A Case Study in SaaS CRM Failure
posted by John Spacey, December 19, 2010I think it will thrill you. It may shock you. It might even horrify you. So if any of you feel that you do not care to subject your nerves to such a strain, now is your chance to—Well, we warned you.
~ Garrett Fort
Here's a quick example of what can happen when the business go off and buys software without involving IT.
The Scenario
This story may sound familiar to many CIOs and enterprise architects — people who have the big picture view of IT.A global company with more than 50 sales offices in dozens of countries had a enterprise CRM (actually it had two). Despite this significant CRM investment, sales teams all over the world went off and signed contracts for a SaaS CRM tool.
In many cases, corporate credit cards were used to make payments. Over a dozen separate contracts were signed by teams all over the world.
Freed from the burden of the customized data validation and sales processes in the enterprise CRM — the sales teams were pleased with their new tool. They went off (as happy as larks) entering data into their rogue CRM. Contacts, appointments, opportunities, sales collaterals, price lists, competitive intelligence, girlfriend's phone numbers, lasagna recipes — lots of critical sales data.
Everyone lived happily ever after — not quite.
The Incident
One day, the sales team in south central Azerbaijan (real location changed to protect the guilty) decided to stop paying their SaaS CRM bill.The vendor let this slide for a while — until the bill was over $2 million dollars. At which point they contacted the New York sales team and demanded that they pay it. The New York sales team laughed this off. So the vendor turned off all twelve global instances one Wednesday morning — effectively knocking out half the companies global sales force.
The vendor was well within their legal rights to do this — it was in all those contracts no one had read.
The Aftermath
Responsibility for cleaning up the mess fell to the CIO.Emergency negotiations were held with the vendor — they quickly turned sour. The vendor wanted full payment (including contractual penalties) to turn everything back on. The company wanted to consolidate the contracts and get a price break.
The vendor held all the cards — without IT involved no one had bothered to backup all that data. The vendor won. The company paid to get things running again.
The Outcome
The company was understandably vexed at having their global sales force disrupted and embarked on an expensive project to migrate everything back to the enterprise CRM. However, the project was cancelled half way through because a business executive joined the firm who had a preference for the SaaS CRM tool.The Lesson
IT organizations need to be proactive about preventing reckless purchases of enterprise software. IT may not be to blame for such problems but they always get stuck with the clean up.
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