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.

Bottom line: Completing a viability assessment of
your CRM vendors now can save you the time of having to potentially
replace them in the future.

Author: Louis Columbus, a CRM Buyer columnist

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