Many companies have spent hundreds of thousands of dollars and multiple years on CRM deployment projects, only to find they made a bad choice and must start over. Don’t let this happen to you. Make sure you calculate the true cost of the project, recognize the cost and time issues involved in ongoing customization, be realistic about what the product can do, and be practical when it’s time to deploy.

What is customer relationship management software, exactly? The answer to that question is different depending on whom you ask. For many companies, CRM equals sales force automation (SFA). Others use the term CRM to describe customer support management, field service, contact center, or marketing automation.

Confusion or miscommunication on this important question can result in companies making bad decisions that can cost tens or hundreds of thousands of dollars and waste months, if not years, of time. Choosing the right system can dramatically improve the productivity of your team and increase customer satisfaction .

The wrong system can create chaos and frustration in addition to burning through a lot of cash — only to put your organization in a worse situation than where you started. The following highlights some of the more common mistakes companies make when choosing a CRM system, and how to avoid them.

Beware of Trojan Horses

For companies that have deployed an ERP (enterprise resource planning) system, one of the biggest issues is deciding whether to choose the CRM module bundled with their ERP software or to purchase an independent package.

For many companies, choosing the bundled CRM will be an excellent solution that enables them to save a significant amount of money. For others, it will be a kind of Trojan horse that ends up costing them money for customization, integration and implementation costs. How can your company make the right choice?

The best and only way to determine whether a bundled CRM solution is a good fit is to measure features and functionality against your CRM needs. Do you need a basic contact center system that enables your team to open, log and close calls? Do you need a system that can manage your field service business, and provide a complete sales force automation solution, or one that offers extensive consumer support or marketing automation capabilities?

CRM is a big space, and it’s not the main focus of some ERP software developers. If the bundled CRM solution is missing features that are important to your business, your company might be better off investing in a solution that meets your needs out of the box.

A positive aspect of a bundled ERP CRM solution is that both packages share one common customer database, and that integration can be valuable. Still, integration between independent CRM and ERP systems can be achieved as well. A CRM system with well-designed application programming interfaces (APIs) is usually capable of sharing data with any enterprise system.

Understand the True Costs Of Customization

No matter if your company chooses a bundled or independent CRM solution, it’s rare to find a product that meets 100 percent of your needs. Almost every product will require some customization, but it’s important to determine how much customization you will need to meet your business needs.

While one product may meet 80 percent of your needs out of the box, another one that meets fewer needs initially might be more attractive because it is customizable. The trick is to avoid falling into the trap of endless customizations; remember that you are buying a solution, not a toolkit.

In general, there are four levels of customization for any product. The first level involves developing simple rules such as report filters, escalation levels and other business rules that enable the system to act the way you want, and provide the information you need.

The second level is the ability to add or change the positioning and formatting of data elements on the screen, such as adding or moving the position of a box that highlights the product type. These levels represent the types of changes that CRM teams constantly make to their systems, and it’s important to choose a system that enables you to perform these using internal staff. Paying a consultant every time you need to generate a new report or change a screen view is an expensive, time-consuming and frustrating experience.

The third level of customization involves scripting to drive process flow. For example, if action A occurs, the system should perform activity B. These types of activities occur less frequently than the first two levels, but ideally can be managed by an internal team.

Finally, the last level requires managing the application programming interface to enable integration with other systems. Again, a competent internal team should be allowed to manage this activity, but because it does not happen that frequently, relying on the vendor for this step will not be too costly over time.

How much will all of these customizations cost? It is not uncommon for professional services such as customization and integration to cost up to 10 times the initial product price, making what seems like an inexpensive package very costly in the long run. Discover true costs by calling existing customers to find out what percent of their overall costs was devoted to the product price, and what percent to other professional services. A one-to-one ratio is ideal.

Some packages and modules are designed to enable an internal IT team to do required modifications, but keep in mind that some require external consultants. This is particularly true of many of the CRM modules bundled with ERP systems, so it is important to gauge those costs upfront. Calculate the costs of professional services, customization and integration along with the product price to calculate the total cost of ownership.

CRM Software Is Not A Magic Wand

After reviewing packages that have the right balance of features and customizability, it’s easy to believe that the software has magical powers that will solve all internal process problems. A robust software package can streamline steps, eliminate redundancies and inefficiencies and turn a good CRM department into a great one — but, it can’t do it on its own. It’s important for companies to honestly assess their department’s strengths and weaknesses and find a product that enhances the former and minimizes the latter.

Sometimes this decision is exacerbated when people outside of the CRM department make a product decision. In many cases, the technology users are expected to accept the management decision. It’s important to communicate the CRM department’s true needs to all stakeholders on the buying team.

Everyone must know the potential benefits of the software and its impact on the well being of the company. While everyone should be optimistic, it’s more important to be realistic. Understand your existing processes and how you’d like to improve them in the future so you can choose a product that helps you get to where you want to be.

Don’t Overreach

In the product selection phase, it’s easy to get carried away. Every feature and option looks crucial, and rosy deployment scenarios abound. CRM teams must work hard to keep their project grounded in reality.

The first step is to create a realistic wish list of features. Beware of outdated or isolated exception options that can turn a simple process into a nightmare. The key to avoiding “scope creep” is to balance necessary business processes with desired customizations. Adding every feature known to man will turn your CRM project into a multiyear quest for the ultimate Holy Grail.

Remember: The best technology solution will not deliver a single result until it is up and running. Implement CRM using the 90/180 rule. Implementation projects should be scoped to less than 90 days in length, and the ROI should be recognized within the next 180 days.

This phenomenon is frequently extended to the deployment phase, as well. Too many companies fail when they overreach on their installation plans — the goal is to create a string of small wins that lead up to an overall project win at the end, and to communicate both the plan and the resulting progress to management along the way.

The CRM group will not endear itself to management if it reports that it can deploy all aspects of the product across the entire company right away. Instead, plan in advance to adopt a phased-in approach. This helps companies troubleshoot deployment issues on a small scale without bringing the whole department down. Focus on segmented components of the solution, discover which are most crucial, and roll them out one department at a time.

Beware of deployment schedules that sound too good to be true — they probably are. Again, the best plan is to speak with existing customers to determine actual deployment schedules, things that worked well and, even more important, things they would change if they could do it all over again. Learn from their experiences.

Many companies have spent hundreds of thousands of dollars and multiple years on CRM deployment projects, only to find they made a bad choice and must start over. Don’t let this happen to you. Make sure you calculate the true cost of the project, recognize the cost and time issues involved in ongoing customization, be realistic about what the product can do, and be practical when it’s time to deploy. Together, these steps can add up to CRM success.

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