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CRM Software Negotiation - Whitepaper (4 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 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 Customization
  7. Improve Customer Support
  8. CRM Service Level Agreements
  9. Avoid Unexpected Changes
  10. Value Added Contingencies
  11. Summary

While the SAAS CRM model's benefits include subscription pricing, hosted delivery, outsourced IT administration and much lower total cost of ownership, its success is entirely predicated on constant uptime and system availability. CRM SAAS system downtime translates to lost productivity and negates any benefits. There's good news as almost all SAAS vendors offer Service Level Agreements (SLA) to demonstrate continuous operations without interruption. The bad news is that very few of the SAAS vendors actually maintain continuous uptime or provide any type of real relief as part of the SLA. If you are acquiring a SAAS CRM solution, it is nothing short of critical to make sure you acquire the following SLA provisions.

  • A minimum uptime guarantee -  Most SAAS software vendors will guarantee 99 percent or better uptime which is very respectable.
  • Guarantees beyond uptime -  The more experienced SAAS CRM companies will acknowledge other performance factors such as jitter, latency and performance cycle time. Each of these factors has a direct impact on system performance and the user experience.
  • Inclusion of maintenance periods -  It's no secret that a few of the largest CRM SAAS providers use the guise of "maintenance" to hide downtime. This simply cannot be allowed. If the vendor refuses to include scheduled or unscheduled downtime due to maintenance in downtime calculations - and you choose to still do business with them - determine how much maintenance time was incurred during the last 12 and 24 months so that you clearly recognize how much downtime your users are going to incur. The downtime maintenance periods will surprise you.
  • Financial guarantee -  It's also somewhat common for SAAS CRM software companies to guarantee uptime, however, put no financial backing behind it (so it's not much of a guarantee). Insist upon financial credits for failing to meet uptime guarantees. Also insist upon optional early contract termination if multiple system interruptions are incurred.
Special Note

Special Note:  While has incurred the most publicized system interruptions and downtime, they have responded with While we like the concept, we find their willingness to only display the last 30 days of system performance elusive. Aplicor is the only other SAAS vendor willing to display uptime. The Aplicor site also displays jitter, latency and performance factors which impact the user experience.

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While the use of escalation charges has always existed, the dramatic rise in up-selling as well as blatant bait and switch tactics performed by a popular SAAS CRM software vendor require special considerations in order to eliminate surprises.

Know your version limitations -  There are generally significant price differences between versions for vendors that sell multiple version product lines. The SAAS market place has become littered with frustrated customers whom didn't recognize the lower cost version they acquired failed to satisfy user needs or provide necessary functionality.

Data storage -  Several of the CRM SAAS solutions provide a fixed amount of storage and then tack on additional fees for additional storage. While the concept is not unreasonable and the storage allotments are generally fair, the cost for additional storage is fairly high. Determine in advance if you believe the storage allotment is insufficient, and if so, negotiate either a larger allotment or a reduced fee for excess storage.

Additional user fees -  Lock in the software price and discount for additional users in the future. As user counts go up, so should discounts.

Hardware platforms -  Try to avoid software licensing schemes based on hardware platforms. Eliminate text that requires upgrade fees in connection with a change to a larger or different hardware platform.

Subsidiaries and affiliates -  There are generally significant price differences between versions for vendors that sell multiple version product lines. The SAAS market place has become littered with frustrated customers whom didn't recognize the lower cost version they acquired failed to satisfy user needs or provide necessary functionality.

Site licenses -  If the license limits the use of the software to a specific site or number of sites, then the client should have the right to change the site(s) from time to time without any obligation to pay a transfer fee.

Temporary operation -  Ensure you have the right to temporarily operate the CRM application software on multiple servers and networks during the time required of a physical move between locations as well as for disaster recovery and business continuity testing or resumption.

Optional upgrades -  You should not be expected or pressured to accept or install upgrades at their first available offering - or within a specified time frame. We generally recommend not implementing an upgrade until the first point release has been issued.

Frequency of upgrades -  Although not a guaranteed schedule, the vendor should indicate the estimated frequency (intervals) of upgrades.

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