Which CRM system to choose and why the future lies in the cloud?
Automation and supporting sales processes are essential components of a business. More and more entrepreneurs see the benefits of using the CRM system. While choosing the best solution for your company, you need to analyze many aspects and available options. Which CRM will turn out to be the most effective in your organization?
The article is addressed both to those who are facing the choice of their first CRM system and to those who need to change, expand, or update their current solution. You will learn, among others:
What are CRM systems?
CRM (Customer Relationship Management) systems are IT systems that improve the management of customer relations – their building, development, and maintenance. The primary function of CRM tools is to automate and support business processes between the Organisation and the Client. All stages of customer-to-enterprise contact are supported from the moment its needs are detected to after-sales service. This is possible due to proper processing and analysis of data stored in the CRM system. In addition, the data brings business value to the company. On its basis, a company can build reliable and lasting relationships with its customers and continuously improve marketing activities. Data include personal details, location, age, telephone numbers, e-mail addresses, positions held, income, purchases made by the customer, as well as his preferences or inquiries.
CRM systems support sales specialists in better understanding of customer purchasing needs and all sales processes. Also, CRM tools are excellent at measuring the effectiveness of sales teams and help sales managers in creating better analyses and statistics based on reports from their employees. CRM systems support the management as well as sales and marketing departments. There are currently two software models available. The first solution is on premise. In this model, the software is installed on the buyer’s infrastructure, a one-off fee is charged, and the buyer pays for the maintenance of this infrastructure and bears the cost of any changes and updates.
The second model is the so-called SaaS version, i.e. Software as a Service, where the fee is paid by subscription payment (e.g. monthly). The main advantage of this cloud solution is full mobility and access to the data system from any place in the world without the necessity of installing special software (like with on premise version).
Who is this solution for? The answer is simple: for anyone who wants to expand their business continuously, increase sales, and respond to customer needs.
Who should consider implementing a CRM system?
It may seem that the days when customer data was stored in a notebook or binders are long gone. Nothing could be further from the truth. As it turns out, even today, many companies still collect such information in notebooks or Excel. While the second method may be a solution for companies that are just starting their businesses and acquiring their first customers, in the future this type of approach will not work out well if the company seriously thinks about development and increasing its revenues. It is worth noting that most CRM systems enable the import of data from spreadsheets.
CRM implementation is for those who want to continuously increase profits while building relationships with new customers (or improving existing ones), and at the same time – to develop their business.
Please note that the mere fact of having data does not mean anything yet. The trick is to process them properly. How to develop relationships between you and your customers, charts or reports? Contrary to appearances, Excel or other basic analytical programs will not meet your expectations. Why? For a simple reason – this type of software simply does not have so many possibilities and extended functions.
So what is unique about CRM systems and makes them the most helpful in building long-term customer relationships? First of all, the software is specialized in one area of expertise (CRM) and designed to develop the functionality of the system exclusively in the CRM area. It means that the possibilities offered by CRM systems are not a result of a coincidence, but a reflection of well-thought-out actions and strategies. SAP products can be used as an example to present the possibilities of CRM system.
What are the capabilities of the latest CRM systems offered by SAP and what are the benefits of their implementation?
Modern SAP CRM systems allow users to manage customer relations and build customer experience. Cloud systems are often much more functional than on premise solutions, but if necessary, on premise systems are easier to expand.
The main capabilities of the C/4HANA system described by the producer (SAP) include:
✓ Creating a customer and consumer profile,
✓ Segmentation of customers,
✓ Planning and creating marketing campaigns and the customer’s purchase path,
✓ Management of potential sales opportunities,
✓ Product, order and offer management,
✓ Sales automation and sales performance management,
✓ CPQ (Configure Price Quote) solutions,
✓ Subscription settlement,
✓ Automation of service requests (based on AI),
✓ Preparation of market and purchase forecasts, profitability analysis,
✓ Building new and improving existing customer relationships,
✓ Proactive response to customer needs,
✓ Creation of personalized sales offers of products and services based on attributes gathered in the system (e.g. customer’s age, income, residence, shopping history).
It is worth noting that CRM systems offered by SAP can be integrated with rest SAP modules, as well as other software and social networking platforms, such as Facebook, YouTube or Instagram.
What does this mean for the company in practice? What are the business benefits of implementing or expanding a CRM system?
The main benefits of implementing the system include:
✓ Building new, long-term customer relationships and improving existing ones,
✓ Increasing customer satisfaction,
✓ Increasing the number of sales, and as a result, increasing profits,
✓ Reducing the time needed to process complaints and warranty claims,
✓ Gaining more leads,
✓ Increasing the number of customers (potential customers are becoming actual ones),
✓ Reducing the time of the sales process,
✓ Providing more accurate analysis and sales statistics based on sales reports,
✓ Improving the effectiveness of the marketing and sales department (optimization of activities) and communication in teams, as well as the ability to monitor its performance.
If you know what possibilities CRM systems offer and what can you gain by their implementation, the next step is to choose the best solution for your organization. There are several solutions.
Which SAP CRM solutions are currently available?
Although the naming of individual SAP modules may seem difficult at first, it is worth spending some time taking a closer look at certain products. This approach gives you the opportunity to understand the connections between the systems and get to know the solutions offered by SAP.
As I mentioned before, CRM systems are available in two versions – on premise and SaaS.
Currently, SAP products include the following solutions.
SAP CRM on premise
SAP CRM on premise is the oldest CRM system of SAP – its beginnings date back to the early 90s, when it was still a separate element of the ERP system. The first stand-alone system was released in 2000. Its current version will be supported until 2025, but it is no longer possible to purchase new licenses. It means that there is a move away from the implementation of SAP CRM (or its expansion) to more modern solutions – on cloud version or Customer Management addon to S/4HANA.
SAP S/4HANA for Customer Management – an alternative to CRM on premise solutions
The on premise alternative to SAP CRM is the Customer Management addon to S/4HANA. The first version was released in February 2018 and immediately gained many supporters. Users appreciated the system due to its modern design and transparency, which is responsible for the latest version of the SAP Fiori user environment, based on HTML. With this feature, Customer Management addon can also be accessed from mobile devices. The solution supports customer relationship management, sales functions and processes, service order management, and the interaction center in SAP S/4HANA.
The user interface, as mentioned above, is based on the Fiori solution and can be customized to meet specific business needs.
SAP CRM in SaaS version, i.e. cloud solution – currently SAP C/4HANA
Since 2011, SAP has constantly been focusing on the best possible development of cloud solutions. The first version of the SAP cloud product was named SAP C4C (SAP Cloud for Customer). A few years later in 2018, it evolved into something more than just CRM on cloud – into a system that builds the user experience. Since then, many of the current SAP products have been included in the SAP Customer Experience suite.
C/4HANA suite, which is the cloud equivalent of CRM solution, consist of the following products:
✓ SAP Commerce Cloud,
✓ SAP Customer Data Cloud,
✓ SAP Marketing Cloud,
✓ SAP Sales Cloud,
✓ SAP Service Cloud.
We wrote more about this solution in a dedicated article.
While showing products at the end of the presentation, there is always a question about the price and time of implementation. So what are the fees and how long does it take to implement the CRM system?
What is the cost and time of CRM implementation?
As you can easily guess, the cost and time of CRM implementation will depend on the scale of system development. The more complicated the system, the higher the price, and the longer the implementation time will be. The same applies to systems with fewer features, which will be installed faster and, above all, at a lower price. Systems whose processes significantly differ from standard CRM processes will also be implemented longer than those that follow good practices.
Please note that in most cases the cost of implementation will be higher for on premise systems (S/4HANA) due to the fact that the one-time fee for the main system license on premise is much higher than the amount of monthly subscription that we incur when choosing the cloud. A large part of the fee is the cost of the required infrastructure on which the software is installed and which, in the on premise model, is a property of the client.
Maintenance of the on premise system and eventual updates are also the responsibility of the client, who pays all the costs involved (in case of on cloud solution, the fees are paid by the service provider). On premise systems are more expandable than on cloud solutions, and as a result, their price is higher.
The obstacle to the implementation of a CRM system in smaller companies – especially those entering the market – is its cost. Expenses incurred by the company for the implementation of the system, from the very beginning of its operation, often raise many doubts.
It is worth noting that such a cost can be repaid in a short time by using the CRM system. Improving all customer-related business processes can increase your company profits by up to 40% per month – so the system will make money and pay for itself before you notice.
It is worth implementing the CRM system (especially on cloud) also in its basic version. Such a system can evolve with the development of the company, and the base version can be extended and modified at any time – according to the current needs of the company.
What should you do if SAP CRM has already been implemented in your company, but it needs to be updated?
SAP CRM on premise system update – so I have SAP CRM 7.0 and what next?
If you currently have a SAP CRM system (e.g. 7.0 version), you probably already know that after 2025 it will no longer be supported by SAP. Such support is still possible today, but e.g. purchase of a license is not available anymore. Of course, not providing services and stopping the development of CRM system in the on premise version would be a very bad financial decision for the distributor.
That is why in 2018, SAP offered its users the solution already mentioned by us, which is the Customer Management for the S/4HANA premium system. S/4HANA is a new generation ERP system that allows to manage company resources in the best way for a particular company. The solution is based on the SAP HANA database, and the interface is built on HTML5 (the so-called SAP Fiori), which makes the visual side of the system very appealing.
CRM on premise vs CRM on cloud – comparison of solutions
|FEATURE||On premise – S/4HANA (CRM addon)||Cloud – C/4HANA|
|Fees||Fixed: license purchase required
(depends on the number of users) + deployment fee
|Subscription model: fee per user/recurring payment (monthly, quarterly, annual)|
|Cost of system update||High||No charge – updates up to the provider|
|System maintenance||Up to the customer||Up to the provider|
|Planning of updates
And technical breaks
|Up to the customer||Up to the provider|
|Access to data||Required SAP software||SAP software not required – internet
Connection and a browser are necessary
|Data storage||Customer’s server||Provider’s server (on cloud)|
No matter what opinions you find online or how good advice from friends you get, it’s up to you to choose the right infrastructure for your business. To help you make your decision a little easier, I have put together the essential components and features of each solution and present them in the table below:
Cost, types of charges, deployment time, and information on how to extend the systems have been described before, but there are a few other issues worth considering. When it comes to system maintenance and possible updates, in case of the on premise solution, all related work is up to the customer. Customer is responsible for the operation process, maintenance, development and troubleshooting. In the case of cloud solutions, the provider is responsible for all these actions. All updates are automatic – the customer doesn’t have to worry about adjusting the system and is informed in advance about eventual technical delays. Another issue is access to data, and the way in it is stored. As the above overview shows – in case of on premise solutions, data are stored on the customer’s server. It means that only employees who use the system have access to data.
In cloud solutions, data is stored on the provider’s server. In order to gain access to data in the on premise model, it is required to have specific SAP software (in this case SAP S/4HANA), as well as a properly configured VPN connection. However, the cloud model does not require any software to be installed, just an Internet connection and a web browser. You probably have doubts about the way your data is stored. Don’t worry, your data is safe on SAP cloud.
Cloud – is it safe?
Cloud solutions – although very convenient – raise doubts among customers as to whether data is whether the data is stored safely and correctly processed. What is the reason for these concerns? In the past, there have been several incidents related to cloud solutions. Unfortunately, several media cases have had an impact on how some of the users now perceive cloud solutions.
What kind of incidents are we talking about?
A known example is Amazon and the difficulties with opening and saving files in the AmazonWebService cloud in 2017. Problems occurred on servers located in North Virginia when the storage service (S3) was not available. It caused a failure of services such as Trello, Slack, Razer and GitHub. According to Amazon, the cause of the problem was a typo. The S3 service failed due to an incorrect command entered by one of the developers. As a consequence, more servers were removed than was assumed during the maintenance work. A temporary nonavailability of the previously mentioned services has led to criticisms of cloud solutions (not only Amazon’s).
Also, relatively recently, in 2018, a cloud data problem appeared in Dropbox. While using the site, users noticed that their folders began to display images from almost ten years ago, which had already been removed by their owners. Dropbox has always stated that it is not possible to restore data after deleting it. Unfortunately, as it turned out, a system error at the very beginning caused the incorrect removal of the data and then, again, the incorrect restoration of files. As you can easily guess, cloud solutions have been criticized again.
It may seem that the problems do not affect the most prominent companies. Nothing could be further from the truth. In 2018, Google Cloud Platform crash occurred. As a result, access to platforms that used the services of the provider (e.g. Discord or Spotify) was very limited or even impossible. Google stated in a statement that the cause of the problems was network overload in the eastern part of the USA. It shows that even the largest providers may face issues with cloud computing.
In these three cases, none of the data stored on the cloud at the time was, as it might seem, lost. Doubts about data security and transparency in its processing are fully understood; however, you should keep in mind that even in the best-designed on premise systems bugs may happen – also as a result of ill-considered actions of the system user. Not every failure of a computer program leads to data breach. Encrypted connections and mechanisms designed to protect the system from cyber threats should be strengthened by good user practices.
It is worth noting that cloud incidents are like vehicle damage. If a defect appears in a particular model – immediately after it is revealed, there are a many tests and improvements, due to which a given solution can become safer than ever.
One of the business sectors that is least likely to opt for the on cloud model is the banking sector. Of course, it’s not surprising. A leak of any kind of data is always a big concern for both the user and the cloud provider, but a breach of security of bank customers’ data could be a disaster. How many people would still be willing to entrust their account to a financial institution after such a failure? Fortunately, bankers’ skepticism is slowly changing, and many of them look at new technology more favorably, while testing cloud solutions internally.
What should we pay attention to in order to make sure that our data is safe?
There is no doubt that the location of the supplier’s servers is an essential factor. After all, behind every cloud, there is an external server belonging to the service provider. In terms of data security, the legal regulations in force at the location of the servers play an important role. In this case, should you consider where SAP stores your data? The software provider comes from Germany, but its servers are located all over the world. Data centers are based in Australia, Germany, and the United States. While selecting the server, it’s important to get to know the legal regulations in a particular country.
A full list of places where servers are located is available on the SAP website.
Besides, the fact that our data is stored on an external provider’s server does not automatically mean that the provider has any access to our data. They can be processed without reading or viewing them.
One of the widely commented issues, which appears many times in the discussion about data processing, is the compatibility of processes with GDPR. Remember that legally the data controller is the entity, which determines the purposes and means of the processing of personal data (not the cloud provider). In fact, it is often the cloud provider who decides about the security measures. Both the organisation and the cloud provider process or will process customer data, but the cloud provider is not a controller. The service provider, on the other hand, will be a processor. An entrepreneur deciding to implement a cloud-based CRM system should check whether the cloud provider guarantees data processing compatible with the requirements of the GDPR.
If you get goosebumps when you think of GDPR – read the article that dispels the myths about EU regulation.
At this point, it’s worth to mention about one of the components of C/4HANA: SAP Customer Data Cloud. It’s a tool from the SAP Customer Experience suite that allows to identify customers needs and build their engagement while protecting personal data. Customer Data Cloud is responsible, among other things, for the management of all authorizations to process personal data.
I already have an idea for my CRM system – what next?
As a consulting company, we specialize in SAP system implementations and consulting. It happens, however, that we are approached by clients who already know the capabilities of the system, have a vision of their own CRM tool and are decided on a particular solution. If you’re one of them and you want to learn more about the possibility of implementing your idea in your own company – contact us!
It is worth noting that the leaders will be companies which, due to well-developed business strategies, will quickly and effectively adapt to technological changes. Owners of medium and large enterprises should keep in mind while choosing a CRM system, that cloud solutions are products of the future. Even if nowadays the on premise solution seems to be better, will it be the same in a year or two?
- On 13/09/2019