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| RealMarket Stock Index |
| RMSI | 56.39 |  | 1.02% |
| Dow Jones | 12,099.30 | | 0.02% |
| Nasdaq | 2,348.68 | | 0.09% |
| S&P 500 | 1,379.76 | | 0.15% |
| Top Gainers |
| Witness | 17.71 | | 17.71 |
| Teletech | 18.9 | | 3.10 |
| Sykes | 21.35 | | 0.79 |
| Top Losers |
| RightNow | 16.03 |  | -1.05 |
| salesforce.com | 40.31 | | -0.90 |
| ICT Group | 31.27 | | -0.66 |
| Complete Stock Index |
| As of close 10/25/06 |
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 "Our Take" - Vendor Viability
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"Our Take"
"Our Take" is a collection of daily
vignettes covering a wide range of CRM topics. It's an attempt to add our own spin to the world of CRM. We will use the column to share our perspectives, opinions,
epiphanies, web nuggets, or quite frankly anything that moves us. Get ready to expect the unexpected. And, don't be shy about sharing your thoughts.
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10/24/06 - Selection Criteria
Yesterday I shared Gartner’s findings of "radical changes" in importance of various selection criteria for CRM solutions. In short, they see vendor viability and technical architecture becoming more important, while functionality and price diminish in importance.
Rather than a big shift in user needs, I really see this as a shift in the vendor landscape. Why? First, the rash of consolidation among vendors big and small has not gone unnoticed. Most mergers create at least some level of confusion, if not partial or complete disruption. Hey, who wants to buy a solution only to find out the vendor is being bought a month later?
Traditionally, vendor viability has meant the due diligence to understand financially viability. Since we've seen many financially sound companies sold off, this "check" often doesn't provide the intended assurances. The reality is that even if a company has absolutely positively no interest in being sold, a big juicy offer can change everything. So what does vendor viability mean in our new world of mergers and acquisitions?
Gary Lemke, Publisher
(Share your thoughts)
10/25/06 - Selection Criteria - Continued
What does vendor viability mean in our new world of mergers and acquisitions? Sadly, there is little you can do as a purchaser of CRM software to stop a vendor from selling the company. Even if they have absolutely no interest to sell the company at the time you buy the software, an attractive offer some time in the future might change everything.
Of course, I still encourage you to ask vendors about how they see view their future and talk about any "exit strategies" the company may have. In addition, I encourage you to maintain open dialog with the company to understand how their business strategies change over time. But all that won't stop the dreaded announcement of a buyout.
So what do you do when your vendor has been acquired? What are the first things you need to do to protect your investment? What should you expect from your "new vendor?" Tell me your acquisition stories - both horror stories and happy endings.
Gary Lemke, Publisher
(Share your thoughts)
10/26/06 - Selection Criteria - Continued
Is there anything we can do to protect ourselves from our software vendor of choice from being acquired? This week, I've suggested that there isn't much we can do to prevent it but there are things we can do to manage it. Then I get this one-liner from a reader:
"Why worry about it, buy Microsoft CRM." If I correctly read between the lines, this reader suggests using Microsoft CRM because no one is going to acquire them and there isn't much concern of them going out of business. Who can argue with that?
That shouldn't be the only reason to buy Microsoft. I heard one analyst recently suggest that the reason people buy Microsoft is because "it looks like Outlook and it is cheap." True enough. But back to vendor viability. Just being Microsoft is not a lock. They are late to the CRM party and they don't always win. Remember MS-Money versus Intuit Quicken?
Gary Lemke, Publisher
(Share your thoughts)
10/27/06 - Vendor Viability in Review
This week, the conversation has focused on the issue of vendor viability. It appears that vendor viability has become more important as a buying criteria but the meaning has evolved from merely the financial stability of the company to an assessment on the likelihood the company will be acquired.
Yesterday, I shared a reader's suggestion that we should not worry about vendor viability and "Simply buy Microsoft CRM." As you might expect, reader response was almost immediate. One person responded by saying, "Too many people are still buying CRM based on initial entry cost and underestimate the real cost of implementing a solution that fits the business workflow."
Another reader chimed in with, "Buying by company name can be a poor decision." Simply buying Microsoft because they are Microsoft sounds like the new millennium version of "no one got fired for buying IBM." If MS-CRM (or any other vendor) is a good fit, buy it for the solution, not the vendor name.
Gary Lemke, Publisher
(Share your thoughts)
10/30/06 - Vendor Viability and Source Code
One strategy for protecting yourself from a vendor going out of business is source code escrow. Basically, it requires the vendor to place a copy of the source code with a third party that can be delivered to the software user in case the vendor goes out of business. It is a very common practice.
While the practice is quite common, I often wonder if it is really an effective strategy. Consider this: most companies buy software because they do not have the resources to create it or support it themselves. Many vendors I talk to doubt much good could really be done should an event occur to trigger the release of source code.
It’s like a dog chasing the car but never knowing what to do should he catch the car. If you don't have the software experts that created the software in house, do you really think you can make any sense of it? Is there much you could accomplish with a self-support strategy just because you have the source code? If you have had to deal with a source code event, please share your story.
Gary Lemke, Publisher
(Share your thoughts)
10/31/06 - More on Source Code Escrows
Yesterday, we talked about the effectiveness of escrowing source code in case the vendor goes out of business. One reader responded, "I totally agree with your position that getting the source code is of little technical use to the average CRM customer. However, there is still substantial value in getting the source code. Since vendors put a high value on their source code, the fact that it is escrowed becomes a strong bargaining chip to the user in obtaining the contractually obligated system support.
Another reader responded, "By the time you are looking for the source code, your vendor has 'surplussed' the engineers who designed it. Some of those engineers may be willing to for with their former customers, and extend the life and value of your system via that source code." Grabbing experts from the vendor can be a matter of timing so keep tabs on key personnel.
And yet another suggested that while it may be difficult for end users to do much with the source code, third party companies with technical expertise might be able to provide support. Candidates include the vendor's partners that might have been provided implementation, integration, customization services.
Gary Lemke, Publisher
(Share your thoughts)
11/1/06 - More on Vendor Viability
"Ten to twenty CRM application vendors will merge or cease trading by 2008. Weigh vendor viability higher in selection." That's the advice from the folks at Gartner.
For the last week, we've talked about the rising importance of vendor viability in the selection process. We've talked about digging into the vendor's financials, source code escrow, and buying from the "big guys."
We've also talked about the lack of ability to predict a merger. Is it possible to rate vendor viability on a scale of one to ten? What goes into an assessment and is impossible to determine? Please share your best practices.
Gary Lemke, Publisher
(Share your thoughts)
11/2/06 - Observations - Source Code Escrow
One reader has spent the last 15 years building escrow tapes. That experience produced some observations that I will now share with you. Consider these three thoughts:
"It is an interesting intellectual exercise to consider ALL of the necessary items that should be included. In my case, several thousand entities. The customer value of escrows is inversely proportional to the future stability of the vendor. The escrow process is a future employment source for those of us who build the products/escrow."
Escrow is a safety net you hope you never have to use. However, you also hope that the net will hold you should you put it to the test. Is the loss of a vendor part of your disaster recovery plan?
Gary Lemke, Publisher
(Share your thoughts)
11/3/06 - Don't Spend Too Much Time on Vendor Viability
By all accounts, we have consensus that vendor viability is becoming more important as a criteria for CRM solution selection. Also, most agree the wave of acquisitions and mergers is a major reason why viability has become more important.
I don't want you to think that I'm not suggesting a reasonable amount of due diligence but my recommendation is not to become overly concerned about viability. Why? To put it bluntly, you probably won't see it coming.
Mergers, acquisitions, liquidations, and bankruptcies are often surprises to even the vendor's employees. If they don't see it coming, why do you think you will? So do the due diligence to determine the obvious. Beyond that, you can only assume that judgment day will come for most of your suppliers.
Gary Lemke, Publisher
(Share your thoughts)
11/6/06 - Don't Spend Too Much Time on Vendor Viability - II
Did you see the last acquisition coming? Probably not. But even if you were lucky to guess the last one, how often can you rely on intuition?
Rich Bohn keeps track of CRM vendors and created a summary of CRM acquisitions on his web site. He concurred with our thinking that, "A customer should not spend too much time worrying about their vendor getting acquired. I do think it is a big problem . . . some customers of these acquired firms have not fared too well."
Rich's list is a good start. However, I did a quick search of our news database and found more than 160 CRM acquisitions in the last two and a half years. I'm sure we missed a few. And, I guarantee we are not done.
Gary Lemke, Publisher
(Share your thoughts)
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