Shopping Guide: Choosing the Right Web-based CRM Software

Lauren Simonds

Updated · Mar 21, 2010

Choosing the right Web-based CRM service (aka, SaaS) for your company can be challenging in a marketplace full of vendors offering similar services. But doing a little soul-searching about what your company priorities are can help clarify the options.

Before evaluating the competition in the field, China Martens, senior software analyst at The 451 Group, says companies should ask, “What is of key importance to you?”

One piece of common ground among all companies choosing a SaaS CRM solution is ease of use. Getting a sales team to embrace a new interface has historically been the challenge in CRM software. “You have to get your users to embrace it, and if they can’t engage with the application, then you’re going to have a problem… It’s a very personal approach,” says Sheryl Kingstone, director of The Yankee Group’s enterprise research group. “If you take a look at the [user interfaces], they’re all very different. NetSuite is very graphical… whereas Salesforce is very list oriented.”

In today’s increasingly mobile workplace, evaluating the user interface isn’t just limited to the UI at the workplace. “Because these applications can be logged on anywhere, anytime, as long as you have a browser… a lot of companies are really looking to what’s going on with the iPhone and the BlackBerry,” Kingstone says, “and a lot of the applications view very differently on the different devices.”

Different companies have integrated mobility into their offerings in different ways. “ has embedded mobility into their platform where NetSuite has partnered for it,” Kingstone says. “So you can go to a partner to allow access to NetSuite’s application on a BlackBerry. Same thing with Microsoft. So those are little nuances that, if that’s a priority for you, you’ve got to consider.”

Finding an interface that will work for your company is key, but equally important is being able to integrate the new software into existing systems and to customize it. “A lot of features today are commoditized,” Kingstone says, “so what you have to really look for is whether the platform can do what I’m looking to do. Can I easily change it for my business processes? If the platform doesn’t allow for ongoing change management, then you’re stuck.”

It’s important to ask the right questions up front when approaching different vendors about customization. “One of the key differentiators that Salesforce and Microsoft have really pushed over the last couple of quarters is the ability to develop custom CRM applications,” says Rebecca Wettemann, Vice President of Research at Nucleus Research, “So rather than just doing sales force automation the way Salesforce wants me to do it, I can really build almost anything that includes data, processes, workflow, using the platform platform. Same thing with Microsoft xRM.”

Some companies may feel the need to integrate social networking into any CRM solution, but Kingstone says it’s so new that it is probably too early to use it as a factor when choosing a SaaS CRM provider. “I wouldn’t base an application decision on where these companies are for social networking today because it’s so new, but I would make sure that you understand the role of social networking into your product planning,” she says.

For many companies, acquiring a SaaS CRM solution is just a first step. If your company is ultimately happy with the SaaS CRM experience, you may want to explore the SaaS deployment model further. To that end, it’s important to be aware of what other services or partnerships the SaaS CRM vendor may offer.

NetSuite, for example, has “financials, e-commerce, more traditional ERP offerings as well as just CRM, so more of what you might think of as a traditional integrated ERP suite,” Wettemann says. “If somebody’s going from, say, a QuickBooks to NetSuite, and they like the NetSuite CRM functionality but haven’t necessarily invested in CRM before, it might make sense for them to take advantage of NetSuite’s CRM functionality because it’s already integrated with the financial product. If someone’s looking strongly for CRM and already has a financial application in place that they’re comfortable with, they’re likely to go with one of the standalone vendors: either Salesforce, Microsoft or RightNow.”

Regardless of which vendor your company decides to go with, it’s essential to ask potential SaaS CRM vendors how your data will be stored. “What happens if my SaaS vendor goes away?” asks Martens. “What happens to my data?… If you are seriously thinking of migrating from one vendor to another, there are all these deals [where they promise to] help with migration. What does that really mean in terms of how much a vendor might help you?”

In addition, “You really do want to look at what those ‘out’ clauses are,” says Kingstone, “What are the cancellation policies? How easy is it to move my data? You own your data, but the question is how do you move it? In what format? To where?”

Security is another key concern. “Most [SaaS CRM vendors] now are SAS 70,” says Wettemann, “and we haven’t heard of big challenges with security for them.”

The Statement on Auditing Standards (SAS) No. 70 is an auditing standard developed by the American Institute of Certified Public Accountants. “If you survive the audit, it’s a sort of a Good Housekeeping Seal of Approval for physical and cyber security… One of the things that I think anybody thinking about purchasing SaaS technology should do is ask about the SAS 70,” says Denis Pombriant, founder and principal analyst of Beagle Research Group.

Another way to evaluate a company’s security record is simply to ask about their other customers. “I think if you wanted to feel very secure about things, you’d really want to know what larger customers a SaaS company might have had,” suggests Martens.

Data security is constantly evolving among the SaaS CRM vendors, Kingstone says, and this can be a benefit to some companies. “Most of these companies have invested in state-of-the-art service level type systems and redundancy and security, better than most internal data center departments have,” she says. “When IT gets really nervous about security, I point out, ‘Well, what are your policies and how good are they? Because they’re usually not good, unless you’re a financial services institution or a pharmaceutical company; there are certain industries that are leading the way with systems. But on average, most companies are not.”

Pricing is often the biggest factor in deciding whether or not to embrace a SaaS CRM solution. “The important thing to remember about pricing in on-demand CRM is that it is extremely competitive,” Wetterman says, “and that these are not perpetual licenses, so salespeople are on the hook to keep their customers re-upping their contracts on an annual if not biannual basis, and everyone knows who everyone’s accounts are, so it becomes very competitive around that time.”

Still, Kingstone advises companies to be careful when locking in a deal. “It really all depends on how many users, how long is the contract, how difficult is the implementation,” she says. “There are a lot of ‘gotchas’ there.”

Before diving into the crowded and evolving marketplace of SaaS CRM solutions, it’s important to establish a set of criteria on which to evaluate the vendors. This process starts at home, with a closer look at what your company’s needs are — needs that will dictate the scope and type of solution. “What you have to do,” Kingstone says, “is you’ve got to make a list, a weighted list of what your priorities are.”

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