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July 24, 2014

Why ‘best of breed’ CRM could be the sweetest suite of all

"One size fits all" approach can often hinder development, says SugarCRM head.

By Cbr Rolling Blog

Businesses all around the world are turning to customer relationship management (CRM) in an attempt to better engage with their customers and their own internal processes. But what is the best approach for a company looking to implement it for the first time? CBR spoke to Martin Schneider from SugarCRM to learn more…

CRM has grown to become a multi-billion dollar industry and CRM software is now utilised by the smallest and largest businesses around the globe. The benefits of CRM are numerous and undeniable: more efficient internal operations across sales, marketing, support and the entire customer-facing organisation, as well as increased customer satisfaction through a dramatically improved customer experience.

However, a new undercurrent has emerged in the world of CRM, one that threatens to compromise the benefits described above. Continued consolidation in the CRM space has prompted leading vendors to attempt to offer inclusive "suites" that cover marketing automation, sales automation and customer support automation. But even with the billions spent on these acquisitions, ultimately it’s a losing strategy. Given the unique needs of companies managing complete CRM initiatives, a "one size fits all" approach is inherently flawed. On the flip side, a best-of-breed approach that leverage a wide array of features, delivery mechanisms and diverse pricing constitute a winning formula for CRM initiatives moving forward.

In theory, IT departments deploying only one CRM product to cover these far-reaching areas could save on costs and reduce complexity. But when one considers the reality of business and the unique needs of each company — big or small — the "suite" approach can offer only limited ROI for any company deploying that suite.

By nature, software suites limit choice and extensibility for customers, and typically halt innovation on the part of the supplying vendor. Conversely, best-of-breed CRM approaches offer far greater freedom of choice, more economically sound deployments and the ability for user organisations to access more advanced solutions and drive innovation among vendors.

CRM is a unique sector in the enterprise software market in that the requirements placed on the software vary on a near one-to-one basis. This means that every single CRM deployment is different. And having only one type of product to choose from across your entire customer lifecycle can be dangerously limiting. We have already seen this concept fail: Siebel Systems, before being acquired by Oracle, made its way into "suite" status, only to see its new license revenue drop 90 percent due to an inability to match product value with buyers’ needs.

Let’s look at two different companies as examples. One company has 300 employees and provides professional services; another is a large global manufacturer of consumer packaged goods with 7,000 employees. If these two companies chose the same suite provider, each would be expected to use the same tools for its marketing, sales and support — essentially every customer-facing process. But these companies are quite different and have very specific needs when it comes to these processes, not to mention unique budgets. One will have functionality that the other may not be able to use; or the suite may cost more than what the company would ideally be able to pay.

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Now let’s examine a best-of-breed approach for these two companies. The smaller services firm could work with a leading CRM vendor such as SugarCRM for its core sales automation needs, yet also use a tool like Act-On or Marketo for its marketing needs and a SaaS helpdesk tool such as Zendesk to handle customer support issues. The larger manufacturing firm could use Sugar to manage its revenue processes with data augmentation from Dun & Bradstreet, while leveraging IBM’s Unica acquisition for deeper marketing capabilities. Its high-volume call center could be managed by Sugar on top of telephony tools from Avaya or Nortel. For enterprise reporting, the smaller firm could use a tool like Entrinsik’s Reporter integrated with Sugar; the larger firm might opt for Sugar Analytics powered by IBM Cognos Business Intelligence based on more enterprise-grade customer segmentation and pipeline effectiveness reporting needs.

In each scenario, the customers benefit from the power of choice. Not only does each organisation access the software that better fits their needs, but their IT budgets are more aligned with the value received from these tools. For example, a SaaS-based Zendesk deployment is far less expensive than a full-scale call center infrastructure system installation, but each purchase matches the actual needs of each organisation.

For the industry, best-of-breed also drives innovation. Consolidation, on the other hand, breeds stasis. With many providers competing for market share, the customer ultimately wins. Products are enhanced in a more timely manner, and companies build products based on real market needs, not to simply increase feature checklists in a suite.

Many providers of suites will say that they too can offer integration capabilities similar to other products like those previously mentioned. While that may be true, companies will invariably pay significantly more to access those additional tools and systems. Why? Because suite vendors will still price their solutions as a suite, forcing customers to pay for software that they may never utilise if they are leveraging a smarter best-of-breed approach on top of a suite.

In an IT universe where the cloud makes for fast, simple and more seamless integration than ever before, it no longer makes good business sense to pay a premium on an enterprise CRM suite. The variety of choice and breadth of functionality available today tells us that best-of-breed has now become the winning strategy for enterprise CRM deployments.

Martin Schneider is head of product evangelism at SugarCRM. He is a former industry analyst covering CRM with 451 Research.


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