Recent Surveys has revealed that the shelf ware problem that haunted the CRM industry in its early days -- in which software is purchased but never implemented -- has not gone away yet. The consulting firm found that 40 percent of software licenses bought by businesses go unused. However, unlike in the past, when companies would buy software that sat on the shelf because it was too difficult to implement or use, companies now tend to buy more than they need for financial reasons,To a lot of companies it may seem like a wise investment to buy software licenses even though they don't need them immediately.
The Gartner survey found that unnecessary purchases of CRM software tend to happen for one of three reasons:
· The vendor offered a larger discount if the business increased its initial purchase.
· The vendor, wanting to position new modules in the market, offered a reduced license fee to companies that agreed to take additional licenses that would include free or heavily discounted modules.
· The vendor enticed buyers with an economies-of-scale rationale, stating that it is less expensive to buy now than to add on later when the company might need more modules.
No Economic Support
None of these reasons, though, economically supports purchasing more software than is necessary. Consider the question of volume discounts. This is arguably the least favorable way for buyers to get a good deal from a software vendor.No one pays list price for software anymore. In fact, vendors routinely inflate list prices to gain negotiating room to strike a better deal while giving buyers the impression that they are getting a discount. Another unforeseen cost is maintenance, which the buyer must pay whether the software remains on the shelf or not.
Smart ROI
But even if the discount is steep enough -- making it a true discount, not merely the standard markdown from the list price -- deliberately buying shelf ware rarely delivers quantifiable ROI, Businesses that carefully select the most appropriate CRM applications, match them to the benefits they are seeking and purchase the correct number of licenses will experience a faster payback on their CRM investments than businesses that blindly implement their CRM applications.
Hard To Use
Of course, there are companies that buy CRM software fully intending to implement it right away -- only to have the software morph into a very expensive dust collector. This usually means that either the software was too buggy or hard for users to handle or the vendor was too aggressive in pitching its wares. These reasons are not so common as before, but the legacy still lives on. CRM vendors were their own worst enemy when it came to CRM shelf ware. First, they pushed users to 'all you can eat' huge software contracts that would take years to implement," she said. "Sure, you get a bigger discount, but the vendor walked away with all your money with no real incentive to help make it work. Worse, vendors kept adding features to the point of unusability.
But ultimately, the biggest problem was the way vendors originally convinced the market that CRM was a software problem, not a business problem. When companies spent millions on the first phase and couldn't find the benefits, they left the rest of the software on the shelf. Not that any of this is unique to CRM.It is just the latest 'must have' software where vendors and companies lose sight of the big picture in their haste to capitalize on the latest trend.
The Gartner survey found that unnecessary purchases of CRM software tend to happen for one of three reasons:
· The vendor offered a larger discount if the business increased its initial purchase.
· The vendor, wanting to position new modules in the market, offered a reduced license fee to companies that agreed to take additional licenses that would include free or heavily discounted modules.
· The vendor enticed buyers with an economies-of-scale rationale, stating that it is less expensive to buy now than to add on later when the company might need more modules.
No Economic Support
None of these reasons, though, economically supports purchasing more software than is necessary. Consider the question of volume discounts. This is arguably the least favorable way for buyers to get a good deal from a software vendor.No one pays list price for software anymore. In fact, vendors routinely inflate list prices to gain negotiating room to strike a better deal while giving buyers the impression that they are getting a discount. Another unforeseen cost is maintenance, which the buyer must pay whether the software remains on the shelf or not.
Smart ROI
But even if the discount is steep enough -- making it a true discount, not merely the standard markdown from the list price -- deliberately buying shelf ware rarely delivers quantifiable ROI, Businesses that carefully select the most appropriate CRM applications, match them to the benefits they are seeking and purchase the correct number of licenses will experience a faster payback on their CRM investments than businesses that blindly implement their CRM applications.
Hard To Use
Of course, there are companies that buy CRM software fully intending to implement it right away -- only to have the software morph into a very expensive dust collector. This usually means that either the software was too buggy or hard for users to handle or the vendor was too aggressive in pitching its wares. These reasons are not so common as before, but the legacy still lives on. CRM vendors were their own worst enemy when it came to CRM shelf ware. First, they pushed users to 'all you can eat' huge software contracts that would take years to implement," she said. "Sure, you get a bigger discount, but the vendor walked away with all your money with no real incentive to help make it work. Worse, vendors kept adding features to the point of unusability.
But ultimately, the biggest problem was the way vendors originally convinced the market that CRM was a software problem, not a business problem. When companies spent millions on the first phase and couldn't find the benefits, they left the rest of the software on the shelf. Not that any of this is unique to CRM.It is just the latest 'must have' software where vendors and companies lose sight of the big picture in their haste to capitalize on the latest trend.
Be awake & Be aware
Your Partner and Companion
DC*
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