Re-Evaluate Your CRM Vendor’s Viability

With the CRM vendor landscape going through so
many changes today, it’s an excellent time to check up and see what
your vendor’s viability is, what their future prospects look like, and
especially for the best-of-breed vendors, what their exit strategy is,
if they have one.

I have compiled some quick tips for completing a viability
assessment and discerning the truth about what’s really going on. You
could, for example, take these factors and create a short scorecard to
evaluate your various vendors with.

What You Need to Know

Dun & Bradstreet is your friend. –Get your
accounting, finance or purchasing department to run a D&B Report on
your CRM vendors that you think are at risk. These reports can tell you
the fundamentals of how your best-of-breed vendors’ financial health is
today, their payment history on key accounts and can either reinforce
your faith in them or give you insights into where their problems are.
If you see danger signs, bring them up to the vendor’s senior
management and get customized code protected.

Recently added new customers. — Beware of vendors
recycling customer wins through the slow summer months. The truth is
that sales cycles do slow down significantly during the summer due to
many factors. If your smaller vendors are continually delivering new
customer wins throughout the summer months, that’s a good sign that
their pipelines are active. Beware, however, of the recycled
references; this happens when wins from months or years ago are just
now getting press.
Churn, Churn, Churn. — If you spoke with a vendor’s references before purchasing their software,
go back and try to connect with these customer references again. While
there could be a multitude of reasons why a previous reference is no
longer a customer (and your vendor’s sales team will do their best to
spin that for you) it’s best to talk directly to references you
initially spoke with to see how things are going. Customer churn is
common in vendors who have been stretched too thin, and instead of
relying on the spin of this once you discover it, go find out for
yourself.
How many sales reps does it take to finish a sales cycle? — This
is a very good measure of how your vendors’ sales force scales. How
many sales reps you’ve had in the last year is a good indicator of the
vendor’s pipeline. In vendors with sustained pipelines, sales reps stay
around to earn more. When you’re getting a new rep every few months
that’s a sure sign the pipeline is running thin.
Ask for an updated roadmap presentation and delivery dates. — When
a software vendor starts to struggle, there is a tendency to cut back
drastically on development. Ask for a roadmap presentation, even via
the Web, of what’s new and what the next launch dates are. Probe into
which customers are driving the roadmap and why.
Drop-ins welcome. — If you happen to be close to your
vendors’ sales offices while traveling or even near their headquarters,
press for a short visit to their offices to catch up on what’s new. You
can tell a lot about what’s really going on by just walking through a
company’s offices. The telltale signs of a growing business complete
with the hum of activity is a welcome sign, while conversely, rows of
empty cubicles once used say it all. Visiting with engineering is a
great idea to review any bug fixes you may have as well.
Time to spill the SaaS — Software-as-a-Service (SaaS) is fundamentally changing the economics of how enterprise software gets sold, and while Salesforce.com is credited with starting the revolution, it’s now pervasive through
many other sectors of enterprise software. Scott Bolick, George Gilbert
and Rahul Sood of Tech Strategy Partners have authored an excellent
article on the new economics of selling software and the influence of
SaaS. Their article
is a must-read for anyone interested in pushing beyond the cursory fact
that SaaS has completely changed the size and scope of software deals,
and has put sales VPs in control of how software gets delivered to
their organizations so they can attain their goals.

SaaS is so pervasive in CRM, and, for that matter, in
customer-facing applications, that your current vendors need to at
least have an alliance strategy in place, if not a roadmap specific to
this platform. Some readers may counter with the fact they may never
move to SaaS. Yet its undeniable that the majority of new business is
coming from this platform today, and, in that fact, is a new
perspective to view your vendor: as an investor and not just a
customer. Put it this way, if you are investing your maintenance
dollars in this vendor, and their future included SaaS, there’s a
better chance of their ability to grow. Conversely, if there’s nothing
on the horizon for capitalizing on the major shift in how companies are
buying CRM applications, that’s cause for concern. Think like an
investor and not like a customer on this point.