Dialling into the Back Office

The level of integration required between a front-office CRM system and back-office systems is another factor to consider when choosing between hosted and on-premise CRM. On-demand CRM vendors are offering ever-more robust integration tools. But, says AMR's Bois, "integration is always going to be an issue with software-as-a-service because you don't own the application or have access to the source code". And more sophisticated real-time integration with back-office transactional systems isn't possible with on-demand CRM software - at least today. "There's movement in that direction, but they can only import flat files asynchronously in batches," says Bois. "Companies that need to do that kind of [real-time] integration are more likely to stick with licensed software."

"It's not that on-demand software can't integrate," says Greenberg of The 56 Group. "It's just that the integration tools in traditional on-premise software are better. The more complex the integration requirements, the better off you'll be with on-site software."

ResortCom's Marxer says the integration of the RightNow on-demand software with his back-office system is satisfactory, but not what he would call ideal. "RightNow delivered on all the integration points we needed and the performance was reasonable," he says. But to open up a customer incident report, which an employee does only when an incident cannot be resolved on the first contact, takes 10 seconds because of the back and forth on the back end. That's just fine for ResortCom's needs at the moment, but "there's some room for improvement", he says.

Mike Davis, CIO of Stewart Information Services, agrees. Like Slusar at SunGard, Davis had to think about the needs of the far-flung sales and customer-service organization supporting the $US2.2 billion title-insurance company he works for. With a requirement that the software eventually support at least 4000 and as many as 8000 users, Davis had the option of becoming one of Salesforce.com's largest customers to date (in fact, small pockets of people within the company had already started using Salesforce.com on their own). But unlike Slusar, Davis ultimately purchased a licence for Onyx's on-premise CRM product.

Davis wanted to tie the CRM to all of Stewart's "day-in and day-out" systems. "We needed the most flexibility we could get in integrating it," says Davis. "And [Onyx] seemed to have much easier ways [than Salesforce] to integrate our system with theirs and theirs with ours - three different levels of embedding and exposing the information. There were modules of code available to use within our systems to make it easier."

Salesforce.com also has ways to get data in and out of Stewart's applications, in an import-export fashion, Davis says. But it would have required users to manually initiate the imports and exports in a less-seamless fashion than he would have liked. "We might have been able to make it work," says Davis. "But it wouldn't be very efficient. And it wouldn't have made for a very good user experience."

Easy for You, Difficult for Me

One of the major selling points for on-demand CRM is its relative ease of implementation, particularly in contrast to the expensive and lengthy roll-outs that have plagued the traditional CRM customer.

Indeed, at Qosina, the Microsoft on-premise implementation took more than a year. And the biggest cost was consulting fees, which, at $US280,000, made up half of the implementation expenses. Davis of Stewart Information Services is just finishing his Onyx pilot (for six sales-force units), which also required the added expense of two full-time and two part-time consultants. It took seven months longer than expected because midway through the process, Davis discovered some additional functionality that would be needed for the regional sales offices.

"It's taken longer than I thought," he acknowledges. "The biggest hold-up just has to do with change in general," including getting users to adopt the systems and change the way they work. The integration that drove the decision to go with an on-premise product won't even happen until the next phase of the roll-out. "It's a long road," Davis adds.

For companies that can adjust to an on-demand CRM system out of the box, implementation takes less time. But it would be a mistake to assume that all hosted CRM implementations are quick and easy. In fact, most take time to roll out enterprise-wide and many require bringing in consultants to help out. "Some customers have the expectation that you flip a switch and you're done," says Bois. "But there are setup costs and training costs and ramp-up costs. There's getting the system customized to match the business context and then getting people to use the system. CRM implementations are still complex, even if they're delivered in an on-demand fashion."