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CRM service providers found lacking

A recent survey found that many firms would not recommend their professional CRM service providers. Forrester offers tips on how to find the right partner.

It seems that some CRM consultants and implementation partners could stand to take a little of their own advice...

when it comes to delivering customer satisfaction.

The good news was that the most important criteria to judge PSPs was whether they understood the real technical criteria of the software and there they did pretty well
William Band,
analystForrester Research Inc.

A recent report from Cambridge, Mass.-based Forrester Research Inc. found that 40% of the companies surveyed wouldn't recommend their CRM professional service provider (PSP) to others.

"One of the things that struck me is that software vendors have been beat up in this sector for a while," said William Band, Forrester analyst and author of the report. "But the consultants they use and depend on heavily don't come out as well as I thought they might."

Ironically, the primary source of dissatisfaction with PSPs comes from their relationships with clients, Band noted. For example, of the 119 CRM buyers Forrester surveyed, 50% said their PSP was not easy to do business with and less than half felt adhering to a budget was a priority for their services partner. Additionally, only 36% agreed that their PSP helped them lower the cost of implementation and the total cost of ownership.

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"The good news was that the most important criteria to judge PSPs was whether they understood the real technical criteria of the software and there they did pretty well," Band said.

Finding the right PSP is as important as ever. Forrester expects enterprises to spend about $3 billion worldwide on new CRM software licenses in 2006 and total spending on applications, vendor services and maintenance will exceed $8 billion. Roughly $6 billion will be spent on CRM consulting and system integration, according to Band.

However, cost and skills are keeping some companies from using PSPs. According to the report, 28% of companies said they had the skills to do the work in-house, and 22% said they didn't have the funds to work with an outside provider.

Companies undertaking a CRM project do have a number of options ranging from management consultants to the big systems integrators like Accenture and Bearing Point.

"The key is, clients really need to understand the role they want the consultant to play," Band said. "Basically each group has strengths. A client has to be thoughtful about who they select."

For example, peer management consultants are strong on strategy, but they don't implement so they get knocked for not being practical with technology, Band said.

System Integrators are seen as having the capabilities and reach, but their value proposition is out of line because the Indian offshore CRM players provide cheaper services. The offshore group is really growing practices, and companies are becoming more comfortable with them, but as a group they still have a lot of question marks about complex projects.

Indian PSPs mainly handle maintenance and upgrades. Finally, vendor PSPs are generally considered to be strong with their own technology but lack credibility when it comes to large, complex projects that require integration with other technology.

Band does offer suggestions for selecting a service provider. While strong contract language can help steer a project, the best method is to be clear about the scope and purpose of a project, Band said.

A consultant should be "rock solid" with the technology they'll be working with, and that they deal with the individual consultant who will be working with them, Band said. Companies should be careful of meeting with one consultant only to find someone new arriving on their door when the project is set to begin. Additionally, the PSP should have a similar culture to the client. For example, some firms like CapGemini are very focused on collaboration while Accenture is more focused on execution, Band said.

"Companies should firmly establish budgets, change requests and fixed price rather than open ended contracts," Band said. "The trouble often starts with a lack of clarity in scope and definition."

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