SaaSy Discussions (Part I)

Much has been said and written lately, on TEC's web site as well as on many other peer sites, about the on-demand deployment model, especially about multi-tenant software as a service (SaaS). The opinions there have ranged from an absolute infatuation with the "technology of the 22nd century" or so (thereby rendering the traditional on-premise model completely passe) to much more reserved and cautious stances.

My idea here is to start with a series of blog posts discussing the various quandaries about these subtle (or not) technology choices and nuances, and to also give many protagonists in the market a chance to voice their opinions too.

Today's topic is sort of "Which model will win at the end of the day, if any?" In my opinion, co-existence of the two deployment models will continue for quite some time to come, since each has its advantages for certain situations. Anyone who thinks one model will dominate for every possible use of software is just not an enterprise software connoisseur, is not a serious person, or is just an aggressive salesperson.

For example, the traditional on-premise model seems as the best option when the application is core to the company's operations, but is also complex, has lots of internal systems integration, and requires a high degree of customization by the customer. Deploying comprehensive manufacturing enterprise resource planning (ERP) and complex multi-departmental customer relationship management (CRM) systems would be two examples where there remains a strong fit for this traditional deployment model.

On the other hand, multi-tenant SaaS subscription-based deployment is appropriate when the application involved is simple, department-oriented, doesn't need to integrate with internal backbone systems too much, and when there is a requirement for communication with outside the firewall systems and/or data integration.

ADP's Human Resources (HR)/Payroll or Concur's Corporate Traveling and Expense (T&E) management applications would be two excellent SaaS examples, as well as simple sales force automation (SFA) products like

However, it is important to note here that the realm of SFA doesn't cover a full-fledged CRM scope, and such corporate-wide CRM processes are hard to deploy via this model except for quite a small company. For more shining examples of good SaaS uses, see my earlier article entitled "Software as a Service's Functional Catch-up".

Finally, the single-tenant on-demand model is basically for someone who needs the similar things mentioned above for on-premise, but wants someone else to host it for the company. It is basically just an outsourcing third-party contact mixed with on-premise software, also referred to as an Application Service Provider (ASP).

Having outlined the above distinctions, following are examples of two renowned vendors' approaches to their enterprise solutions deployment, one from the CRM and other from the ERP arena.

1. Consona CRM

Consona's CRM division claims that CRM is often treated as a tactical project rather than a holistic strategy and vision, while many organizations don’t have consensus about what constitutes a desired customer experience.

Also, CRM tools are typically sold as simple, quick fixes and are thereby being commoditized. Last but not least, CRM still frequently entails a silo implementation, with many CRM vendors coming from a departmental focus and with point solutions, whereas multi-departmental CRM is still not a common practice and occurrence.

If we look at the market today, Consona believes that we can see CRM vendors falling into the following three categories.
1) First, there are the low cost CRM products (including the SaaS ones) – the Microsoft Dynamics CRM’s and’s of the world. These can be effective tactical solutions (without necessarily taking a strategic view of the business) -– but users need to accept the functional scope, customization and integration limitations of the solution and the fact that typically these are not the best economic choice over the long term. Such vendors also often lack own professional services and vertical industry knowledge, and thus rely heavily on partners.

2) At the other end of the spectrum, there are so called "mega vendors" (no names, no pack drill here!), with their "one size fits all mentality" and their value proposition about building a complete technology stack – CRM & ERP – on the same platform. This option, often bundled with too many products with overlapping functionality, comes at a significant price, particularly if the users don’t want to follow the “standard” customer-facing processes that these vendors provide.

Given that these large vendors' strategy is about the product stack rather than on finding a tight solution fit, the CRM processes they provide to users and to their competitors are similar. It makes it incredibly difficult (and expensive) to then create a truly differentiated customer experience that is tightly aligned to the customer experience vision. Also, customization and integration are often cumbersome, with total costs and time of implementations high, while the vendor's focus is on the product, rather than on services (which are then often outsourced to partners).

3) Logically then, there’s Consona CRM, which claims the differentiation of recognizing that every user company has to be able to at will align and maintain its customer-facing processes over time. After all, we live in a changing world where if we don’t adapt, ultimately we don’t survive. Consona CRM has built the technology, which supports the lofty vision outlined above, within the conceptual bullet points below:

  • Will conform the CRM solution to the user's needs;

  • Will provide the depth of customization & integration;

  • Aiming for the lowest total cost of ownership (TCO) in the long-term;

  • Having a leading direct consulting organization;

  • Enabling a strategic CRM view; and

  • Continually working to improve and enhance the offering.

Most companies will still say that they have never had a great CRM system and that their CRM implementation never quite hit the mark. The key here is what Consona likes to call Total Customer Management (TCM) -- a management strategy aimed at embedding awareness of the customer experience in all organizational processes.

Total Customer Management (TCM) Defined

TCM provides an umbrella under which everyone and every department in the organization can strive and create a differentiating customer experience. In other words, TCM is the proper implementation and ongoing management of the people, processes, and technology associated with all front-office operations which, in turn, achieves a differentiated and cohesive customer experience.

Because TCM is a people-, process- and technology-focused management strategy that aims at continual improvements in the customer experience, it requires that organizations, on a regular or event basis, revisit their TCM practices and operational marketing automation, SFA and service automation processes.

This has to be done as the company acquires, expands, converts, retains and grows customers and markets. TCM should become a regular operational process, and if it is as critical to the company's strategy, refining and tweaking the CRM system should be done about as often reviewing the financials or sales funnel.

The five steps that follow basically describe a typical TCM implementation process:

  1. After defining the desired customer experience, the company should...

  2. ...align the organization and get everyone on the same page from a strategic and directional perspective. Then, the company should...

  3. ...look at every customer touch point it might have across the organization, and define how those touch points will work together within operational processes to create the overall customer experience. Next, the company should...

  4. ...find an enabling CRM solution that is adaptable and flexible enough to support everything it has just defined. Once this solution is implemented, the enterprise should also go through the process of ...

  5. ...refining and adapting – both processes and technology – to get where the organization needs to be.

Now, the kicker is that most companies stop after the step 5, and they no longer allocate people and dollars to TCM on an annual basis. They forget that businesses, markets and customers change. The fact of the matter is, great companies – the ones whose customers love them – follow this process on a regular basis. They take responsibility for TCM by partnering with a CRM vendor, rather than by relying on one.

In other words, an adaptive CRM system is prerequisite for TCM on top of comprehensive CRM functionality that entails the realms of marketing, sales, service, and resolution management automation. The customizable system has to be tailored for business needs with easiness of adding new application modules, creating role-specific user interfaces (UI's) and dynamic UI changes (based on who I am and what I do at the company).

Rapid deployment (measured in weeks -- versus months or years -- and cost-effective) and robust integration (with existing applications & data, support for industry-standard application and data interfaces, and portal-based infrastructure) are other tenets of adaptive CRM.

Also critical for adaptive CRM are the inherent business intelligence (BI) capabilities to understand customer and market dynamics, and business process management (BPM) in a multi-tier way (via stored procedures, application server, client-side scripting, multi-function BPM) to define, manage and change customer processes without writing code.

It also goes without saying that the underlying product architecture has to feature modern service oriented architecture (SOA) infrastructure to enable processes to extend across enterprise boundaries and to support easy integration using extensible markup language (XML)/web services standards.

Part Ia of this blog post will continue with Consona's concrete CRM portfolio that enables TCM, and will conclude with a well-known manufacturing ERP vendor's approach to software deployment.

In the meantime, your comments with regard to the opinions and assertions expressed thus far are welcome. How important are the abovementioned considerations in your software selections, and what are your CRM experiences?
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