How to Calculate the Real Cost of SaaS CRM?
Most on demand CRM vendors resort to using ROI calculations to prove that their Software-as-a-Service CRM solutions are a better and wiser choice than traditional in-house cousins. While I strongly believe that any company with less than 2000 employees should and must use an on-demand CRM solution versus a traditional one; I also believe that there are other hidden costs associated with on-demand CRM that most vendors either hide intentionally or make vague.
In my quest to uncover the hidden costs of SaaS CRM, I realized that many costs are almost either never found on the web site of the vendor, or just simply hard to find and buried away.
I investigated 3 different on-demand CRM providers namely: Salesforce.com, Netsuite and Salesboom.com. I also made this simple comparison based on the Enterprise Editions of these companies. By choosing this product offering you will get a complete CRM system encompassing Marketing Automation, Sales Force Automation, Customer Service & Support as well as in the case of Salesboom.com you will also enjoy back-office and accounting tools.
Hidden Costs of SaaS CRM
The on-demand model depends on per user pricing, and that is the actual cost most people associate with the product. The difficulty in this approach is it is unrealistic for many reasons. Almost most companies will depend on customizing the application to suite there business processes and that will cost time and money to the tunes of as much as %200 of the license fees. Another reason would be that companies can use less licenses than actually needed at any given time during the lifetime of the contract, which will not normally lead to a lower bill. Some companies will be required to purchase extra storage at a later date and believe me it is expensive as you will see in the comparison at the end of this post. If your company's critical processes require immediate support, then there are extra costs associated with premium support which is typically calculated as a percentage of the actual license fees.
Also, except for Salesboom.com, both other vendors will not permit your users to mix and match editions, and that alone can lead to huge increases in license fees and premium support as well.
If your company wishes to integrate the CRM product with other ERP or legacy systems, other fees are applicable (normally as an API yearly license fee).
At the end of the day, every company that considers on-demand CRM must understand the real costs associated and must ask the vendors first hand.
1) Salesforce.com
:
Price Per User: $125/user/month
Extra Storage: $6144/year per GB
Included Storage: 1 GB
API license fees: $5000/year
Professional Services: $250/hour
Premium Support: %15 of annual license fees
Mix & Match Editions: No
2) Netsuite:
Price Per User: $99/user/month
Extra Storage: $1500/year per GB
Included Storage: 10 GB
API license fees: $7000/year
Professional Services: $225/hour
Premium Support: %22.5 of annual license fees
Mix & Match Editions: No
3) Salesboom.com:
Price Per User: $75/user/month
Extra Storage: $700/year per GB
Included Storage: 12 GB
API license fees: FREE
Professional Services: $150/hour
Premium Support: %15 of annual license fees
Mix & Match Editions: Yes
When software-as-a-Service CRM was first launched back in the late 1990s, it represented an innovation of how the CRM technology was delivered to end users. The hosted model decreased total cost of ownership- TCO dramatically and became a very popular option amongst small and medium size businesses as well as many Fortune 1000 companies.
Although more innovative; the software-as-a-service model suffered serious usability issues and obstacles when compared to its desktop cousins. Web based applications have been suffering from the Page-Reload Cycle which annoys users and prolongs the time it takes to do any task within the CRM. When a post form is utilized to generate a dynamic page, the content will not be refreshed unless a page-reload is performed. Some applications might use Java Applets to show data in real time, but this approach is so not web 2.0 and is just another user-annoying feature. What this means for the CRM user? It basically means, that getting up-to-the-minute information is never done in real time and will depend on a human-effort (you) to synchronize whats on your screen with whats on the servers.
Such usability deficiency has not stopped tens of thousands of companies from implementing SaaS CRM, which leads me to believe that resolving such user-interface issues is only bound to make the on demand CRM market that much larger!
Many companies with a SaaS offering have been trying to bridge the gab between the desktop and the webtop behavior, and to their credit with much success. Take for instance gmail. By using AJAX, Google is offering a hosted web-based email solution that is as interactive and user friendly as Microsoft's outlook, without the headaches.
Salesboom.com, implemented many AJAXy features that reduce the clicks required to complete everyday CRM tasks. For instance, in Salesforce.com, adding a note to an account will require several clicks and page-reloads before it is done. In Salesboom.com, an AJAX pop-up will take care of this task in one single click without the usual page-reloads seamlessly.
While a full-AJAX approach is not feasible financially for most vendors, some vendors are starting to focus on important and often most used tools, especially in SFA- Sales -Force Automation.
Another great solution to synchronizing data in real time between the user's screen and the server's database is COMET. COMET is an AJAX technique that allows a server to hold a poll request until it times out. With such techniques, the server will inform the user when new data is available without depending on the user to request it or ever reloading the page. Again gmail uses it to synchronize emails, and Salesboom.com uses it to alert the users with work flow messages.
The development techniques such as AJAX and COMET will further contribute to the idea of Rich Internet Applications- RIA, which promises better CRM adoption through enhanced usability.
March, 2007
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