When I started writing about customer relationship management (CRM), the rule of thumb was that a business could easily spend two or three times the cost of the software on consultants for services such as integration, implementation and training. Over time the cost of all those services went down, not because we became less intent on getting software to do exactly what we wanted or because consultants got smarter, but because software vendors got smarter. A key reason for this efficiency surge has been the software ecosystem and, now, the cloud ecosystem.
We call it an ecosystem but in fact what people buy is a set of standards that are defined to systematize how applications are built and how they can integrate. Applications built to a set of standards can more easily be made to work together. There is a whiff of geometric proof about standards -- things that are set to common standards are made to be compatible with each other even if they are not built together.
You can't look at a software vendor today without also seeing its ecosystem, and if you can't see the ecosystem, run away. Simply put, the ecosystem is a group of satellite applications that work well with a primary application more or less out of the box or literally off the wire. One of the appealing parts of the Software as a Service (SaaS) market is the commonality of the platform that provides the foundation for ecosystem applications. Here are five things to consider when buying SaaS CRM products.
- When buying your applications, always investigate the CRM ecosystem, the other vendors that have cast their lots with the software vendor to build accessory functionality or services. A large ecosystem is a big vote of confidence by the players in the marketplace because it shows how many other applications are available and built to work with your primary choice. You may never need most of them, and you might not know which ones you will need in the future; however, like money in the bank, more is definitely better.
- Look at how many ecosystem solutions are made to "plug and play" with the primary solution. Anyone can say they can integrate their solution to something else, but having something that's ready to plug in and run speaks well of the compatibility of the two solutions, the underlying platform and the dedication of the vendors to your satisfaction. They did the work up front after all, and that should be worth a couple of points on your scorecard.
- How easy is it to buy CRM ecosystem software? Most vendors have or are developing online stores to facilitate the purchase process. Companies like Apple and other device makers have online stores where "apps" cost as little as 99 cents and some are free. Enterprise vendors are getting into the act too, though the prices are a bit higher; however, subscription companies still manage to sell at price points that are very attractive. Most importantly, our research shows that enterprise customers are buying enterprise-grade software from app stores and we believe this trend will accelerate.
- Understand the variety of offerings. Are they all bunched into a few categories like sales, marketing and service or is there a rich variety of interesting functions that can enrich your use of the products or your customers' experiences? Hallmarks of a great CRM ecosystem are its breadth as well as its depth.
- Check out the application programmer interface (API). Standards are only valuable if they're published and everyone knows them and can easily access them that's what the API is all about, from a business perspective. If the API is not published for everyone to see and adhere to, it's a yellow flag. Make sure your vendor is just short of a zealot for standards. And while you are at it, make sure the API works with common off-the-shelf development languages and other standards.
Buying applications in an ecosystem is still far from nirvana and depending on the partner and the rules it has set up, you might need to adjust your expectations and models. For instance, whether you are a vendor or a customer you will need to review the payment and support rules to know what to expect. Some ecosystems bill on behalf of the vendor and take a percentage of the fee, but others allow the vendor and end customer to strike the deal.
There will also be issues of service-level agreements (SLAs) to consider. If the primary vendor's platform goes down, the partner's software might also. There should be clear rules for how responsibility is assigned and what, if any, penalties accrue.
SaaS CRM ecosystems are much better than they were only a few years ago. The solutions on offer are more mature and robust, and the policies surrounding participation have matured. This does not mean everything has been set in stone and, as always, being an informed consumer is still the best approach to getting what you want.
This was first published in March 2013