Putting a Lid on CRM Implementation Costs

By Barton Goldenberg  |  Posted 2002-01-14 Print this article Print

Until recently, implementing CRM software meant either engaging an implementation company that has been trained and/or certified by the vendor or using internal IT resources.

Until recently, implementing CRM software meant either engaging an implementation company that has been trained and/or certified by the vendor or using internal IT resources.

Neither choice is optimal. By using an external implementer, you are theoretically buying expertise and experience, but be prepared to pay an extra 0.5 to 2.5 times the cost of your software for it. Also, be sure that the personnel assigned to your project are skilled and available throughout the implementation.

Using internal IT resources also has pros and cons. Once the CRM software vendor has properly trained your IT personnel, you can look forward to substantial long-term cost savings. But remember that your IT people will be on a learning curve and that mistakes and project delays will occur.

The deficiencies of each option are helping to drive the following alternative approaches:

Combine internal/external skills. One of my customers, a leading payroll services vendor, was tasked with implementing a 2,000-person CRM system. External implementation quotes hovered around $6 million. The customer, instead, opted to have six internal IT staff members go through training by the CRM vendor. The six were complemented by three external CRM software implementation experts. The customer also engaged a leading CRM authority for overall project guidance. The cost for this combined skill set was less than 20 percent of the $6 million alternative.

The vendor owns the implementation. Another customer, a leading oil and lubricants manufacturer, had a 400-person CRM system to implement. Officials asked the CRM software vendor to implement the system. In this case, the CRM software vendor accepted the challenge and placed four internal project managers and developers on the implementation. This project was on time and below budget.

The ASP route. Be prepared to give your data to the application service provider and understand that it may not be cost-efficient for the ASP to tailor the CRM software to your every whim. The drivers here are lower startup costs, and you can write off all ASP fees as an expense item.

Barton Goldenberg is the founder of ISM Inc. (www.ismguide.com), a CRM consultancy in Bethesda, Md. He can be reached at bgoldenberg@ismguide.com.

Barton Goldenberg Barton Goldenberg, president of ISM Inc., has established his Bethesda, Maryland-based company as premier Customer Relationship Management (CRM) and Real-Time Enterprise (RTE) strategic advisors, offering consulting and research services to Global 2000 companies, vendors and financial organizations. He founded ISM in 1985.

Goldenberg's foresight and vision to integrate sales, marketing, customer service, e-business, and business intelligence has been central to today's CRM industry success. He is now pioneering a new business model for the 21st century, which will be in his upcoming book, Creating the Real-Time Enterprise.

Goldenberg is co-chairman and co-founder of the CRM and RTE conferences and expositions sponsored by DCI Inc worldwide.

His bottom-line, results-oriented style has made him popular with chief executives around the world and has helped to make him a sought-after speaker and writer. In the United States, Europe, and Asia, Goldenberg conducts CRM and RTE management briefings and has helped companies worldwide successfully implement CRM. Clients include Abbey National, IBM, Lucent Technologies, AAA Mid-Atlantic, New York Stock Exchange, McGraw-Hill, Roche and Xerox.

Goldenberg is the author of CRM Automation (Prentice Hall, 2002 and 2003), which provides a step-by-step process for successfully implementing a CRM program, and the benchmark Guide to CRM Automation (now in its 12th edition), which features ISM's selection of the Top 30 software packages for the enterprise and the small and medium size business sectors. The Guide and CRM-related software reviews are featured online at www.ismguide.com.

Goldenberg is a columnist for CRM Magazine and serves as a member of the Editorial Board. He contributes to eWeek and Sales and Marketing Management magazine, for which he also serves as an editorial advisor. He is often quoted in the media, including BusinessWeek, CIO, Computerworld, Information Week, and Selling Power.

In 1999, he was recognized by CRM Magazine as one of the 'Ten Most Influential People in Customer Relationship Management' for his leadership in galvanizing the CRM industry and his role in co-founding and co-chairing DCI's CRM conferences. In 2002, CRM Magazine awarded Goldenberg as one of the '20 Most Influential CRM Executives of the Year.'
Goldenberg is one of only three inductees into the newly-created CRM Hall of Fame presented by CRM Magazine at the August 2003 DCI CRM Conference in New York.

Prior to founding ISM, Mr. Goldenberg held senior management positions at the U.S. Department of State and Monsanto Europe S.A. He holds a B.Sc. (Economics) degree with honors from the Wharton School of Business and a M.Sc. (Economics) degree from the London School of Economics.

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