crm total cost of ownership analysis

8/4/2019 CRM Total Cost of Ownership Analysis

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CRM Total Cost

of Ownership:Fees, Subscriptions

and Hidden Costs

Chris Bucholtz


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CRM Total Cost of Ownership: Fees, Subscriptions and Hidden Costs

2Copyright 2011 CRM Outsiders and SugarCRM, Inc. All rights reserved. SugarCRM is a registered trademarks of SugarCRM, Inc. in the United States,the European Union and other countries. All other trademarks are the properties of their respective com panies.

Contents

Executive Overview ..................................................................................................................3

Vendor Pricing Analysis ...........................................................................................................4

Microsoft Dynamics CRM 2011 ..............................................................................................4

Microsoft Dynamics CRM............................................................................................4Microsoft Dynamics CRM Online ..............................................................................5

Sage Software ...........................................................................................................................6Sage SalesLogix ............................................................................................................6Sage SalesLogix Cloud ................................................................................................7

Salesforce.com ..........................................................................................................................8Hidden Costs .................................................................................................................8

SugarCRM ..................................................................................................................................9

Three-Year TCO Analysis ........................................................................................................10

10-user deployment .............................................................................................................. 1125-user deployment .............................................................................................................. 12100-user deployment............................................................................................................ 13500-user deployment............................................................................................................ 14

Conclusions .............................................................................................................................15

Appendix/References ............................................................................................................15


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3 Copyright 2011 CRM Outsiders and SugarCRM, Inc. All rights reserved. SugarCRM is a registered trademarks of SugarCRM, Inc. in the United Statesthe European Union and other countries. All other trademarks are the properties of their respective companies

Executive Overview

Te way companies use and pay or customer relationship management (CRM) applications is changing.

Moving rom a predominantly perpetual license-based system, where companies paid a large up-ront sumand then smaller annual maintenance ees, CRM soware providers are now moving towards monthly orannual subscription ees to access CRM soware on the Internet.

Te various pricing schemes can create conusion among buyers as they try to assess the total cost-o-ownership (CO) o dierent CRM services priced under various schemes. For example, there are stillseveral companies oering license-based pricing models. Also, some companies oer a subscription optionin addition to a perpetual license option.

Te ollowing analysis provides a comparative price analysis o our leading CRM solutions or midmarketorganizations. Forrester Research denes midmarket organizations as any organization with revenues o lessthan $1 billion and/or ewer than 1,000 employees. Te CRM solutions included in this CO analysis are:

Microso Dynamics CRM 2011 Sage SalesLogix Salesorce.com SugarCRM

For this analysis we looked at the ollowing costs and requirements: or premise-based solutions we includedthe server and end-user (named user) licenses and annual support and maintenance ees. For on-demand solu-tions we looked at the annual end-user (named user) subscription ees. Each solution had to include mobileaccess, integration with Microso Outlook, a customizable reporting engine and conguration and customiza-tion capabilities.

We looked at the three-year CO (total cost o ownership) or a 10-user; 25-user; 100-user and 500-user deploy-ment. We are assuming the ollowing storage requirements: 5GB or the 10-user; 10GB or the 25-user; 15GBor the 100-user and 25GB or the 500-user deployments. For this analysis, we used standard list pricing asavailable in July 2011. erm, volume and other discounts (such as discounts available under the MicrosoEnterprise Agreement) have not been considered.

Hardware costs or on-premise deployments, such as servers, security rewalls, and other associated costs suchas human capital, which are needed to maintain these systems, have not been included in this cost analysis.

All price inormation is sourced rom reputable web sites and reerenced throughout the analysis.

This white paper is published by CRM Outsiders, an

industry blog on all things CRM and was sponsored

by SugarCRM.


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Vendor Pricing Analysis

Microsoft Dynamics CRM 2011

Microso Dynamics CRM is a ull suite o CRM solutions ocusing on sales, marketing and customersupport. Similar to Sage SalesLogix, Microso Dynamics CRM can be purchased as a premise-based tradi-

tional server soware solution or as a SaaS deployment with monthly subscription ees.

Microsoft Dynamics CRMEach server that runs Microso Dynamics CRM 2011 requires a Server License. wo Server Editions areavailable or Microso Dynamics CRM 2011;

Microso Dynamics CRM 2011 Workgroup Server 2011 (a maximum o ve named Users licenses) Microso Dynamics CRM Server 2011

Since this CO study looks at deployments o more than ve users, were only going to review pricing o theMicroso Dynamics CRM Server 2011.

Microso Dynamics CRM 2011 servers are licensed under the Microso Server/CAL licensing model,meaning that they require a separate server license or each server on which the soware is installed, plus aUser Client Access License (CAL) or every internal user who accesses CRM. Tere are several Client AccessLicenses available. Te most common CAL is the ull User CAL. A ull User CAL is a licensed user whohas ull read and write access to all the Microso Dynamics CRM unctionality rom any device.

In addition, Microso also has pricing or External Connectors. Te Microso Dynamics CRM 2011 ExternalConnectors enable companies to extend Microso Dynamics CRM to external users such as customers,partners and suppliers.

Pricing and licensing o Microso Dynamics is complex and can vary based on the existing Enterprise

Agreement (EA) a company may have in place with Microso. For companies who do not have an EA inplace, Microso oers a Business Ready Licensing plan.

For comparison purposes, we are we are using Business Ready Licensing pricing with the ull User CALpricing in this CO study..

Microsoft Dynamics CRM 2011 Business Ready Licensing Microsoft Dynamics CRM Server 2011

Server (per instance) $4,999

User CAL $999

External Connector (per server instance) $4,999

Software Assurance (support and maintenance) 25%


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Microsoft Dynamics CRM OnlineMicroso Dynamics CRM Online is a Soware-as-as-Service per-user subscription-based model availablein 40 countries. Microso Dynamics CRM online is sold on an annual commitment basis:

Microso Dynamics CRM Online User Subscription License (USL). Tis includes 5GB o storageper organization

Microso Dynamics CRM Online Storage Add-on

Microsoft Dynamics CRM Online Monthly subscription per user Annual subscription per user

CRM Online USL $44 $528.00

Microsoft Dynamics CRM OnlineStorage Add-on

$9.99 per GB per organization $119.88 per GB per organization


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Sage Software

Sage SalesLogixSalesLogix is the top-o-the-line CRM oering rom Sage Soware. Sage SalesLogix is available on-premise(Sage SalesLogix) as well as in the cloud (Sage SalesLogix Cloud). Pricing or these deployment options isvery dierent, leading to some conusion. Sage SalesLogix comes in a variety o favors: Standard, Advanced

and Premier. Deploying SalesLogix involves a number o dierent cost points. Tese include the server ee,user license ee, and additional server ees or mobile access, customization, integrations, etc. Sage chargesan annual maintenance ee on the total cost o the solution. Tis maintenance ee is between 15-21%,depending on the level. For this CO study were using the Sage-recommended Sage Business Care SilverPlan. Te Silver Plan comes at an 18% annual maintenance ee, calculated o the total cost.

Sage SalesLogix solution does not come with mobile access, a Microso Outlook Plug-in, reporting orcustomization and integration capabilities. o get access to these services, customers need to deploy addi-tional servers and capabilities.

ConfgurationsandCustomizations. Unlike all other solutions reviewed in this report, SageSalesLogix customers have to pay extra or conguration and customization capabilities. Tey getthis with the Sage SalesLogix Architect.

Exchangeserverlink.Unlike all other solutions reviewed in this report, Sage SalesLogixcustomers have to pay extra or integration with Microso Outlook. Tey get this with the SageSalesLogix Exchange Link.

Mobile. Unlike all other solutions reviewed in this report, Sage SalesLogix customers have todeploy another server to access their CRM solution rom mobile devices. Tey get this with theSage SalesLogix Standard Enterprise Server.

Reporting.Unlike all other solutions reviewed in this report, Sage SalesLogix customers have todeploy a Sage SalesLogix Pivot Reporter Server in order to get reports rom their CRM solution

Tese are the our most commonly needed additional costs. An overview o all the Sage SageLogix pricingoptions can be ound here: http://www.blytheco.com/saleslogix/price.asp


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Te breakdowns or the ees or SalesLogix editions are as ollows:

Standard* Advanced Premier

Sage SalesLogix Server $2,995 $5,995 $8,995

Sage SalesLogix Architect n/a $1,295 Included

Sage SalesLogix Exchange Link $2,995 $2,995 Included

Sage SalesLogix Standard Enterprise Server $2,995 $2,995 $2,995

Sage SalesLogix Pivot Reporter Server $3,995 $3,995 $3,995

Total server costs used in this TCO white paper $12,980 $17,275 $15,985

Named User (1-50) $795 $995 $1,095

Named User (51-200) $695 $895 $995

Named User (200+) $595 $795 $895

Sage Business Care Bronze Plan 15% 15% 15%Sage Business Care Silver Plan 18% 18% 18%

Sage Business Care Gold Plan 21% 21% 21%

Sage SalesLogix CloudSage Soware also oers an on-demand option o SalesLogix; Sage SalesLogix Cloud. Tis solution includesmobile access, a Microso Outlook Plug-in, reporting as well as customization and integration capabilities.Te pricing or Sage SalesLogix Cloud is a simple annual per user subscription.

Sage SalesLogix Cloud Monthly subscription per user Annual subscription per user

Named User $65 $780

Concurrent User $100 $1,200

For the purpose o this CO study, we are only comparing the Named User subscription pricing.


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Salesforce.com

Salesorce.com is delivered solely as a SaaS oering, which means customers do not pay server ees or annualmaintenance charges. Te subscription ee is inclusive o maintenance, some but not all o the editionsinclude mobile access, a Microso Outlook Plug-in, reporting as well as customization and integrationcapabilities.

Te breakdown o subscription list prices or the various Salesorce.com editions is as ollows:

Edition Monthly per-user costs Annual costs per-user

Contact Manager (no more than 5 users) $5 $60

Salesforce Group (no more than 5 users) $25 $300

Salesforce Professional $65 $780

Salesforce Enterprise $125 $1500

Salesforce Unlimited $250 $3000

Since this CO study looks at deployments o more than ve users, were only going to review pricing orSalesorce Proessional, Enterprise and Unlimited Editions.

Hidden CostsIn the Contact Manager, Group and Proessional Editions, Salesorce.com arbitrarily limits customer usageand integration capabilities. For example advanced reporting, ull mobile access, workfow and API levelintegration capabilities to other soware solutions are only available with the Enterprise and Unlimitededitions. Tis leaves customers that reach any such limits no choice but to eventually upgrade to SalesorceEnterprise Edition. Tis is an important CO actor to investigate when considering Salesorce.com

Remember, these additional prices are not one-time server eesthey are annual ees that must be paid eachyear in order to access your data and CRM system in the manner you see t.

Please review http://www.salesorce.com/crm/editions-pricing.jsp or more inormation on the Salesorce.com pricing.


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SugarCRM

SugarCRM is oered under a subscription model, similar to Salesorce.com, but with some important dier-ences. Te subscription ee is inclusive o maintenance, and includes mobile access, a Microso OutlookPlug-in, reporting as well as customization and integration capabilities. SugarCRM aims to limit the hiddenees that some CRM providers do not include in their base license costs.

In addition, Sugar can be deployed either as an on-demand or SaaS deployment, or on the users ownservers. In addition, Sugar can also be deployed on a number o public clouds, including Amazon EC2,Windows Azure, Rackspace and IBM GS cloud. Sugar partners also deploy customer instances in theirprivate clouds. In contrast with other CRM vendors who oer a choice in deployment, Sugar is priced thesame, regardless o deployment option.

Sugar comes in our subscriptions: Proessional, Corporate, Enterprise and Ultimate. You can consult https://www.sugarcrm.com/crm/products/editions or more inormation around the dierences in these versions.Pricing is as ollows:

Edition Monthly User Fee Annual Cost Per UserSugar Professional $30 $360

Sugar Corporate $45 $540

Sugar Enterprise $60 $720

Sugar Ultimate $100 $1200


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Three-Year TCO Analysis

No two CRM solutions are the same, and o course pricing varies as well. Because o the wide dierencebetween the up-ront and continuing costs across product oerings, a single-user or single-year cost analysisis incomplete. Instead, it becomes necessary to compare the total costs associated with on-demand or SaaSproducts versus on-site or server-based solutions over time.

For this analysis we looked at the ollowing costs and requirements: or premise-based solutions we includedthe server and end-user (named user) licenses and annual support and maintenance ees. For on-demandsolutions we looked at the annual end-user (named user) subscription ees. Each solution had to includemobile access, integration with Microso Outlook, a customizable reporting engine and conguration andcustomization capabilities.

Note: Sage SalesLogix Standard does not have conguration and customization capabilities. Tis skews theCO analysis a bit, which is why we put an asterisk next to Sage SalesLogix Standard in the charts shown.

We looked at the three-year CO (total cost o ownership) or a 10-user; 25-user; 100-user and 500-userdeployment. We are assuming the ollowing storage requirements: 5GB or the 10-user; 10GB or the25-user; 15GB or the 100-user and 25GB or the 500-user deployments. For this analysis, we used standardlist pricing as available in June 2011. erm, volume and other discounts (such as discounts available underthe Microso Enterprise Agreement) have not been considered. Pricing is in US dollars.

Hardware costs or on-premise deployments, such as servers, security rewalls, and other associated costssuch as human capital, which are needed to maintain these systems, have not been included in this costanalysis.


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10-user deployment

$-

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

$100,000

3 Year TCO (10 users)


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25-user deployment

$-

$50,000

$100,000

$150,000

$200,000

$250,000



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100-user deployment

$-

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

$900,000

$1,000,000



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500-user deployment

$-

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

$4,500,000

$5,000,000



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Conclusions

Choosing the right CRM or your business includes many actors. otal cost o ownership is but one o these

actors. However, the importance o low CO increases when considering the liecycle o the CRM deploy-ment. Choosing an inexpensive, entry-level CRM may seem a smart choice now. But i that system cannotscale as your business grows, the deployment can prove more costly in the long run. Also, while some prod-ucts seem to be licensed at a certain price, be sure to ask deep questions regarding additional ees to integratethat CRM tool with other systems, or or mobile access.

Tis short analysis provides some basic insight into the costs o buying and maintaining a CRM system.Several pricing and deployment models existand it is important to understand which model best addressesyour business issues. Beore making any decision, be sure to plot out the value to be generated rom thedeployment, including but not limited to the hard dollar costs.

Appendix/References

List Pricing or Sage SalesLogix: http://www.blytheco.com/saleslogix/price.asp List pricing or Sage SalesLogix Cloud: http://customerx.com/pages/saleslogix_cloud/2011/03/05/

SalesLogix-Cloud-Pricing.aspx List Pricing or Microso Dynamics CRM: http://crmdynamics.blob.core.windows.net/docs/

Pricing_Licensing_Guide.pd List Pricing or Salesorce.com: http://www.salesorce.com/crm/editions-pricing.jsp List Pricing or SugarCRM: http://www.sugarcrm.com/crm/products/editions


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About the Author

Chris Bucholtz is Editor-in-Chie o CRM Outsiders. Chris is a long-time journalist, blogger and CRMindustry infuencer. For over 17 years hes been a technology journalist or some o the industrys best printand online media. Aer his role at VAR Business, he became the rst Editor o InsideCRM, a Focus.combrand. He then took the reigns as Editor-in-Chie o ForecastingClouds.coman online destination deliv-ering rich content and thought leadership views regarding CRM and ERP cloud solutions. Hes also a regularcolumnist or CRMbuyer.com.

In his current Editor-in-Chie role, Chris is the voice o CRM Outsiders Bucholtz continues the CRM

Outsiders tradition o being an independent and opinionated CRM advisor, who provides trusted and useulcontent to the market. He uses his extensive network to encourage other CRM visionaries to contributeregularly on CRM Outsiders.

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