The tyranny of choice in CRM configuration

If you are in the market for a CRM solution, you will ignore Salesforce.com at your own peril.

Salesforce.com has an awesome product; flexible, customizable for many uses and markets. Salesforce has a plethora of add-ons you can pick from their partners (Appexchange); to enhance the product functionalities.

Salesforce changed the way we think of buying and using enterprise software, particularly sales and marketing automation products; all others who have followed Salesforce in that space have been largely following the same model of configuring and pricing their solutions. You pick what you need and pay as you go; what can be better than that?

I am not so sure the actual experience will match the expectation though; especially if you are a relatively small business with less than 20 sales/ marketing users. You see, most small businesses are, well, small. You are assuming that a surfeit of choices in the configurations, menu customizations, add-ons, license-choices etc work to their advantage. Nothing can be farther from the truth. I looked through the list of features from a few leading CRM vendors and I am sorry to say, I could not understand the relevance of many of the specs in a small business environment. See Sugar, Salesforce and Zoho. All the SAAS CRM offerings seem like the small business focus is an afterthought; so, the tendency to over-profile, over-log (have a workflow for everything) and offer an abundance of choices for customization.
What an SME or its employees want is to focus outside and not spend a substantial amount of time on logging the daily grind everyday. None of the CRM systems I have looked at, offers a respite from this workflow induced drudgery.

Let me use primarily Salesforce as an example of how the configuration and pricing works in the SAAS based CRM landscape.

An entry level package is offered for virtually no price at all (Salesforce offers one for USD 5 per user licence per month) with little better functionality than Outlook contact manager. Okay so, it is cheap. It is not apparent to me, however, if it does anything useful.
This is available for 1-2 users; more than that and you need to move to a higher priced license, costs 25 USD per user per month but will not add much to functionality except integrate with a webform for lead capture, tracking sales opportunities and running sales reports. Upto 5 users only. Hmm..
You want to add email marketing and a facility to send unlimited emails and remove restrictions on the number of users? No problems. There is a package at 65 USD per user per month. This also does Campaign Management (though, this seems to be a limited time promotion valid till 31st Dec, 2009).

Let’s not worry so much about the Enterprise (USD 125 per user per month) and Unlimited editions of Salesforce (250USD per user per month) as I do not expect small businesses to be interested.

Now, each of the above packages come with severe storage limits. When you pay USD 65  (Rs 3200/ approximately) per user per month; you are allowed only 20MB of usage space per user. Pay more to upgrade storage as your contact bases increase. How does your storage needs increase? Everytime you use a CRM system, you store details of the transaction including, call logs, literature, quotes.

And, what do you get for the money? Confusion. A list of features you are never going to use; a bunch of workflows which will ensure that you spend all your day on the software rather than meeeting customers and getting the job done. Bah!

Nine dollars too much

Good marketing? Maybe. Good value? Perhaps not

I found this fascinating quote today:

Salesforce.com announced a contact management solution today specifically targeting the smallest businesses, nearly a decade after that product might have been a logical initial offering. Instead, the company started as a bare-bones sales force automation (SFA) provider at the turn of the century, a time when premises-based, standalone SFA had become not only commonplace but, in some cases, a high-end alternative to contact management products such as Act! and Goldmine.destinationcrmblog.com, GUEST-BLOG: Salesforce.com Gives Something Back to the Little Guy, for Just $9/Month | CRM Magazine Blog, Sep 2009

You should read the whole article.
Frankly to me this is just a over-priced rolodex with some deal-management thrown in. While it might be a good strategy to spread the net for new customers (who will soon get frustrated with the limited functionality and want to do more and thus hopefully upgrade); what is to stop those guys from upgrading to Zoho? Or Sugar CRM for that matter, who have been running an identical product promotion at an identical price point for some time now. See below:

Zoho continues to impress me with their accent on partnership building. Also impressive is the fact that not a week goes by without something happening. Last week they announced that from now on, you can sign on to Zoho using your Google Apps credentials. This week’s announcement is about their partnership with VMWare, where Zoho Apps can now run on VM Ware’s vSphere or other VMWare approved hardware behind the client’s firewall for those clients who want to use Zoho Apps but are uncomfortable with hosting their data on Zoho’s cloud.

I wish Zoho continues to improve on the user experience on their apps and that includes the CRM. The coming year will be a fight worth watching, as Zoho continues to make inroads into Salesforce territory.

The real cost of CRM implementation

There is a market for a “Just enough CRM”- with necessary and sufficient functionalities, easy to use, delivered over the cloud and at a great price.
Vinnie Mirchandani in the deal architect posted a blog “TCO: Total Cloud Ownership”. Among other things, it makes a point that while the SaaS vendors have successfully positioned their lower pricing vis-a-vis the “On-premise” vendors, the next wave will see the pricing battles among the cloud vendors themselves.

The battlelines in the CRM marketplace seems to be hotting up.

Zoho just launched a bold move by offering to “Zwitch” all Salesforce.com customers to their CRM platform. This offer comes with a free assessment of the existing Salesforce implementation, free data migration and free 15 days trial. Further sweetening the deal, is the (upto six months) credit for the time remaining on existing contract with Salesforce. Considering the relative affordability of Zoho over Salesforce (Zoho claims almost 80% savings), if this was a simple pricing decision, the “zwitch” is a no-brainer.

Enterprise software purchases are rarely that simple, however. It will be interesting to see the result of this campaign, how long does Zoho plan to run this, the retaliatory action that Salesforce takes and what do the rest of the CRM vendors “in the cloud”, like Sage, Sugar etc do.

I of course do not think that Zoho thinks this is anything but a step in a journey. They have a mission to be the company that supplies all software that a small business needs: office productivity, CRM, invoicing and what have you. It is one of the most exciting companies to watch. It does great marketing, largely by generating buzz through effective use of PR. How many companies their size get written up on the Economist? It also frequently takes potshots at Salesforce, as in the most recent post by Shridhar Vembu.

With all that said, Zoho continues to come across to me as a company which is spread a bit too thin. Their UI is not the friendliest, their documentation not the greatest. Salesforce (and Sugar and Sage) have more partners, many more Apps and on the whole look like more “finished” products. Zoho continues to improve, however. When I first checked it out almost a year back, even their email used to frequently crash and most of their office productivity suite (on the lines of Google Docs) was very “temperamental”. My current experience is a lot, lot better. And, the nicest thing about their employees is that they do not come across as pushy salesmen, unlike in some others!

In the short term, I expect Salesforce to do nothing. In the medium term, if they start hurting because of this Zwitch thing, I expect them to rationalize prices under pressure from their users. And, that may not be such a bad idea for users!

The CRM implementation challenges for SMEs
The real cost of CRM implementation and the barrier to its adoption in enterprises continue to be traced to the same thing: striking a balance between usability, pricing and being feature-rich. I maintain that for SMEs, the issue is not how many features are we getting for what price, but, which features are really useful, how easy are they to use and how quickly can you “get done” with your daily dose of CRM, if you are a sales or marketing guy who uses this everyday.
CRM software is like email; absolutely essential and needed everyday. Just don’t spend your whole day on it!
There is still a market for a “Just enough CRM” delivered over the cloud and at a great price.