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Profit from on-demand CRM

Although recent CRM adoption trends suggest a higher uptake of on-demand CRM, companies must exercise caution with respect to customization and integration when rolling out a solution By Rajendra Chaudhary

Not that it needed a recession, but it appears that the overall appeal of SaaS CRM has actually grown considerably ever since the world economy took the wrong turn and began heading south. While our search for some cold hard stats didn't yield much to substantiate the statement, our conversations with a number of IT professionals, vendors and industry watchers suggested that, driven primarily by budgetary constraints and the need to preserve cash, companies in India are far more willing to give on-demand CRM a try than its much older cousin, on-premise CRM.

Just ask vendors such as Salesforce.com, CRM 24X7 and PK4 Software and they agree that this trend is unfolding fast. Although the on-demand model had been displaying strong double digit growth (some estimates suggesting a growth rate as high as 41% YoY) for the last five-to-six years, recent developments on the economic front have given some extra impetus to the already impressive adoption rates.

“At a time when reducing cost and complexity of IT operations is the dominant theme for most organizations, on-demand CRM has emerged as a natural alternative for businesses looking for tools that help them better manage their customer interactions. Without doubt SaaS CRM delivers on both parameters that more companies are willing to try it out and comes as no surprise to us,” commented Jeremy Cooper, VP - Marketing, APAC, Salesforce.com.

Then there are the newer entrants such as PK4 software, who believed that things could have been even better had it not been for the larger incumbents like Salesforce.com.

According to Kishore Mandyam, Managing Director of PK4 Software, “Although the adoption rates for on-demand CRM are through the roof in the more advanced markets of the US and Europe, they are nowhere close to that here in India for the simple reason that the older players haven't done a fair job of pricing their solution as per the needs of the Indian market. What's cost-effective in the US isn't necessarily so here in India. The price of enterprise-class on-demand CRM solutions is prohibitively high in India.”

Mandyam's views aren't entirely unfounded since it is a widely known fact that even today there exist a huge number of small to medium size organizations conducting business without a formal CRM system. They rely on application such as spreadsheets and other homegrown systems to manage customers because they still find on-demand CRM packages a bit out of their reach. Additionally pundits indicate that there are couple more vendors that have joined the market, which will increase competition and help prices go south.

First timers like it on-demand

While one can debate endlessly about the pricing issue, it has to be said that it was the advent of on-demand CRM that encouraged many a user to look beyond Excel sheets for their CRM needs. It in no wonder then that when it comes adoption, an overwhelming majority of on-demand CRM buyers are in fact first time users.

Su-Kam, a power backup solution provider is one of many such examples. Currently leveraging Salesforce.com's Service cloud for all its customer service activities, the company used to rely on a combination of Excel sheets and its call center application for handling service related issues. Before it chose to subscribe to the online CRM offering from Salesforce.com, Su-Kam considered a variety of CRM packages including both on-demand as well as on-premise solutions.

Shashi Kumar, IT-Head, Su-Kam said that he wanted to avoid the high cost of setting up the support infrastructure required for on-premise licensing model for CRM such as server, storage and connectivity infrastructures and hence he decided to go the on-demand way. Additionally there was a fear of technology obsolescence with on-premise CRM deployment. Kumar said, “We were running a Oracle ERP at that time and for us it would have been a fairly natural progression to move to Seibel. But we chose otherwise as it would have been 'overkill' for our needs and it would certainly have been a costly proposition. We would had to provision for additional resources for redundant connectivity options, bandwidth, support and maintenance.”

Similarly Kartikay Sharma, Head - IT, Modi Tyres was running an offline, in-house system for customer service up until recently. However, there were far too many issues with the system. To automate customer service it decided to implement Impel CRM from PK4 software to increase the productivity of its sales team. Sharma's mandate was to deploy a system that was cost-effective and easy to use for the users. “When we evaluated some options, we realized that our needs would be fully covered by the Impel CRM offering from PK4. It just made sense for us to opt for the on-demand solution simply because it saved our time and costs in setting up new infrastructure for CRM,” said Sharma.

Like Su-Kam and Modi Tyres there exist a whole host of companies whose primary concern when it comes to IT, are the upfront costs and financial overheads and given a choice it is likely that they will opt for the on-demand model.

The customization issue

As is the case with any packaged offering be it on-demand or on-premise there is certain amount of customization required before it can be rolled out. For instance in case of Modi Tyres it customized Impel CRM across the organization before rolling out the system. More specifically, the software had some product fields and MIS parts missing, so Sharma had those built and incorporated into the system.

At Su-Kam although the company didn't have to spend too much time customizing the solution, it certainly needed to integrate the on-demand CRM Service module that it bought from Salesforce.com with its existing Oracle ERP that posed a challenge. The process took a couple of months before the solution could be rolled out to the users, informed Kumar.

Now Su-Kam has a set-up where the Oracle ERP system and the Salesforce CRM are tightly integrated and therefore provide users with a seamless, unified view of the customer. They have also integrated the in-house call centre application, so that all calls are now logged and tracked within Salesforce.com CRM.

Experts agree that while some degree of customization is necessary, often companies don't know where to draw the line when it comes to tuning the system to fit it into their set-up. Additionally customization would also add to the cost of the package.

“There is customization and then there is too much customization,” said, Mohamed A Ali, President, CRM24X7. “Therefore for a general purpose customer, we don't usually accept anything beyond 5-10% customization. However, in exceptional case we have given in to customer demand for deep customization. These are 'I can't use it if I don't have it' scenarios and we have to oblige. But even in such scenarios we don't go beyond 20-25% customization.”

At PK4 software they follow a somewhat similar rule. According to Mandyam it's not a good idea to go with a product if it doesn't meet at least 70-75% of the customer's requirements. “As a policy we have made it very clear that we will not morph our solution into something which is unrecognizable at the end. While we accept that no solution can be rolled out without some degree of customization, customers have to realize that it's not worth the trouble if customization becomes critical for them to even start using the product,” Mandyam added.

At the end of the day, on-demand CRM is only a deployment option. It is a choice that companies have to make based on their needs, degree of customization or integration with existing transactional systems and the amount of emphasis that they place on their customer processes. There are plenty of options to choose from and based on some recent trends it is safe to assume that there will be many more in the future.

rajendra.c@expressindia.com