Do Legacy CRMs Need a Reality Check? 4 Risks of Purchasing Legacy Systems

As legacy CRMs continue to age, are they getting too complex
and too bloated to provide the business value needed?
Let’s explore how CRM has to change,
in this episode of Closing Time.
Thanks for tuning into Closing Time the show for go to market leaders.
I’m Chip house CMO at Insightly CRM and I’m joined today by Mike Topalovich
a solutions architect and consultant with specialization in CRM.
Thanks for joining us, Mike. Hey Chip, thanks for having me.
Yeah, it’s great to have you here.
And you know, Mike,. I was excited to talk to you
because you’re really passionate about this topic of CRM.
And so I’m really grateful that we get to have this discussion.
It doesn’t take much to give me excited, but yeah, this is absolutely something,
yeah, I think a lot about.
So you’ve been around the CRM market for quite a while.
Being the CMO of a CRM company,
I think a lot about this topic as well. And
we’ve done some
research over the past few years that talks about,
you know, some of the challenges that now exist for
especially mid-market organizations for adopting a CRM
inside of their organization and getting true business value from it.
And so it made me think a little bit about Crossing the Chasm
and that book, which was embraced by so much of the SaaS community
over the past several years, and it details how innovations
diffuse across population.
You know, you mentioned that you feel a lot of CRMs
that have come along and that started out
strong early are really now at the laggard stage.
So talk to me about that.
So if you just kind of trace, really what. Crossing the Chasm,
what the adopter curve, the technology adoption curve is trying to
measure is how quickly do new customers come on to your platform,
your software, your technology in general? Right.
So with Salesforce,. I was an early adopter of Salesforce
because I just happened to be in the right place at the right time.
And what we focused on was CRM back in the early 2000, mid 2000s was table stakes.
It was getting very basic business processes right.
So the early adopters on CRM or at least. SaaS based CRM back in the day,
were really focused on automating things other than CRM processes.
They weren’t worried about pipeline management, they weren’t
worried about a lot of the traditional selling capabilities of CRM.
They were starting to worry more
about their core business processes and how they integrated into CRM.
So from there, we started to see a proliferation of CRMs
that focused on integrations, CRMs that focused on very specific
functionality, CRMs that focused on one little thing.
And then eventually the market became saturated.
There was consolidation.
You know, Salesforce became the de facto winner in that game.
But with the Crossing the Chasm reference that we were talking
to, especially with Salesforce, which is my bread and butter,
you saw early 2000s, you saw the early adopters get on the platform, right?
The Force.com platform, whatever it’s called today,
gave you the ability to extend beyond CRM.
And that was a huge capability that went far beyond what anybody else is providing.
So we have the early adopters, we have the fast followers,
and then the early majority
started from on to the platform,. I would say probably late 2000.
And after that, we started to see the late majority.
We started to see the laggards start to come on.
So when I talk about laggards, it is kind of a two
sided street here where I do feel, you know, some of the legacy CRM
providers are laggards in themselves just because they become so big and so
their architecture has become so bloated over the years.
But you also have the laggards in terms of the former
Siebel customers and former
Oracle customers that are now saying, Hey, we have seen the light of SaaS.
We want to move on to something like an Insightly or a Salesforce.
What does that look like today?
And those dynamics are making. CRM in general very interesting
because companies like Insightly and Salesforce,
as you start to rely more on the enterprise dollar
and the laggards coming onto the platform, you become constrained by their ability
to move forward.
So you have this dichotomy between the early adopters, fast followers,
and then the late majority and the laggards
and there becomes a conflict where the early adopters
want to move really, really, really fast, but they can’t anymore because
now the platform needs to constrain itself or not move as fast
for again, the late followers, the late majority and the laggards.
So what I see today is a lot of going back to basics, trying to get business
process right, trying to align to things like value streams, right?
We’re going back and you know, it seems like everybody is having
what Mark Zuckerberg called their year of efficiency. Right?
The economy’s not so hot right now.
We’re all trying to figure out what’s going on.
So we’re going back and figuring out the basics
and then we’re trying to figure out, okay, in this grand scheme of software
as a service and CRM, what actually matters to us
and what do we want to build on moving forward?
Well, it’s interesting because early on, really just being SaaS,
being in the cloud was one of the main differentiators, right?
Especially for
the brand that you talked about that has the big Blue Cloud logo, right.
You know, it seems like over time
as they’ve tried to solve needs for more
and more different types of companies or larger companies, enterprises,
you know, that’s kind of added
to some of the bloat and the heaviness,. But drill into that a little bit.
Can you can you provide some other details of the challenges there?
What makes the bloating a problem?
How does that become a specific problem for an organization
when they go to implement it or support it over time?
Yeah.
So there’s there’s two sides to this coin, one side being the technical issues,
the other side being
just the business issues or the management of the technology architecture.
So when we talk about bloating, you know, when I talk about
SaaS sprawl, you’re absolutely correct.
The the value proposition of early cloud providers was, hey, we’re on the cloud.
Well, cloud computing, fantastic.
It really did change the way that we manage technology, but
it became a little bit too easy to roll out.
Okay, I could slap down a credit card
as a business user and get two licenses of a tool
that will help me with my personal workflow or my team workflow.
But then over time that sprawl, there’s hundreds of these instances
of enterprise applications or SaaS applications
that have just popped up
and then if you flip over to the business side, you have the CFO trying
to figure out right now, what am I paying for?
You have the CIO or the CTO trying to absorb just
what is out there in my enterprise.
What do I have to know about?
Where does my data live?
And this complexity just creates management overhead and it creates
true business risk in that
you could be putting data out in the cloud or in these applications.
And you know, maybe it’s not a trusted service provider.
There’s just all these implications of the sprawl, right?
So now we’re getting to the point where we’re saying, okay, well,
what do we want our SaaS applications to actually do?
And this is where we’re starting
to see differentiators in the different types of applications.
CRM being what we’re talking about, where,
do I want to focus on core functionality?
Is pipeline management, interaction management, contact management
my most important thing or is it the platform?
Do I want to build on a platform?
Do I want to build my own stuff, write my own custom code, have my own custom
workflows, or do I want to have out-of-the-box integration capabilities?
Right.
With the company with the big blue logo on the box,
they acquired a very large company to help with integration.
But for the smaller shops, if you want to do integration,
you either hope that that provider that you’re integrating with
has a pre-built integration for you, or you have to build it yourself.
And then companies like Insightly
have their plug ins or their integrations that they have that they make available
to their customers. I love that model.
I think that type of model, the plug in model over the marketplace model
will truly be the driver of integrations and connections moving forward.
But it’s just interesting to me, having gone through this whole evolution
over the last 15 years where, yes, we are SaaS, we are cloud, buy our stuff.
And now it’s okay, we’re SaaS were cloud, that’s table stakes.
How well do we integrate?
How well do we provide core functionality?
How well do we secure your data?
You’re starting to look at the functional level.
You’re starting to look at the ‘ilities’ right?
Does it have scalability?
Does it have reliability?
You’re starting to look at a lot of those things and it’s like, well,
we were looking at this with enterprise software,
We were looking at this with packaged software,
and now we’re starting to see those, you know, that
that thinking come around again.
There’s so much there to dig into.
But I’m going to start with just the promise of platform, right?
Because that that was exciting initially
to think about one platform, a single view of the customer
that managed salesforce automation and project
management and service and marketing, etc., etc..
But some of the legacy CRMs have gone the route of acquisition
to get there right, which have led to more complexity,
needing more hands, making all the gears work right.
And so
one of the things that we think about
when we think about legacy. CRM is the fact that there’s
the cost of the software and then there’s the
total cost of ownership, which can be two very different things
because you have to implement it, you have to train, you have to support it.
And as the platform itself gets more complex,
you know, you need people who know how it works.
You almost need like a trained admin slash
engineer to support it ongoing.
And so the total cost of ownership, TCO
is made of a bunch of different things.
But what didn’t I I talk about there?
I mean, talk to me more about just the realities
of a high TCO of a legacy platform.
You alluded to the point
of cost not necessarily being a dollar cost, or at least that’s
something I pick up because maybe that’s just the way I like to frame things.
But when we think of total cost of ownership, we tend to put things
into monetary terms like, Oh, if I buy Salesforce, or if I buy Insightly
or if I buy anybody, it’s this upfront and then this to maintain it.
And just what I’ve seen over the last 20 years to the point where
I don’t want to say it’s comical, but. I see the same things over and over again.
It’s the we’re going to spend a bunch of money on the licenses and then,
oh wow, it costs money to maintain this.
I’ve actually gone beyond that thinking that’s just kind of table stakes
at this point. Yes.
You buy CRM, you’re going to have to have
some level of engineering or administration to keep it up to date,
to keep it functioning, to keep the data clean.
There are all sorts of ancillary roles that go into managing a CRM,
but just in general, in enterprise software in general,
I think that the total cost of ownership really comes down
to the cost of managing complexity.
So the more tools you have, the more functionality you have within these tools,
the more different human mental models you have from the users using the system.
It just becomes very, very difficult to manage that complexity over time.
And just the management overhead of these different systems.
Nobody really takes that into account.
I’m totally guilty of that.
I’ve worked in an ISP capacity, consulting capacity
and also as an end user,
and you get to a point where you start to realize
just the overhead of running this system is this
If we want to increase our capacity so that we can actually roll out new stuff
for our users, we need to add this and this and this and this.
And all of a sudden
you’re looking at an organization of 10 to 12 people just managing CRM,
which, you know, for some organizations makes sense for other organizations,
it’s absurd.
So this all goes back to to planning.
You have to plan for
what you need out of your CRM so that you’re buying the right software.
You have to plan for how you’re going to manage it over time,
how you’re going to implement it. CRM’s complex.
It’s not hard, it’s complex.
And with that complexity comes management overhead.
And like you said, administrators, architects, developers, right.
Everybody has to play a role in this because it does require
constant care and feeding.
It’s not a one time buy it, set it and forget it.
You have to manage this over time.
Yeah, that’s entirely true.
So and we actually recently just studied this with a third party
GTM Partners who looked into our platform and our customers see
time to ROI,
time to live much faster than some of these legacy systems
because the non-monetary expenses are real for a business, right?
I mean, just the fact that it’s not specifically dollars,
how quickly you can get live, how quickly you can repay
your investments is super, super critical.
But the other thing that I think companies struggle with when they think
about leaving a CRM platform or really any platform,
is just the cost of changing.
Which can be sometimes significant,
but often
there is a path to change.
And, you know, I think
companies struggle with this sunk cost fallacy.
So I know you have an opinion on this.
What your thought about that?
So the sunk cost fallacy is a great one.
When we were talking about the complexity of managing CRM, right,
there’s the cost that’s associated with managing that overhead.
Of course there’s dollar or,
you know, monetary measurement of it, but then there’s other measurements of it.
So like now we’re starting to talk about with change.
We’re asking human beings to change.
As human beings, we don’t do that very well.
We need a lot of help
and when you introduce really large
change, the chances of it being absorbed, especially in today’s environment
where we’re also hyper sliced our attention, is, you know,
we’re being pinged by 10,000 different people all the time.
We have notifications all over the place.
Nobody can focus on anything.
So in the olden days of CRM, like you would buy Siebel
and you would send everybody to training for two weeks and you know,
they would learn 10% of the system and maybe you got some value out of it.
We don’t have that luxury these days.
I just worked in an environment where I couldn’t get my users
to spend 5 minutes training, let alone five days.
So that type of change.
Now, when we talk about offloading
from a legacy CRM or any legacy system to a new system,
you have to think about that change differently because the human cost,
the switching cost, the cognitive load, just the you know,
people have too much on their minds, people are too stressed out.
Why would you dump a whole bunch of new stress on people
just to get an incremental gain or save a little money with the new CRM?
You have to think that through.
What is the impact on the humans?
What is the impact on the business to roll this out and then is that juice
worth squeeze?
There’s so many different elements that go into it.
Again, monetary considerations is what we tend to focus on.
But just think about the human cost.
Think about the impact to the organization on such a substantial change.
Is it something you could do incrementally?
Is it something where if I’ve got ten, 20,000 users on a legacy CRM,
I need to move them to something more agile, something cloud based,
something software as a service base, start moving pockets of functionality first,
look at switching costs.
Do you have teams that have never used CRM before, who have used it lightly,
who don’t need to unlearn an old CRM and learn a new CRM?
Can you start with them
or do you have a new business process you’re bringing online?
Is this an opportunity for you to do something faster
where the IT organization may not have responded as quickly before?
Can I go out and maybe buy a new CRM and then take the time on the back
end to move things over slowly over time in a way that doesn’t
impact the business, that doesn’t impact users.
There’s a lot of different thoughts that go into this,
but the original question had to do with sunk costs.
And I think at this point you have to evaluate the cost
of everything from this point forward, whether it’s the additional dollars
to finish implementing a CRM, whether it’s the human cost of switching
from one system to another and having to learn a new system,
the integration costs, the potential risk of losing data
during a migration, of losing customers during a migration.
All these things.
Nothing is a simple choice anymore.
You have to evaluate all these things incrementally
and holistically to get to the point where you then decide
This is the reason why. I want to move to a new CRM.
This is the new CRM I want to move to.
What does that migration path look like?
It’s a lot of planning and it’s a lot of up front thinking,
which I know
is not attractive to companies who want to grow, grow, grow and move fast.
But this is what we’re looking at.
Everything has a cost associated with it.
Yeah, And it’s interesting
because most organizations are struggling with their CRM.
A good share from our research says, well, 79%
are unsatisfied with their CRM.
And when we ask them why and they’ll say things like it’s difficult
to support, it’s costly to support, it’s difficult or
costly to integrate, it’s not as flexible as we thought it would be.
It’s harder to adopt, harder to use.
And so
there’s real reasons for organizations, especially those that are smaller,
that maybe don’t have enterprise level resources
to think about a just a different path for CRM.
And so but what’s wrong with CRM selection?
How are these companies making mistakes when they’re choosing a CRM
and what kind of things should they think about
to just make better purchasing decisions for CRM?
So when I would typically lead requirements gathering
or discovery sessions as a consultant,. I had a rule.
It was what I thought was going to be an easy rule to maintain,
but it really wasn’t.
And if I was implementing Salesforce or building on top of Salesforce
as Salesforce architect, my challenge to anybody in the room as we were doing
design sessions was,
okay, tell me your business process start to finish
from the moment something comes into your world
until you’re delivering value for the customer, Describe the steps
without using the word Salesforce or whatever system it is,
and you would be shocked at how difficult that is.
So that 79% figure of people being dissatisfied with CRM,
not surprising, but it’s not the CRM fault.
Most of the time.
It’s just not understanding what you want the CRM to do for you.
Okay?
And it’s really coming down to business capabilities
that are going to be met by the technology.
What do I want this technology to do?. Okay.
I want to be able to track contacts.
All right.. Well, Act and GoldMine can do that,
a blast from the past.
A lot of CRMs can do that.
I want to be able to track pipeline.
Okay, cool. You can track Pipeline and all these different tools.
I want to be able to track interactions, phone calls.
Right.
There’s there’s all these different business capabilities.
I want to be able to send mass emails.
I want to be able to segment lists of prospects based on criteria, right?
These are all business requirements.
And then once you have
the business requirements in place, you sit down and you prototype that.
Prototyping for me could be whiteboarding,
it could be sticky notes, it could be just hacking something together on Figma.
And you get everybody to say, Yes,
this is what we want because this will get us from point A
to point B, it’ll satisfy all of our business requirements.
It will give the experience for customers that they’re looking to get out of this.
And you just kind of think of things that way.
You think of what you want this to do in an ideal world
and then you go out and you evaluate the software
and then, you know, I could go way off on a tangent here on build versus buy.
But that type of discussion happens only after
you have defined what you want the technology to do.
We’re putting the cart before the horse way too many times and it results
in dissatisfaction because, you know, again, salespeople are salespeople.
I know that company with the blue logo on the box could sell
kryptonite to Superman.
So you get a lot of companies are like the software does all this stuff
and then they go to roll it out and it’s like, well,
it doesn’t do this stuff the way we want to do it.
We don’t know how to do it the way we want to do it.
And we can’t articulate the way we want it to work.
So therefore it’s the software’s fault.
And I think that’s where that big number comes from.
I don’t know how many times I’ve seen it.
I hate Salesforce,
I hate HubSpot, I hate all these tools, but they all kind of do the same thing.
Maybe let’s sit down and figure out what we want them to do before we go out
and make large purchasing decisions.
Yeah, that’s a big piece of it obviously is being super planful and clear
on your requirements
of what you really want it to do and how that’s going to impact your business.
One of the things that we hear from our customers
because we obviously have customers that switched from Salesforce,
right, is that they end up saving money and in general
are able to train and implement it across their team
just more easily, more likely, if that makes sense.
And so sometimes
as complexity can add to the challenge
of implementation and the challenge of getting what you want.
Right.. Complexity is the biggest part of it.
So if you cut down on the number of permutations, the number of possibilities
by narrowing down the number of possible moving parts,
you’re going to have naturally a much simpler solution.
So again, kind of going back to the migration from legacy CRM
to more modern CRM or, you know, more lightweight CRM, that’s a big part of it.
You’re stripping out a lot of the features, right?
A lot of the benefits that aren’t really benefits.
You know, like when companies
announced large increases in their monthly prices
to the tune of almost 10%, you sit down and you figure, well,
what am I getting for this, this extra nine or 10%?
And you start to realize I have so many features and functions that I don’t use.
Why am I paying for it?
So to go to a more simplistic solution, a solution
that was designed with simplicity in mind,
it allows you to just take a step back and say, okay, we were just
we were overkill here with whatever we were using before
we put a lot of time and money into it.
We just weren’t getting the value out of it.
Let’s go simple.
Let’s start over again.
Let’s do something much simpler.
And there is huge, huge, huge value in simplicity.
It’s just the ability to start fresh, see things with clean eyes,
and then build on top of a strong foundation
as opposed to trying to pick and choose from thousands of different features
to try and figure out which one best suits your needs.
You start simple, you build with your needs.
You start to speak the language of the CRM that you’re using.
You integrate with your other systems and grow that organically and holistically.
You’re going to have much better results than plunking down, you know,
seven figures for, again, legacy software that’s going to take you a year, year
and a half to implement that 79% of you will not ever be satisfied with.
So start small build from that foundation.
I think you’ll be much happier.
That’s great final advice, Mike.
So thanks for all those insights and we’re almost out of time.
Any final thoughts for us on CRM and the future of it?
No. It’s you know, we’re going through cycles right now and we went through,
you know, the cycle to SaaS in the cloud, put Siebel out of business.
You know, now we have legacy CRM vendors
that are kind of getting long in the tooth,
trying to figure out what they want to be when they grow up.
So now with A.I., with this new cycle,. I’m I’m really excited to see
where CRM goes with this just enterprise software in general.
I’m excited for Insightly like, you know, just
you guys are in this really sweet spot where you can capitalize on these shifts.
So really looking forward to see your growth.
Love being on here.
Appreciate the opportunity.
And you know, at some point in the future, if any of these predictions
play out, let’s talk about them again and figure out what comes next.
For sure.
No, it’s super great having your insights
and your experience, Mike,. So thanks again.
No, thank you.
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