Solutions - traditional, sassy or sweet?

One of my business partners is in the process of implementing a new CRM solution. While I was debating with them the merits of the particular solution they've chosen, I started to think about the technology choices available to the organisation today. For most application areas we are beyond the make-or-buy decision, as there is a huge choice ofstandard offerings, but there are two major technology shifts that mean the buy choice can fall in to 3 categories. They are traditional licenced software, Software as a Service (SaaS) and Open Source Software (OSS).

Historically, companies were required to buy, build, and maintain their own IT infrastructures despite exponential costs. Even a small business with a few PCs needs to find somebody in their organisation to take on the role of the IT Manager – to install the applications, manage the new versions that come from the author at regular intervals, to make sure the systems and data are regularly backed up and stored securely off-site, to think about a disaster recovery plan – all the necessary technical and management issues that can rise to a significant overhead in any company and need a large team in bigger organisations. Software as a Service effectively redefines the software deployment model from packaged applications with upfront licensing fees and lengthy implementations to one that constitutes a dynamic, “pay-as-you-go” Internet delivered service relationship. This shift fundamentally changes the assumptions, relationships, partnerships, and value proposition between software vendors, clients & end-users, and third-party service providers.

According to an AMR Research study, over 80% of CRM software deployments either fail to add value, encounter significant adoption issues among end-users, or fail outright. Maybe this is why Salesforce.com is one of the companies at the forefront of the new wave of SaaS providers. An SIIA (Software & Information Industry Association) and Tripletree report last year showed a comparison between two successful CRM projects for 500 user systems. The traditional approach with Siebel cost $8.8m, whilst the new approach with Salesforce.com cost just over $1m. Although the difference will be less pronounced for smaller projects, the payback for a SaaS CRM system is typically in the 3 to 6 month timeframe, compared to 12 to 18 months with the traditional approach.

But the situation is complicated, in a good way, by the possibility of a third option - the OSS route. An option to compare with Siebel and Salesforce.com is an open source company called SugarCRM. They have a typical business model for this field. You can download the free version of the software, and tap in to the development community and message boards for help and advice, or even track down some consulting help from the community or SugarCRM themsleves. In this instance, I have a business partner who integrates the solution to their content management system, so they have the expertise, and a days consultancy from them could give a working installation. This type of company would even host it for me - price dependent on the capacity I need. Beyond the open source download, there are some commercial options with extra features which I can licence, or even buy as a Software as a Service offering for a monthly charge. Depending on the type of application and the business risk, you can argue pros and cons for the SaaS or OSS route, but the writing is on the wall for the traditional software licence option.

Technorati Tags : SaaS, ASP, OSS, Salesforce.com, SugarCRM, Siebel