Share what you know with millions of people
Focus is the best place to turn what you know into remarkable content
How should one weigh the pros and cons of going with an industry-specific vs. generic ERP or CRM?
What is the best way to go about weighing the pros and cons of going with an industry-specific vs. generic ERP or CRM? Are there certain industries that would have more to gain from going with an industry specific ERP or CRM? If so, which ones? Furthermore, how should company size be taken in account? For example, I spoke with an individual who was only planning on looking at automotive-specific CRM platforms for their 50 person car dealership. Was this truly in their best interest?
Best Answer
- Recommended by:
- Brielle Nikaido,
- Scott Priestley
I agree with Victor and offer up another possibility to consider. I see vertical apps vs generic erp as two extremes. I see a middle option here as well.
There are great examples out there of what might be considered generic ERP solutions that have used vertical add-ons to address the industry specific requirements. When done well you achieve the best of both worlds. The generic functionality (cutting checks, cash receipts, EFT etc) are easily handled by the generic erp but the industry specific functionality (in my case batch manufacturing) is handled by folks that do that all day long.
The benefit is that you get the larger generic erp shop (such as Microsoft Dynamics) handling the things that virtually all companies need. You also get the flexibility of an app written specifically for your market by a development team that does not have to also address the generic functionality.
I have written a blog post on this topic and use the example of having a root canal done at your general practitioner OR having a sinus infection diagnosed by a orthopedic surgeon.
Put the right people on the right task and tap their resources is the benefit of this approach.
It is not for everyone but certainly should be considered.
We should take a look at their business processes and personnel before prescribing either class of CRM. There is a large difference between having CRM and having it provide value for the organization. CRM can help you increase sales, reduce customer attrition and provide a higher level of service if it is used. That is the part that will be determined through tried-and-true methodology. Therefore, as a consultant I would go in vendor neutral and question the result that the industry-specific CRM would deliver to the client on a cost-to-serve basis vs the generic CRM that could be customized to fit.
We should at least understand going in, generally speaking:
1. What critical processes are going to be handled by the solution (then explore those areas)
2. Who is going to use it (e.i., sales, customer service, admin, and/or whole organization)
3. What are the goals of the organization or team (short and long)
4. What are they currently using and why the change
5. What are the expectations of the selected solution and how should it look once in day-to-day use
6. How would the business support the selected solution
7. What type of budget is expected for this solution
8. Capex vs Operating expense. Which would benefit the business more?
In my experience, gathering these detail helps tremendously when making the decision. Once I have a clear understanding, I now can compare the solutions on a ROI basis and measure whether the expense can be justified. CRM or ERP should be used to make doing business easier and faster.
I have worked with several auto dealers and a couple of them wanted a platform that could handle each aspect of the business (marketing, sales automation, accounting, e.i.) and that was a great client for an industry-specific platform. For the most part, I've had a majority of them that just wanted an easy-to-use CRM (like ACT!) that could be off-the-shelf ready for their sales guys. Let's face it, it doesn't matter whether it is industry-specific or generic but a solution not in use is a solution that is wasting money.
For 50 person car dealership I would recommend SaaS type of CRM i.e. Salesforce. Easy to maintain, low cost, simple in understanding. The way of choice is size of company, complexity of industry, knowledge of personnel, BPM maturity, budget and time for full implementation. Your choice - generic, because there are no complications in your industry. And you don't need either tier 1 or 2 ERP, enough to have Quickbooks or Accpack
To keep the answer very simple, most non-CRM based tools have the advantage of great business/industry knowledge and processes.
That said, the glaring weakness in most industry solutions is the lack of sales, marketing and especially calendaring functionality.
Sure, anyone can build an Opportunity module. But can they then integrate that into the reports and dashboards in a way that the sales reps and manageres can appreciate?
What about marketing features? Again, this is usually an afterthought. And it isn't as easy as it looks. Sure, you can export your data to excel and shift it over to constant contact. But what about getting the opens and clicks info back into your database for data mining and future targeting?
Lastly, calendaring gets totally overlooked. And calendaring is not to be underestimated. Calendaring is difficult. Very difficult in fact! Oh yeah, there's that "sync with Outlook" thing too. What about "sync with my mobile device" thing? Calendaring is often extremely weak. And is often forgotten in the purchase of a CRM. But in the end, if it doesn't look and feel like Outlook, then it will often not get used at all.
For all of these reasons, I have found tremendous advantages to building a solution on the backbone of a solid CRM system like Microsoft CRM 2011 or Sugar 6.
Events
- Dos and Don'ts of Small Business Marketing May 29 @ 11 am PT
- Lead Nurturing 202: The Next Generation May 31 @ 11 am PT
- The Tricks to Paid Media June 6 @ 11 am PT
- Display Advertising for Brand Awareness June 20 @ 11 am PT
Related Activity
There are several aspects to consider. Three of the most important are cost, maintainability and business process re-engineering. Vertical software is designed for industry specific applications. This means that someone has taken the time to understand the general best practices of an industry and designed software to fit their needs.
Generic software is designed to fit a broad variety of industries horizontally. It can generally be tailored for a better fit to specific industries. One problem with tailoring generic software is maintainability. On the extreme, it's possible to so completely customize a generic package that you can forfeit future upgrades and bug fixes if you're not careful.
Business process engineering needs to be considered as well. A vertical package may very well provide the features and workflows that are very close to the manner a business works at present. If anything, the business may need to alter their business processes slightly to adjust to the vertical software. If you use a generic toolset and customization is not an option, then the business may be forced into a situation where they have to completely re-engineer their processes to work the way the software does. No company wants to go through that. Organizational change management under those circumstances can be a real nightmare.
When you factor in all of the costs associated with these changes to calculate TCO and ROI, you're likely to discover the vertical solution is more cost effective over time than the generic although implementation costs may be higher.