Major CRM applications vendors will be making an all-out effort in 2009 to persuade customers to move onto the latest release of their applications. Vendors have invested heavily during the past 18 months to improve their UIs, and have re-architected their solutions to make it easier to migrate to new versions. In the coming year, they will be pressing hard for a payback on this investment. Expect that you will get a lot of calls from software salesman during the next six months.
Oracle is pushing aggressively to get its customers to up-grade to Oracle CRM 8.1. SAP is in the midst of an determined campaign to get its customers to accept its much improved SAP CRM 2007 product and will soon be introducing SAP CRM 7. Microsoft has made great strides with Microsoft CRM 4.0 and will release CRM 5.0 this year. And, the CRM software-as-a-services (SaaS) players (salesforce.com, Oracle CRM On Demand, and RightNow) continue to tout their quarterly up-grades.
But in a down economy, businesses are tightening IT expenditures leaving CRM professionals in a real quandary. They wonder: Do the benefits of upgrading CRM apps outweigh the costs? To answer this question, my colleague Pete Marston has defined a process for evaluating the CRM up-grade decision. You must evaluate carefully the benefits that may accrue from up-grading:
- Revenue improvements. Improved application functionality and enhanced analytics capabilities that are part of newer releases can better equip sales and marketing resources with information about customers and prospects, leading to more productive demand generation campaigns.
- Process improvements. Newer CRM applications can improve throughput for customer-facing business processes. For instance, the implementation of new self-service functionality can reduce the time and resources needed for firms to fulfill customer requests.
- Productivity increases. The usability enhancements in the new releases can prompt increased user adoption and can increase the productivity of existing users.
- Reduction of ongoing CRM app customizations. New functionality often replaces in-house customizations that were previously made to compensate for absent functionality in prior app releases. When new functionality comes out that replaces the need for customization, its impact is a reduction in current and future upgrade costs and lower support costs.
- Extension of vendor technical support. CRM app upgrades extend the timeframe vendors must support the app, and the extension of the vendor maintenance window provides a level of assurance that the application can be repaired if it breaks.
- Avoidance of increased support fees. Applications that age into extended support and beyond are subject to increased maintenance fees from application providers. Upgrading can reduce the fees by moving back to standard maintenance for the escalated extended maintenance fees.
However, CRM upgrades can introduce the risk of business disruption during testing and cutover. And in cases where CRM systems are highly intertwined with other back-end systems, like enterprise resource planning (ERP) or financials, a potential for bottlenecks can exist where data and workflows are halted and where downstream resources dependent on upstream data cannot perform their duties — like billing, invoicing, or order fulfillment.
Hi Bill
Another interesting post about CRM technology.
My 20 years experience of buying, using and upgrading CRM technology suggests that the questions we should be asking when thinking about upgrading are as much, if not more about whether any new features will actually be used to create business value, rather than about what they might potentially enable. I have seen too many CRM implementations where perhaps only 30% of the available functionality in the installed CRM application was used. Or to put it another way, where up to 70% of the functionalty was not used.
There is often more value in developing the complementary factors that enable the optimal use of the CRM application you already have, than in just buying the latest upgrade: Factors like whether business processes are truly compatible, whether all the required data is available, whether daily work routines need changing further, whether new performance measures need to be developed, even whether the recession is a good time to introduce yet more change in a highly stressed organisation.
Complementary factors usually represent a much greater and more important challenge for business value creation than the upgrade decision alone. CRM technology is all about business value creation at the end of the day.
Keep up the good work.
Graham Hill
Customer-driven Innovator
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