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2/4/2004
03:50 PM
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Smart Advice: Under-Promise And Over-Deliver On ERP Projects

To escape the Y2K spending hangover, IT must reverse the skepticism brought on by expensive ERP projects, The Advisory Council says. Also, look at business fundamentals before starting a CRM project, and create processes that implement and tie together local and global objectives to generate value companywide.

Topic B: What are the pros and cons of software packages versus hosted-service CRM solutions?

Our advice: As usual, the answer to which model is right for your situation is, "it all depends." There's no doubt CRM has the potential to transform your business, with proper planning and careful execution. However, like all transformative business technologies, CRM also can be an expensive morass of good intentions and hidden costs, if you don't pay attention to business fundamentals. With CRM implementation costs typically starting in the six figures, deciding whether to use an application service provider solution or rely on in-house IT resources is only one of the many major assessments you will have to make.


Related Links

CRM Today

SOCAP International


Here's an approach. First, identify how you're going to use the CRM application to improve your customer relationships and business processes. It's only once you have a clear understanding of CRM's role in supporting your company that you can then make specific tactical decisions on your delivery model. The common choices are either the ASP model or an in-house software implementation. If you select in-house implementation, you also must decide on either a commercial package or a custom solution.

Indicators that favor the ASP model option include:

  • Availability of a ASP solution that meets most of your needs


  • Availability of an ASP provider that supports your industry vertical


  • A shortage of appropriate in-house IT resources


  • A lack of available expertise


  • A need to minimize initial costs


  • A preference for a pay-as-you-go solution


  • Comfort with the business-partner model.

Look at an in-house deployment if you have:

  • A need for a specialized industry vertical or custom deployment


  • Enough in-house IT resources and expertise


  • A preference for capitalizing deployment costs


  • Lack of comfort with outsourcing solutions


  • A planned integration with an ERP or management-relationship-planning back-office system.

The bottom line is that the right CRM solution for your business is going to depend on your specific situation and industry vertical. The ASP or hosted-services approach potentially minimizes your business risks while giving you the advantage of business knowledge and industry best practices. It also minimizes your initial expenditures by allowing you to expense your costs, as your business needs change. On the other hand, choosing an in-house software deployment means that you can customize a package to meet your specific needs. The tradeoffs are higher initial start-up expenses and the overhead of in-house support.

-- Beth Cohen

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