Small and medium-sized businesses (SMBs) need customer relationship management (CRM) software just as much as their big-company competitors do. It not only automates many time-consuming sales and service-related tasks, such

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as fulfillment, but it also provides a 360-degree view of customer buying habits and problems.

But purchasing the right CRM system -- one that fits the budget and really works the way the staff needs it to -- can be daunting for a small firm. And price is almost always the first and most problematic stumbling block for SMBs.

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"It always comes down to cost," said Jim Berkowitz, CEO of consulting firm CRM Mastery Inc., based in Denver. "I say to people, this is not about spending money. It's about making an investment that should bring a return to the business."

Both Berkowitz and Steve Raye, executive vice president of eVergance Partners LLC, a CRM consulting and integration firm in Overland Park, Kan., strongly advise IT managers at SMBs to treat CRM as a long-term investment, and resist the urge to grab the cheapest package available. That, they say, will only create more expensive problems down the road.

Besides price, there are five other key issues that any SMB IT manager needs to consider when buying a CRM system, Berkowitz and Raye said.

1. Think integration.
Like enterprise resource planning, CRM is intended to provide an integrated set of sales and service functions and a consolidated view of all customer data. It enables employees to access all their tasks and data from one application, rather than consulting multiple screens and re-entering data. But SMBs too often decide to purchase just one part of the CRM suite -- the sales module or the support package, for instance -- and try to use it alongside their existing marketing, billing or customer service applications. That, experts say, is almost always a mistake.

"They're not thinking about how it will integrate with the stuff they've already got. And that always comes up sooner or later," Berkowitz said. "They underestimate the technical issues involved in integration."

2. Compare workflows.
Small companies usually have different workflows for sales and service than large enterprises that have many departments and more layers of management. Therefore, it's imperative for SMBs to check how a CRM application handles key processes, such as requesting and mailing out marketing materials.

"A good example is Oracle On Demand," Berkowitz said. "That package was designed for big companies. I looked at one customer service process [in Oracle] that took about five or six screens to accomplish. That's logical for a large firm, but not for a small one with two customer service agents."

3. Investigate SaaS options.
Some Software as a Service (SaaS) providers offer full CRM applications for a per-user monthly fee. The provider hosts the software so the customer incurs no additional hardware or maintenance costs. It's also usually faster and simpler to get up and running than it is to deploy a CRM application in-house. So unless you have complex integration or functionality requirements, SaaS may be the best way to go, advises Raye. "It's hard to make the case for on-premise CRM these days, especially for SMBs."

4. Check your customization abilities.
Whether you buy the software or subscribe to a service, check beforehand to see how easy (or not) it is to customize to suit your needs. "Different packages offer varying configuration and customization tools, including scripting languages. Think about which ones are best for your internal skill sets," Raye advised.

5. Budget for changes.
Whatever the final price tag, leave a little extra room in the budget for unforeseen modifications and other work that may be required. Most companies find lots of things to add or adjust in their CRM application after it's up and running. New types of reports, an extra data field or two, and other small items quickly pile up, so budgeting ahead of time for those changes is just common sense.

There's no set percentage, Berkowitz said, but your extra budget should be enough to handle a few hours of work each month. "Even just $500 buys four or five hours of work to get a new screen or a couple of new reports or whatever is needed," he said. "For CRM to be successful you have to have resources to get those things done, or else it just becomes a big frustration."

Sue Hildreth is a Waltham, Mass.-based freelance writer specializing in enterprise software. She can be reached at

This was first published in February 2007

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