CRM software-as-a-service (SaaS) applications have made the big leap, claims Forrester Research in a recent report. SaaS CRM offerings "have moved beyond their previous status as a specialized deployment option and into the mainstream," write Forrester analysts William Band and Peter Marston in the May 2008 "Best Practices: The Smart Way To Implement CRM" report.

The analysts back up their assertion with recent Forrester survey data. A late 2007 survey of 1,017 software IT decision-makers at North American and European enterprises found that SaaS adoption is growing at double-digit rates. In addition, nearly two-thirds of those surveyed said they were already using, or were interested in using or piloting, SaaS software solutions. CRM, in particular, was being used by 36 percent of respondents.

"With more frequent upgrades, faster deployment, lower upfront costs and high acceptance by employee end users," Band and Marston write, "customer demand for CRM SaaS applications shows no signs of slowing down."

For the CRM best practices report, Forrester spoke with 16 CRM professionals at buyer companies, professional services providers and software vendors. Included in the list of the buyer companies were: Citizens Financial Group, Equifax, High 5 Sportswear, IAC Search & Media, Polycom, Seagate Technology, Shaklee and Symantec.

Out of those interviews, Band and Marston identified five critical strategies that have enabled these companies to "capitalize on SaaS," they write in the report.

1. Build the Right Business Case.

Organizations and their CRM chiefs who are evaluating deployment options should weigh both SaaS and traditional on-premise solutions "against criteria more comprehensive than just cost tradeoffs alone," advise Band and Marston. "Depending on the business models and economic drivers, differences in business benefits, flexibility and risk are important when comparing these deployment options."

The analysts advise decision makers to "dig deep" to understand the total costs of a SaaS CRM-which should include software license fees, internal labor implementation costs, professional service fees, user training expenses, mobile and offline/online system access, industry-specific functionality, storage capacity fees and premium help desk support.

Two other areas to closely examine are whether the SaaS vendor's technology will allow a company to migrate to an on-premise application set in the future, and the viability and long-term prospects of the selected SaaS vendor.

2. Negotiating the Right Contract

The individuals responsible for choosing to a SaaS solution are often business users, notes the report, not IT people or solutions sourcing professionals-the director of sales and marketing or the director of customer service, for example.

"As a result, they may be unfamiliar with the more technical aspects involved in choosing a SaaS application and thus may not know to include key items in their contracts," write Band and Marston.

In addition, the analysts point out that most SaaS vendors don't provide a formal service-level agreement (SLA) to "avoid risk and responsibility when selling directly to business users. Instead they rely on a 'best efforts' agreement." And if it's not in writing, SaaS customers have little recourse.