To CRM or not to CRM

Organisations looking to optimise their customer relations through IT projects and business have several options.

Organisations looking to optimise their customer relations through IT projects and business have several options.

They can opt for a full ERP suite and use the CRM functionality within that, adopt a complete CRM package, or choose a lightweight CRM option through software known as contact management (CM) or sales force automation (SFA) product.

A contact management system can be as simple as a downloadable applet that updates contact details whenever emails are sent or received — such as those from ActiveNames, Scout and Peoplestreet — to a near-CRM product. Analysts estimate that sales force automation now represents a $US3 billion to $US6 billion industry with products from more than 500 companies, many of which have long histories designing sales processes, CRM, web contact management and other sales-oriented tools and services. They include Front Range Solutions, Oracle, Saratoga, Siebel, Vantive and Interact.

But how does an organisation decide a full CRM system is not appropriate? Does it depend on the number of records being too small or the number of users being too few?

Partly. Pivotal NZ manager Helen Robinson believes everyone needs a CRM system in one form or another. “However, there does come to a cost justification point. Ours is 10 users.”

Nelson fish farmers New Zealand King Salmon (NZKS) considered a CM system but wanted an entire, integrated solution. After considering several other ERP packages, NZKS opted for Intentia’s midrange Movex system, and intends to implement its CRM functionality as it rolls out the suite over the next six months (see Service with a smile).

Anne Moller and Graeme Leo from XAct, a small Auckland consultancy that implements Interact’s CM software, Act, claim only about 10 companies in New Zealand can justify buying a full CRM system — and only a midrange CRM solution at that. Most are better off opting for a standalone contact management system, they say.


Xact says in a 100-user business a CM system will cost about $300 to $400 per user, compared to $6000 to $8000 per user for a CRM system — before development. The server software can cost $20,000 and the total can easily reach $500,000, they say. Nathan Luck, a Sydney-based pre-sales manager for CRM software vendor Onyx, suggests between $6000 and $10,000 per seat.

Pivotal’s Robinson says her company’s sites’ average number of users is 40 to 50. The software cost for this is around $130,000. Implementation costs vary between 25% and 75% of the software cost (ie, between $32,500 or $97,500), she says. One local survey last year found the average local CRM project budget was nearly $US600,000.

While some CRM specialists suggest 5% of the system cost should be spent on training staff, XAct put the figure at 30% of the cost of the package — though $12,000 at the high end is much more palatable, naturally, than $240,000. Nevertheless, training is undervalued in this country, they say.

The XAct pair concede a CRM system is probably more appropriate where an organisation has millions of records to integrate and when access from multiple sources is required, particularly web and wireless feeds, such as WAP mobile systems. CRM systems also usually have stronger integration with back-office applications, they acknowledge. They would probably accede that scalability is likely to be an issue for a fast-growing company. However, they say Act, for example, is a 14-year-old product that has 100-odd add-ons for functionality such as web access and quoting requirements if necessary, and can be easily upgraded to Act vendor Interact’s CRM product, SalesLogix. XAct says Act needs 1 to 1.5 hours’ installation per user.

XAct’s Moller suggests IT managers sometimes have a “fortress mentality” when it comes to alternative solutions, and can “unduly influence” buying decisions.

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