A CRM system is not a stand-alone solution that magically gives you a better insight into your customers and delivers customer loyalty. CRM should be the fourth step in an up-front business planning process that first addresses business goals, processes, and people.

A business must establish clear goals and objectives, identify the processes that need to be in place to achieve those goals, and implement the communication and training required for employees to act in support of the desired objectives. Completing these tasks—which are potentially challenging and time-consuming—is a key success factor to ensure a successful CRM implementation.

Once business goals, processes, and people are in place, companies need to ensure that they select the right technology to enable their people to support the desired business processes. A company should not have to change business processes to accommodate technology, but should instead select a flexible, intuitive, and open CRM solution that supports both current and future business processes.

Understanding Your CRM Users And Their Needs

It is important to understand that there are two very different groups of CRM users in a company. The first group consists of customer-facing employees who use the CRM system to manage their daily customer interactions. The second group is the management team, who use the CRM system to report on past and future company performance.

Customer-facing employees should spend their time with customers, not entering data into the CRM system. For the front-line staff, flexibility and ease of use are critical. A flexible CRM system allows each employee to tailor the interface to work they way they work. An intuitive CRM system reduces barriers to adoption. A CRM system should simplify and automate repetitive tasks for employees, but many CRM implementations fail because they actually add complexity.

Management needs to be able to get business metrics from the CRM system, so flexibility and openness are critical requirements. Can the CRM system adapt to the unique processes of the company? Can the CRM system integrate with other software applications such as billing and order management systems?

So this leads us back to the process companies should go through before selecting a CRM system. Business goals, internal processes, and employee training need to be considered prior to CRM design and implementation. A good understanding of sales, marketing, and customer support processes will allow the company to configure the CRM user interface so that employees can focus on customers and not get lost in a data maze. A good understanding of overall business goals during the design and implementation process will ensure that management can measure, track, and report on the key metrics they need to understand past and future company performance, allowing them to make the right decisions to grow the company.

Employees should be aware of company goals and be trained on the necessary procedures to meet these goals. The CRM system should mirror these procedures so that system training becomes reinforcement of established processes, not technical training on a CRM system.

A great way to introduce CRM in any company, large or small, is to involve key employees from the earliest  planning stages. When employees understand the capabilities of the system, how it follows existing processes, how they will interact with it and how it automates and simplifies repetitive tasks, they can not only socialize the implementation with their teams, but they can make valuable contributions regarding the processes and desired functionality of the CRM system.

So here it is…The Secret To YOUR Success.

The two main acquisitions by Salesforce that give me pause are its puzzling $250m+ acquisition of hobbyist Ruby platform Heroku that no one was actually paying to use in production. Now, Benioff and Co. are shelling out $276m or so to acquire Radian6, a social media monitoring and analytics company.

What the #$%& is going on here?

Salesforce.com has spent more than half a BILLION dollars on a) platform tools that no one really cares about and b) a “cool” set of tools that really doesn’t add anything major to its core offerings (where, I should point out – Salesforce.com makes all of its money).

I think Radian6 does some cool stuff, really I do. But this multiple is ridiculous – and dangerous for the industry. It was bad enough hearing everyone freak out about Color getting a trillion dollars in funding (OK, maybe I’m off by a hair or two here) – but this type of overspending makes those shouting “BUBBLE!” seem like wise sages right now.

Salesforce paid a ridiculous multiple for a company probably struggling to grow profitably in a space that has not matured into a “must have” portion of the app stack for small and mid-sized businesses and may not for several years. While it is great to get insightful data from social channels, what companies have proven to have the right actionable processes in place to leverage this data in any valuable way?

Agin, social media monitoring is a useful tool – BUT – Radian6 was already tightly integrated into Salesforce.com. AND – I imagine that only about 15% TOPS of Salesforce.com’s user base really gives a damn about the kind of social media intelligence that Radian6 provides. Remember, Salesforce’s bread and butter is still the SMB and midmarket – areas where “brand monitoring” are not as critical as in, say, the Global 2000 (where Salesforce.com pretends to be a big player).

So, to recap, Salesforce.com has spent upwards of $500m+ to bulk up a platform that does not serve its core user base, and for a social media monitoring tool that its core user base has no desire or need to use.

Wow.

Just imagine, if Salesforce.com spent that money making its core CRM product actually easier to use, contain a less “Siebel in a browser” look and more of a modern web app feel, more reliable and less vulnerable to universal outages, etc. Imagine if they kept their actual core user base happy and actually still built CRM tools?

I guess we’ll never know…

In our discussion I made an analogy that I wanted to share. We were talking about how SugarCRM has not been all that vocal about our enterprise or general upmarket strategy – but we’ve been killing it in the SMB space for ages. But I think that we are going to make a lot of waves in larger enterprises thanks to Sugar being an amazingly scalable yet cost-effective platform to do…well, just about anything process or data-oriented.

That’s when I made the parallel between the real estate industry in the downturn and how SugarCRM can and will bring major value to enterprises.

For most people buying a $200,000-$350,000 home in 2011, that home was probably as high as $550,000 in 2005 in the height of our collective insanity (AKA the sub-prime mortgage world). That is a great value today and many people love that they can have the American dream without paying an arm and leg. That is the typical SugarCRM value proposition – a strong, logical value over the proprietary alternatives.

But in the enterprise, things are different – in a far more profound manner. Enterprises are like the much more affluent family buying a home valued at $2 million – which would have been $5.2 million in 2005. In comparison, this is a FAR greater value – even with a still seemingly high price tag.

SugarCRM is lucky to be both – the platform is so flexible, scales both up and down, and is intuitive for all users and developers. So, the smaller businesses get a great, ready-to-go solution, while enterprises can take advantage of the extensive platform and build amazing web applications and user/customer experiences to drive loyalty, save $millions and differentiate in their markets.

So, maybe it isn’t the best analogy – but it is worth noting that Sugar is a rare platform in its ability to be so well-suited for the smallest to the largest organizations. Pretty cool.

Oh, and of course, traditional marketing concepts like broadcast messaging and direct mail is dying. Today’s more savvy customer rejects any marketing message that is not relevant or catered to their actual interests.

So, how are you supposed to build your business, and stand out in a crowded marketplace?

Well, with the new integration between SugarCRM and Hubspot, you can begin to attract more prospects and understand customer behavior to create a cost-effective, closed-loop inbound marketing model. Now, you can begin to manage leads before they become ultra-qualified (and acquire them without overpaying for bogus lists). You can nurture leads and then convert them into opportunities in your CRM system – and track the effectiveness of your online conversion cycle.

With the combined process flows, reporting and the smooth marriage of marketing and sales in this Hubspot/Sugar connector – you can generate more leads, and be much more effective in your conversion funnel.

Discover what Hubspot can do for your SugarCRM deployment on their SugarExchange page.

To learn more about the integration between Hubspot and SugarCRM, check out our upcoming webinar focusing on closed-loop marketing automation.

Want to see how Hubspot and Sugar can help improve your lead generation activities?  Take a free test drive of the combined solutions here.

Many have probably seen that Salesforce.com has acquired web conferencing tools provider DimDim for $31m. (The rumors of this deal had been percolating since before Dreamforce so for many this was no surprise at all.)

The deal pits Salesforce.com in many ways against some big companies and very popular products – Citrix’s GoToMeeting and Cisco’s Webex, in addition to IBM’s Lotus Live set of offerings. With its recent platform buy in Heroku, and this new move, it is funny to see Salesforce continue to add competitive concerns and look to enter in large markets where it has no clout, rather than look to live above the competition in one market where it already does well. Confident move?  Yes. Smart move?  Well, we’ll just have to wait…

And while the DimDim acquisition clearly places SFDC in competition with the likes of WebEx and GoToMeeting, Salesforce would like to look at this differently. Salesforce instead sees this as a pocket acquisition to bolster its Chatter functionality – a tool it is already basically just giving away to gain some stickiness for its actual paid apps. So, if SFDC does not really see much future for DimDim save for part of what is now a free add-on, then the $31m price was not a huge price to pay to make a cool new collaboration feature a little more robust.

But again, if Chatter is basically free at this point, why buy DimDim? The product was open source under the GPL. Couldn’t SFDC simply create an integration to the free tool and offer up that integration along with a simple installer to add video and screen sharing tools to Chatter?

I think the answer here is two-fold. One, I have not yet seen SFDC do anything that resembles open source. Yes, they have opened up their toolkits and platforms for developers, but everyone does that. There is just not that type of culture alive at SFDC in my opinion. This is a company steeped in the grand history of proprietary software.

The second reason (which is definitely intertwined with the first) is that due to SFDC’s multi-tenant model, adding DimDim-like resources without wholly owning the code would be problematic. As we know, in order for SFDC to really have a tight handle on anything its users touch, it has to run on its monolithic platform. This makes upgrades and other things easy, but does set limitations on how SFDC can go to market with technology it doesn’t own.

It will be interesting to see if the nature of a GPL licensed piece of software sitting inside a huge multi-tenant database has any effect on the way in which Chatter users are empowered to make, own and redistribute changes.

All in all, this is chump change for SFDC, and while it plots them theoretically against big names like Webex, I can’t see Salesforce actually making any huge headway into standalone video conferencing with the DimDim technology (After all, Cisco’s Unified Communications suites are pretty awesome and light years ahead of where a DimDim-powered Chatter tool is today). Most likely, Salesforce.com will only relegate the functionality as a nice add-on to Chatter.

One of the curious things I have seen, however, is that Salesforce.com continually seems to be moving away from its core product message. While SaaS and “the cloud” have permeated the company’s message to date – at least in the early years when the company was ramping up we heard a lot about the actual business software it was developing.

Now, apart from Chatter, I have not heard much about actual CRM features from Salesforce.com in what seems like years. Now, I am sure they are developing the apps – don’t get me wrong. It just does not seem a focal point anymore.

Why? Well, there are a number of possibilities. I’d like to explore two potential options. (Both, one, or neither could be true as I am just postulating here.)

One explanation about the perceived lack of actual feature/CRM development is that the actual Platform capabilities of Force.com are a reality. (And not, as one observer called it – “Farce.com.”) What I mean is that if Force.com is even half as easy to use as say Sugar Module Builder and Sugar Studio – customers can build features they need so that Salesforce.com does not have to do so. This is a possibility – but the limitations of the multi-tenant model make truly deep code-level customizations hard to perform and manage in terms of upgrades etc.

Another option, and this one is far fetched I admit, is that Salesforce in time will shift its revenue model away from application subscription fees and into data services fees of various types.

Huh? You mean Salesforce.com would STOP charging for what has proven a potential multi-billion dollar business?

Well, yes and no. Salesforce.com has created a huge revenue stream for itself, granted. However, it’s prices are proving too high for the market in terms of value received. Even Microsoft is coming down to SugarCRM price levels. For Salesforce.com to compete effectively against better engineered CRM software and highly competitive pricing – it needs to innovate in new ways.

Salesforce.com’s multi-tenant model makes it difficult for the company to offer a lot of different vertical, geographic, etc. solutions, since there is technically “one version” of the system. But – Salesforce.com’s multi-tenant model makes it perfect for another concept – data collection, segmentation and other data-centric services. Having one HUGE database of customer, product, sales information, etc. about thousands and thousands of companies – coupled with data from it’s Jigsaw acquisition and the type of customer sentiment data from Chatter – and that becomes a valued asset.

Salesforce.com seems to be on some sort of track around this, with plans to offer  a free, stripped down version of Chatter to any interested party in the coming weeks. This would allow non-Salesforce.com users to enter data into their huge environment and allow Salesforce to leverage that data in any number of ways. I think of Salesforce taking the cue from Google – understanding thew value of data and information, not plain out of the box apps.

I do not think Salesforce.com would abandon what is a highly valuable revenue-stream any time soon.  But it does seem to have an innovation gap happening in CRM. And if it were to couple seriously interesting (to marketers especially) data services with its core CRM tools, it might be able to at least sustain its bloated pricing rates for the time being.

I have railed against the company’s multi-tenant architecture as limiting for some time. But here I think its huge database might be how it remains a relevant company in the future.

On the other hand, I think Chatter has been over-hyped in a dangerous way, one that will lead to failure for Chatter as a product line for Salesforce.com.

And since I’m feeling particularly snarky on this pre-Labor Day Friday, I thought I’d jot down a “top 5″ list of reasons why I think Chatter will prove yet another one of Salesforce.com’s interesting, but ultimately unprofitable ventures.

Here we go…

1. Chatter is only an internal collaboration tool. There are many of these available, but more important is the fact that if Chatter is the lynch pin of Salesforce.com’s “social” strategy it is missing one very important thing – customer engagement. Unless Chatter “opens up” and becomes a true community/social engagement tools for users to collabroate and engage with real customers in real time, it is going nowhere in my opinion.

2. Chatter is not enough to unite departments and override data and people silos. I get that millions of users are on salesforce – but they are all ONE department inside an organization. To really benefit from the tenets of Enterprise 2.0 – all departments need to be on the same page – and I simply do not feel Chatter is equipped at this stage to be a unifying app to make an externally hosted system THE main collaboration platform. Not yet at least.

3. Chatter (and Salesforce.com) costs too much to have wide appeal. At $15 per non-CRM user, Chatter’s pricing will creep on a large organization. And smaller firms can simply collaborate in person or using IM or other tools – and resist adding even more fees to an overpriced CRM bill. I think Salesforce.com has some cool ideas around Jigsaw and adding data updates to the CRM and alerts to new data changes via Chatter – but at that rate we are looking at $45 per user, per month for someone using Chatter with Jigsaw alerts – and they get ZERO CRM capabilities to boot! If a user was using Salesforce’s Enterprise edition and Jigsaw they could be paying nearly $2000 per user per year!!!! Compare this with SugarCRM which gives you all this stuff for $30 per user.  Yes, there really is the opportunity to cut your CRM and collaboration costs SEVEN TIMES with SugarCRM versus Salesforce.

4. (Do I really need to keep going after pointing out how ridiculously expensive this stuff will be for a company?  Ok, I’ll go on…) Salesforce.com’s outdated multi-tenant model will hold Chatter back. Look, Salesforce has a lot of cool ideas for Chatter and its web site shows some suggestions for use – document sharing, etc. But is there a Chatter developer kit?  can there be one?  Will salesforce.com let people really take Chatter and run with it to create collaboration engines that integrate between applications, departments, inside and outside multiple firewalls, leverage Oauth to activate engagements through multiple social networks? I don’t know, but I doubt it. Chatter seems like a great idea locked inside a limiting architecture – yearning to break free.

5. Adoption will be underwhelming. CRM vendors sell into sales and marketing and support departments. These guys have a lot on their plates, and most have no “social agenda.”  Salesforce.com in my opinion would be better off simply selling the value of its core solutions, which are solid well-built apps, instead of branching off into these new areas where it has no domain expertise. I toyed with #5 being “Salesforce has lost its focus” but I think that happened years ago. But seriously, as noted in #2, I think there are way too many barriers to success for a concept like Chatter as a paid-for tool. I am not saying Chatter doesn’t do what it says it does 9for the most part it does) but I think that Salesforce.com must leverage Chatter as a “cool add-on” or value-add rather than expecting this to be a profit center, because I think they are too far ahead of the pace considering their true target market.

…OK, those are just a few of my thoughts around Chatter. Ultimately, I think Chatter is cool, but underwhelming as a standalone product line. Maybe that is why I did not make more hype around Sugar Feeds – I simply see that most companies are wrestling with getting core CRM right, social-collaboration is rocket science to them – foreign and scary. Being asked to pay extra for these kinds of features must feel like a slap in the face.

Maybe I’m wrong. I mean, the Jigsaw capabilities could be really hot for Salesforce. Or, maybe the majority of small businesses are still learning to walk with CRM and getting social…paying a ton of additional money with no clear ROI path to start running with social and CRM might not make sense for a lot of companies right now.

Sugar Feeds - Social Collaboration without the hype or high price tag.

But looking at Michael Maoz’s recent blog post around customer service vs. social. He makes a great point: good service is a must-have goal of any company and you need to man the phones, handle email well and essentially do all the traditional customer service channels well if you want to be a great company.

All to often, both companies and consumers are finding themselves accepting social as a band-aid to bad service rather than an additional tool to extend the relationship. This is dangerous: simply clinging to a new trend could be damaging to your brand, and how your customers see you.

The “Comcast cares” initiative is a great one. While yes, the Twitter users may help some customers – the campaign’s popularity is a glaring indictment on how bad Comcast’s traditional customer service is, and how low in esteem consumers hold the brand.

Sometimes, cutting the corners can be an efficient means to gaining new capabilities. SaaS CRM is a good example of that development. But with customer service, we can not simply jump to social alone. There are far too many people and processes that need to occur via traditional mediums and with the help of real people, etc.

And ultimately, this could be said about all areas of CRM: sales people are not ONLY going to use social tools to ferret out leads and try to close deals. And marketers will still mail, email and perform webinars and ads in addition to Tweets and Facebook campaigns.

Really, what is the ideal role for IT when it comes to adding social tools into the day-to-day life of sales, marketing and support agents?

I am not saying I have the answers. )If I did, I wouldn’t be blogging about it while shirking my duties getting Sugar 6 out the door ) But it is an important question to ask, and I think your previous IT decision (especially in CRM) will dictate how much IT should or must be involved in this stage of your CRM lifecycle.

What I mean by that is that many older, and current proprietary approaches to CRM make it very hard for the end-user to add full featured tools like Twitter or SalesView into their CRM interface and processes without jumping through hoops with IT. For some, this is a good thing. For others, it is a headache.

It all depends on how you view the concept of control. Do you want to lord it over your employees, or do you want to empower them?

I use the SalesView example because it is a great one in terms of playing both sides of the field; it took me about four minutes to get SalesView installed into my SugarCRM installation. But that is because I had admin rights. As an average everyday CRM non-admin user, I can consume the valuable data in SalesView without embedding it in my CRM system – but the overall value and productivity gains are diminished.  So, I can expand beyond my IT-controlled database and circumvent IT in some simple ways – but to fully gain the value of social CRM and sales 2.0 – IT has to have some bit of involvement.

There are a LOT of “social CRM” projects and offerings popping up.  The pro is that they are simple to get up and running and can help a business professional make sense of his social web as it pertains to his work life. But the downside is that these are not true CRM tools, and can not replace the strong, centralized CRM system’s value.

Again, I don;t have the answers. But for now – it seems that to truly drive the most value out of social CRM – a balance must be struck between empowered individuals and the governance of IT.

It was an interesting talk – and brought up some interesting points. I think the most interesting one was not necessarily around SaaS, cloud or open source technology but rather about what the culture of “open” means in the age of the cloud and the age of social.

Really, I think more and more people are feeling less “locked-in” by companies like Salesforce.com or other older proprietary vendors. People are seeing the myriad alternatives and the emergence and growth of all of these companies in the cloud proves that there is opportunity and a clear migration path from proprietary and closed SaaS apps.

End user organizations of all types are starting to reject the notion of traditional SaaS – finding point products on a single server farm an untenable scenario. Of course, there are a ton of organizations out there that do not care about the limitations of traditional SaaS – but there are sooo many companies that need access, ownership, control, etc. – all the things that “open” offers. This is not a zero-sum game here: Salesforce.com can continue to grow even as open cloud companies like SugarCRM become huge as well.

I’ve seen a lot of ridiculous documents from competitors trying to bash Sugar as a product based on it being open source. They liken the application to a pile of car parts – claiming you have to assemble parts to make Sugar work. That is obviously a bogus analogy: in reality as Larry notes SugarCRM is more like any car you’d buy off the lot that enables you to open the hood, make changes to the cosmetics and/or drivetrain, etc. You OWN the car! Traditional SaaS in a lot of ways is like leasing a car, where the hood is welded shut and there is a gas cap that only the dealer can open to fill – at their rates. (I hope Larry doesn’t mind my extending his analogy.)

But ultimately – as Marten and Larry point out – by empowering customers and giving them control of their data – you enter an engagement lifecycle that provides value and a relationship built on real benefits – and that is more powerful than any artificial lock-in strategy out there today.