September 15th, 2009 by Lauren McKay

It may seem buddy-buddy when your CRM vendor refers to you as their “partner.” But you, as a customer, aren’t a partner, said Gartner analyst Jane Disbrow — You are a source of revenue. Disbrow’s presentation today at Gartner’s CRM Summit in Scottsdale, Arizona served to alert CRM users of the potential pitfalls they may encounter when signing on for new software or trying to update terms and negotiations.

Software discounts are hot right now, Disbrow said, adding that clients often try to wow her with the great deals they think they have scored with vendors. However, sometimes discounts require a bit of reading between the lines, she said.

“Sometimes the best discounts are often the worst deals I see,” Disbrow admitted to attendees. “They end up being products that [customers] don’t use. They end up being shelfware.” So as a cautionary note, be sure to know what are looking for when shopping around. It’s like the idea: “Never go grocery shopping on an empty stomach.” Offers, promotions, and discounts are appealing, but you might end up with something you don’t really need.

“Often people just think ‘We have to buy new software,’ but they don’t think of the additional aspects,” Disbrow said. There are many (hard and soft) hidden costs involved with implementing new projects that must be taken into account:

  • Training costs,
  • Customization of code,
  • Implementation time and manpower,
  • Database management, and
  • Data conversion.

Not only are those important to look out for, but Disbrow said that customers need to be aware of the silent software-as-a-service “Gotchas.” Many people think that SaaS lets you scale up and down with users whenever you’d like, she said. However, that’s truly not always the case. On-demand applications can bring along a tailwind of additional expenses including:

  • Storage fees,
  • Premium main fees,
  • Data protection and rights to data,
  • Set-up fees and customization fees,
  • Sand-boxing fees,
  • Fees for customers and business partners,
  • Document functionality, and
  • The ability to reduce or re-level volumes midterm.

Additionally, Disbrow told attendees to check over contracts for policies on down-time. Your SaaS provider likely will cover expenses for when the technology is down; however, it might not be good enough. She said, if your software is down 100 percent of the time, but the company only reimburses you for 50 percent of the cost, you, as a customer lose. Don’t be fooled.

Disbrow added that it’s always important to assess the financial viability of your vendor. Don’t get lost in the fray — Understand the procurement process and the importance of the contract to protect yourself from unexpected costs, she said.


Training and customization fees can be hidden, that’s true, but only for the uneducated buyer. The software sales business model has been service-based for so long, anyone who has bought software in the last decade knows the resellers make their money on services, not software. I don’t think it is a “bad” thing, necessarily, but only if it’s misrepresented like the software could be used out of the box.

Nick

Comment by Simple CRM — September 17, 2009 @ 8:35 pm

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