their box”
                                                                   it can get very costly and require high maintenance
      9. Does the vendor have referenceble                         Don‟t take the vendor‟s word on this (it‟s called
         accounts with whom you can speak                          marketing)
         directly (at least 3)?
                                                                   Be sure to actually talk to at least 3 of the vendor‟s
                                                                   customers to ensure they are satisfied with the
                                                                   product and service
      10. Is the vendor‟s product easily integrated to             Lots of vendors say this is “no problem” but make
          your other business tools (email, word                   sure you see a demonstration of these promises
          processing, faxing, accounting system,                   and/or talk to their customers specifically about this
          data engine, etc.)?                                      element

      11. Is there a “win/win” here?                               When you‟ve found the vendor you want, a proposal
                                                                   will be submitted and you‟re on your way to pricing
                                                                   negotiations. Before you set out to get the absolute
                                                                   lowest pricing, remember that this project HAS to be
                                                                   a win/win – A win for you because you‟re getting the
                                                                   best solution for the project based upon your needs
                                                                   and budget AND a win for the vendor because they
                                                                   are going to have a happy, referenceable customer
                                                                   AND make a fair profit. Any other result could
                                                                   absolutely jeopardize the success of the project.
    vendors very quickly and make your final decision.

Copyright © 2002 CRMnow, a division of King Technology Group, LLC / / (949) 863-6924                         Page 4
     7. Project Commencement (Phase I) – The keys to success here are as follows:
            a. Clear understanding from the project team (both internal staff AND outside resources and
                consultants) of the immediate goals and objectives of the project for Phase I
            b. Management of Expectations – Be clear to your staff and users of what they can expect in terms
                of functionality, etc. Watch out for the Teddy Bear Syndrome (see below)
            c. User Adoption – It‟s very simple – No matter how excited you become about the technology, the
                features or the project, if you don‟t get quick user adoption, the project will most likely fail. How
                do you ensure user adoption?
                       i. Include some users in the project team and get their input on design, workflow and ease
                          of use rather than shocking them with a new system they‟ve never seen
                      ii. In the initial roll out, you‟ve got to keep it simple, easy to use, minimize change wherever
                          possible and provide great (not good) training (this is the biggest factor for success and
                          usually the one that gets ignored because it‟s typically viewed as unnecessary and
                     iii. Read our document on Getting your Sales Team on board with CRM
            d. Limit Phase I development time to no more than 60 days (CRM now!) – I‟ve seen so many CRM
                initiatives that take 2-3 years to rollout! By the time the system is ready, the original project team
                is either retired or has given up and the business process for the organization has totally
                changed! Remember that the strategy is quick implementation with a fairly simplistic rollout with
                gradual introduction of increased complexity or features as you go.
            e. Follow the guidelines for the project in our RPM (Rapid Process Methodology) document

                         The Teddy Bear Syndrome – Think of the Teddy Bear as a person’s current
                         workflow and/or system for performing their job. The Teddy bear is ragged,
                         missing arms and/or legs, eyes…. You get the picture. Now tell that person
                         that you’re taking away their teddy bear and giving them a brand new teddy
                         bear with eyes, all legs and arms intact! The typical person will say “Gee,
                         that’s a nice teddy bear but I like my old teddy bear” You explain that the new
                         teddy bear is in much better shape but this explanation falls on deaf ears.
                         Their teddy bear (although tattered and torn) is very comfortable to them an
                         they will have to be “sold” on the virtues of the new teddy bear and convinced
                         that it will replace the old one.

Following this Road Map will not guarantee success, but it‟s sure better than buying that race car, getting behind
the wheel and just driving. Your CRM initiative WILL also uncover other business issues that need to be
managed and addressed. Use this opportunity to work through these issues, match your goals and objectives
with the CRM Initiative and you‟ll not only reach the finish line, you‟ll take first place!

Chris King is founder and managing partner of CRMnow and has been involved in CRM and SFA rollouts to
organizations since 1983. For more information on this topic, email him at

Copyright © 2002 CRMnow, a division of King Technology Group, LLC / This text may not be reproduced without the express written permission of

Copyright © 2002 CRMnow, a division of King Technology Group, LLC / / (949) 863-6924                                     Page 5

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