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CRM Software Negotiation - Whitepaper (3 of 5)

Customer Relationship Management Software Negotiation Survival Guide

This second version advisory was written by CRM analyst Rob Kane based upon his twenty two years experience
in negotiating CRM software license agreements. The crux of the paper's approach and recommendations
focuses on achieving a fair price and advancing the vendor's cooperation, participation and vested interest.

With over 12,000 downloads, the original document has been widely cited in several industry publications and
community web sites as well as commented on by countless readers. This updated version has been enhanced to
include the new software as a service (SAAS) delivery model and the particular experiences learned thus far
from the more popular SAAS CRM vendors. This paper provides no legal advice or representation.

  1. Preperation and Prerequisites
  2. Validate CRM Decision Making Criteria
  3. Become a Preferred Customer
  4. Achieve a Fair CRM Software Price
  5. Lower Risk and Cost with Seasoned Consultants
  6. Caution with CRM Customization
  7. Improve Customer Support
  8. CRM Service Level Agreements
  9. Avoid Unexpected Changes
  10. Value Added Contingencies
  11. Summary

CRM software customization is one of the most widely cited causes of failed software operation. If customizing the CRM software is part of your implementation, be sure to insert the below provisions into your agreement.

Follow the SDLC -  To reduce the risk of failed or unstable software customization you should enforce as part of the Agreement that any software customization or development will follow the same development approach as dictated in the vendor's software development life cycle (SDLC). Vendors have been known to cut corners on software development to either reduce costs or accelerate time frames. Such a practice normally results in poor quality, unstable and bug ridden code which is further difficult to upgrade. By mandating conformance to the vendor's SDLC, proper design, development, testing, quality assurance and extendibility should all be achieved. It is also advisable to require the vendor to provide notice in writing if any customization or development may impair an upgrade path or otherwise limit future upgrade opportunities.

Approval of software modification -  Unless otherwise agreed, the software publisher should not be permitted to perform a "one-off" or to alter the client's commercially available software application in order to fix, tweak, troubleshoot, repair or solve a particular issue or request if that modification were to involve a 'code' change, have the potential to impair the upgrade path, have the potential to lessen outside support resources or alter the application from the commercially available product.

Intellectual property rights -  Who owns software customization code created by the vendor but paid for by the client? There are very diverse answers to this question. Many buyers feel adamant that they are solely entitled and own the copyright on software modifications or new software development which they paid for. The downside to this approach is that several of the CRM vendors will not agree to such a stipulation. Further, it is generally advantageous if the vendor incorporates the modified software into their commercial product as they will then continue to enhance and support the software modifications.

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We've always found it ironic that a few CRM software companies choose to put access and financial barriers in front of their customer support. Some limit available options, some relegate support to untimely e-mail exchange, some use nickel and dime tactics to charge for support and some choose to require significant financial outlays to gain the needed support level. Irrespective of the various support plans available, including the below provisions into your software agreement will accelerate getting the help you need when you need it.

Guaranteed response time - Response times should be dependent upon the severity of the software problem. Some vendors will provide guaranteed response times and some will not. For those that don't, at least identify what their average response times are.

Escalation provisions - The Agreement should state the escalation provisions, based upon problem severity, for when such guaranteed response times are not fulfilled.

Designated account representative - Gaining a dedicated vendor liaison can dramatically improve your professional life and enhance the overall relationship. To ensure that your Account Representative has access to company resources, this person should be physically located at a vendor site and work normal business hours. The primary roles of the Account Representative are to act as a central liaison between the customer and vendor and to quickly identify and solicit needed vendor resources, to implement escalation provisions for open items or issues, and to be a general one stop shop or source of information. This position is often a coordinator which can quickly navigate through the vendor's organizational maze to find the needed resources for any issue.

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