Subscribe to our e-mail newsletters For more info on a specific newsletter, click the title. Details will be displayed in a new window.
Subscribe to
Computerworld
40 years of the most authoritative source of news and information for IT leaders.
CRM To Go
Hosted CRM services offer easier and faster setup and more customization options. But integration, data control, training and even privacy issues could shift the decision toward an in-house implementation.
December 15, 2003 (Computerworld) --
DecisionOne had just scrapped its IT outsourcing deal with Electronic Data Systems Corp., but not every one of its applications was destined to be run inside its own data center. Its CRM effort would either continue as a mishmash of Excel spreadsheets or move to a hosted service. The reason: "We wanted to get our CRM software up and running in 45 days," recalls Frank Tait, vice president of marketing at the Frazer, Pa.-based IT support services firm. "We were also constrained about how much we could do because we were bringing all of IT back in-house." DecisionOne opted to go the hosted route and selected a service offered by Salesforce.com Inc., which met that 45-day deadline for providing a CRM system to the company's 140 sales and marketing users. That success underscores one of the key benefits of subscription-based CRM: swift deployment. But there are technical challenges beyond the need for timely implementation that companies must consider when deciding whether to subscribe to a CRM software service, or license and run CRM software themselves. IT managers must evaluate potential problems, which run the gamut from customization and training to data integration and security. For some companies, customizing CRM to reflect the needs of a given sales organization is critical. When subscription-based CRM first appeared, that wasn't possible. Customization flew in the face of the application service provider (ASP) business model of managing a single code base for many customers. But as CRM subscribers become more sophisticated, rigid restrictions on modifying the underlying code limited their capabilities. Some companies looked elsewhere. "Every CRM implementation becomes almost a proprietary product," says David Leibowitz, managing director of solutions architecture at Lexington, Mass.-based Excelergy Corp., which supports utility and telecommunications operations. That's why Excelergy shifted from Salesforce.com's hosted service to an in-house implementation of Microsoft Corp.'s CRM software. Faced with demands for customization, San Francisco-based Salesforce.com, the current leader in the CRM subscription market, shifted its strategy earlier this year with the introduction of Sforce, now in its 2.0 release. According to company Chief Technology Officer Cary Fulbright, users "can create their own custom data entities." He adds, "We control all the code, but they can change data types." Yamil Hernandez, director of IT at Sigma-Tau Pharmaceuticals Inc. in Gaithersburg, Md., has done just that, changing a standard Salesforce.com field to match those needed for his 35-member sales team's custom work with dialysis centers. Application integration has been another stumbling block for ASPs. Salesforce.com has struck deals with third-party suppliers, such as Tibco Software Inc. in Palo Alto, Calif., to provide standard connectors between its software and other enterprise applications. But even with those changes, the subscription model for CRM doesn't interest Michael Fields, director of business sales operations at Cingular Wireless in Atlanta. That's because the most critical aspect of CRM, he argues, "is solving business process problems." That means much more than making application changes at the field level. True business process integration, he says, requires deep links into in-house and customized proprietary applications as well as off-the-shelf software.
Economies of Scale A longtime user of CRM software from Siebel Systems Inc. in San Mateo, Calif., Fields says that a large company like his, with 1,800 CRM users, has to be able to manage an application more rigorously. The fact that ASPs regularly update their code bases makes him extremely nervous because of the possibility that an integrated business process could be broken by a change that he doesn't control. But Fields isn't opposed to subscription services on principle. In fact, he says a hybrid approach might be ideal for tying third-party partners into his CRM process. Fulbright disputes the notion that his company's ASP model limits Salesforce.com to smaller operations. So far, the company's biggest deployment is 1,000 users. However, he claims that Salesforce.com could handle a business with up to 50,000 seats. But size isn't the issue when tight integration is the problem, says Leibowitz. He says that midsize companies often need to link their messaging infrastructure with their CRM operations. Leibowitz says he chose Microsoft because it has "done an extraordinarily good job of integrating its CRM with Outlook and Exchange." Even Salesforce.com user Hernandez says he wishes his ASP's software had better real-time links to Microsoft's BizTalk. "As a Microsoft shop, that would be nice to have," he says. "But it's not a must-have." "Salesforce.com's product does its thing very well," says Adam Honig, president of Akibia Consulting in Westboro, Mass. "But it's a corkscrew. Siebel is a Swiss Army Knife." For example, Siebel's flexibility comes into play particularly well when you've tied in your call center operations with CRM, Honig says. That's because call centers are subject to "peaks and valleys" in demand, and you need to be able to handle the performance variance, he says. Benjamin Holtz, CEO of Green Beacon Solutions LLC in Watertown, Mass., agrees, adding that it can come down to simple issues such as being able to reboot a CRM server. "Sometimes, you just need to be able to get your arms around the box," he says. ASPs dismiss such criticism. Keith Raffle, former chairman of UpShot Corp., a subscription-based CRM software company recently bought by Siebel, says service-level agreements protect users from downtime and outages. User training is often touted as another benefit of subscription-based CRM. Tait lauds Salesforce.com's Web-based training and is delighted at "not having to maintain training manuals." This is particularly helpful when Salesforce.com adds features to its software, he says. But regular updates by ASPs to their applications scare Holtz. "New stuff confuses users," he claims. "Sales guys are inherently idiots." Privacy is another concern. Although there haven't been any scandals about ASPs losing user data or having it fall into the wrong hands, IDC analyst Robert Blumstein advises potential CRM subscribers to investigate the safeguards an ASP has in place to protect your data. "It's going to be your responsibility," he says. And privacy laws could prove to be even trickier, warns Honig, especially if you have international or medical customer data stored outside your premises. You should review HIPAA restrictions and other nations' strict privacy laws carefully before opting for an ASP.
Learn-Fast Guide: Software as a Service is Growing Up
Download this Computerworld Executive Briefing, a $195 value, for free! Compliments of Akamai. (Source: Computerworld) SaaS is here to stay as an application delivery channel. You will be using it, but will you do so wisely? This Learn-Fast Guide will prepare you for software delivered over the Web. From security issues to contract negotiations, there's a lot to consider ... and a lot to gain. Download this executive briefing
Rapid application development, rapid results
Download this special report now! (Source: Intersystems) All too many businesses suffer from IT infrastructures that are a hodge-podge of disconnected databases and applications. What's needed is the ability rapidly develop connected applications under a unified service-oriented architecture. InterSystems Ensemble integration environment and Cache database are effective tools in answering this need, delivering a rapid ROI. Download this white paper
Moving to Windows Vista: The Promise, The Reality
Moving to Windows Vista: The Promise, The Reality View this exclusive webcast today! Go to the webcast
White Papers
Read up on the latest ideas and technologies from companies that sell hardware, software and services.
See your link here
Subscribe to
Computerworld 
or
Other CRM Stories
or See all Blogs 
Thin as ever, the latest Air offers up to twice the storage and snappy performance.
We've got an array of economical, expensive, and just plain weird tech gifts for your friends and family.
The spam-spewing 'Srizbi' botnet that was shut down two weeks ago has been resurrected and is again under criminal control, say security researchers.
Facebook is popular and growing -- especially with criminals. Here's why they love it.
Get the latest news, reviews and more about Microsoft's newest desktop operating system
Find wage data for 50 IT job titles.
Download this Computerworld Executive Briefing, a $195 value, for free! Compliments of Akamai. 
Download this special report now!
Moving to Windows Vista: The Promise, The Reality
Read up on the latest ideas and technologies from companies that sell hardware, software and services.
Best Places to Work in IT
Computerworld