The Promise and Pitfalls of CRM Service Level Agreements
In the wake of Salesforce.com’s repeated downtime and service disruptions which left many thousands of
Customer Relationship Management (CRM) software customers without accessible CRM systems, the market has demanded
increased assurance and accountability in the form of CRM Service Level Agreements (SLAs). However, rather than
provide CRM SLAs backed with greater levels of redundancy to support increased system reliability, several software
as a service (SaaS) CRM manufacturers have treated SLAs more in line with a cat and mouse game, or at best a
game of salesmanship whereby software sales people discourage the need for SLAs or use them as negotiation
sales closure tactics.
We set out to determine which CRM vendors back their on-demand solutions with SLAs. Not only did the results surprise us, but the ingenuity in CRM SLA disclaimers and lack of any real guarantee or recourse has reached a new low for CRM users looking for uptime dependability. Here’s where each of the hosted CRM software vendors stand.
Unfortunately the poster child for hosted CRM software may also be the poster child for repeated service interruptions and downtime. Salesforce.com has responded to hosting failures and industry criticism with http://trust.salesforce.com which displays hosted uptime and service disruptions for the prior month. While an admirable start, we find four major flaws with Salesforce.com’s SLA – or lack thereof.
- Limited SLA - In communicating with a number of salesforce.com customers, it appears that most customers do NOT get an SLA. In fact, our observation suggests that unless you are a large customer, making large software subscription payments and demand an SLA, you don’t get one. Mark Siler, VP of Technology at Priority One Financial Services shared his experience, "They first told me they don’t do SLAs; then when I quoted what Marc [Benioff, CEO] said – that they do SLAs if the customer requests it- the account executive said she didn’t have the authority to do an SLA and a vice president would have to contact me." As of two weeks later, no contact was made.
- SLA Exclusions - We’re not sure who pioneered the concept of not including downtime if it is categorized as 'planned downtime' or 'maintenance', however, we find it in bad faith. If the system is not available to users who pay for it, the reason for the downtime is really inconsequential. While several SaaS CRM software vendors hide downtime under the pretext of maintenance, salesforce.com seems to abuse this practice far more than most. For example, near the time of this article, noted 'maintenance' time just for the month of January 2007 included January 4 to January 6, January 12 to January 13 and January 20 – all as 'scheduled maintenance'.
- Limited Guarantee - As each customer is left to fight for their own SLA, they are also relegated to fight for a respectable recourse and financial credit in the event of failed SLA achievement. Good luck with this one.
- Limited Visibility - As indicated prior, we think http://trust.salesforce.com is a good start, however, in its current form it is clearly elusive and seemingly more of a marketing tool than an SLA visibility instrument. It’s common industry knowledge that salesforce.com has incurred repeated downtime for the last two years. We suggest salesforce.com not run from this and choose to display hosted uptime for more than 30 days at a time.
Known more for its ERP software and payroll software, SAP arrived late to the web-based CRM software party. SAP delivered a pseudo-SaaS CRM and SFA solution in February 2006, marketing module in May 2006 and customer service module in September 2006 - and has since steadily advanced their CRM software offerings. Unfortunately, SAP has yet to release a CRM SLA. That’s right, no SLA and no assurance that uptime will be maintained. Perhaps that’s why "SAP CRM On-Demand" took a hybrid approach of offering hosted and non-hosted systems. One upside to SAP’s hosting approach is its use of an isolated tenancy model, instead of the shared multi-tenant model. Yankee Group analyst Sheryl Kingstone noted in a CRMBuyer interview, "That [isolated tenancy] is a good thing for the customer, because it means better scalability and better service…"
NetSuite provides a standard SLA as part of its software subscription agreement. However, there is no on-demand SLA visibility to understand their uptime history or verify downtime and even more troubling, NetSuite excludes both scheduled outages and some unscheduled downtime making the SLA extremely questionable. Perhaps the only saving grace here is that if they do not achieve their 99.5% uptime guarantee (while taking into account their broad exclusions), they do provide a financial credit.
RightNow offers "service-level objectives" as opposed to service level guarantees (there’s an interesting twist of terms). In a CRM SLA interview article, Jason Treu, director of corporate communications at RightNow Technologies said "we don’t have guarantees on our contracts per se … However, if we fail to deliver on the stated time, and it is attributable to us, customers can get hosting fees returned." The inability to put SLAs in writing as a part of the subscription agreement and a one-off procedure for enforcing downtime remediation pretty much shows their confidence in being able to achieve their "service-level objectives". We were hoping to speak with more RightNow customers regarding their particular SLA and uptime experiences.
Service Level Agreement Snapshot Summary
- SLA offered upon request; you may or may not get it.
- This is RightNow’s ‘service level objective’, not to be confused with a service level guarantee.
In a SearchCRM article highlighting SLA importance, Forrester Research analyst Liz Herbet commented, "The bigger, more influential customers are more able to negotiate an SLA into their contract … The whole idea of SLAs and uptime and its reimbursement is standard in outsourcing and hosting, but Software as a Service [SaaS] -- likely because of the role the business user has taken -- doesn't have that same standardization." We regretfully agree with this analyst’s opinion, however, also note that more SaaS customers are demanding – and getting – SLAs.
The entire Customer Relationship Management SaaS value proposition is completely predicated upon continuous hosted uptime. If on-demand CRM systems are inaccessible, CRM users become paralyzed, the software subscription pricing model fails to deliver any price benefit and the hosted delivery model has no merit compared to on-premise systems. CRM systems with anytime and anywhere access is not good enough; they must be available all the time to deliver the benefits of the Customer Relationship Management promise.