I recently read an article on TechCrunch about the evolution of the enterprise software market and why we need to reconsider some of our preconceived notions about it. The author, Aaron Levie, who is CEO of the cloud enterprise start-up Box.net, sums up his point quite nicely here:
“Almost everything about this category—from how software is built to who’s buying it—is undergoing massive change, and many longstanding assumptions no longer apply.”
One of those longstanding assumptions is that the big guys, such as Microsoft, Oracle and SAP, leave no space for competitors. But the cloud has changed things, and more and more products are entering the market daily. As a result, customers today have more options than ever when selecting a customer relationship management (CRM) or other enterprise software system.
The question of what direction to take when choosing a CRM system is not a new one, but with the evolved ecosystem and advances in technology, it begs revisiting. Whether you are seeking to implement an integrated suite or a point solution, you have three general options when choosing a CRM system: go vertical, customize, or build-your-own (BYO). I will break down the pros and cons for each to help you determine the best approach for your needs.
In addition to a set of core functionality common to all CRM systems, most companies would benefit from some degree of industry-specific “verticalization” in their CRM instance. For example, real estate professionals will want a CRM system to track not only client contact information, but additional data elements such as properties, lease/sales comps and stacking plans, which illustrate how “healthy” a property is in terms of tenants and leases. Companies that require a high level of industry specificity should look into a CRM system that has been designed specifically for that vertical.
The biggest benefit of a vertical solution is that the end user won’t bear the burden of development. The vendor has already done the hard work so that the customer receives a product that will meet most of their needs out of the box and has industry best practices and processes built-in. Because the vendor is intimately familiar with the industry, customers that go with a vertical solution will also benefit from working with experts who speak their language. Finally, vertical solutions often have better adoption rates because the built-in best practices and processes provide a level of familiarity that you don’t get with a generic CRM solution.
“It’s amazing to see the complete rejection when you don’t have an industry-specific solution,” says Wes Snow, President of Ascendix Technologies. “[The system] has to speak their language. Otherwise, they’re going to say, ‘I don’t know what you’re trying to do here, but this isn’t what we do.’”
While there are clear benefits of going with a vertical solution, there are some drawbacks as well. One is that some fall behind on core technology. Vertical solutions often don't have a large enough market—and therefore enough revenue—to support the level of continuous technical innovation that a Salesforce.com, Oracle or Microsoft offers. As a result, many vendors invest in one platform and stick with it as it ages. It is worth noting that many vertical solutions, like real estate CRM vendor Ascendix, are built on a popular, well-supported platform like Microsoft or Oracle, which helps shield against technical obsolescence.
Another risk with vertical solutions is that they can be too constraining for some organizations, or in a sense “over-verticalized.” Organizations that want the freedom to break out of the industry-specific mold that vertical solutions impose might be better off choosing a standard CRM system that they can customize accordingly.
The majority of CRM systems available can be customized to meet at least most of the needs of any organization. Customization has become easy enough such that many companies no longer require the help of an IT team. Almost all of today’s CRM systems offer “point-and-click customization,” which is exactly what it sounds like. Want to add a custom field for tracking properties? Point and click. Want to create a report that tracks lease freshness and vacancies for each property? Point and click. The days of rewriting code and relying on IT departments – for major or minor changes – are all but gone.
Arguably the biggest benefit of going with a customized solution is that you can make it look, feel and act exactly how you want. The system can be tweaked to mirror your business processes and support the way your company works. And with features like point-and-click customization, many tweaks and customizations can be made instantaneously.
Getting the exact system you want is great, but it can also be a double-edged sword. Many companies getting started with CRM don’t know exactly what they need, and therefore might create a system that fails to incorporate best practices and processes. Another consideration is cost. Though one system may be more attractive because it is simpler and offers more customization, professional services such as customization and integration can cost several times more than the initial product price. This can make what initially seems like an inexpensive package costly in the long run.
The idea of building your own (BYO) system can seem like a daunting project with a high price tag. However, building your own system today is feasible and can be surprisingly affordable, thanks to technological advancements. A plethora of robust development environments and tools are now available at little to no cost, such as the popular open source LAMP (Linux, Apache, MySQL and PHP) stack, which is free. These tools make it dramatically easier to build CRM systems from scratch. And you can host your systems and valuable customer data at highly-secure facilities managed by companies such as Rackspace or Amazon Web Services, relieving you of the burden of maintaining your own infrastructure.
A build-your-own system is ideal for companies with unique business models—like Software Advice! We built our system from scratch because we had very specific needs that couldn’t be met with Salesforce or Microsoft. For example, we required features such as a strong decision support component and advanced scripting capabilities. As we have grown over the past six years, our system has evolved accordingly. And with each evolution, everything remains tightly integrated.
The biggest hurdle when taking the BYO route is finding the right developer talent. Our system has been a huge success because, after much time and effort, we were able to find incredible tech talent to build it. Finding this talent, however, meant going through 14 developers. And, of course, finding the right talent—and then scoping and building the system—takes more time than customizing something available off the shelf. The BYO approach can give you precisely what you want, but it is never the fastest path to implementation.
A final point to consider is that when you endeavor to create your own solution, you become the sole steward of that implementation. It is your responsibility to care for and feed the system, making sure it evolves. This means that management not only needs to be 100 percent behind it, but they must truly be passionate about creating and growing the system. BYO demands a lot of time and effort, and without that personal investment, your system will flounder instead of flourish.
This outline should serve as a good overview of the different routes you can take when choosing a CRM system, but we’d love to hear about your experience, too. Have you already implemented a CRM solution? What route did you take? What were the pros and cons to your approach? Let us know in the comment section below.
Thumbnail image created by dmitrybarsky.