| Buying CRM - Cost Components |
There are three things that are certain in life – death, taxes and the fact that most companies underestimate the life cycle cost of a CRM deployment. Let’s look at some of the cost components.Purchase ConsiderationsWhen you purchase CRM software outright, you’ll typically need to buy a server license and a client license for each user. On top of these one-time fees, the vendors (or their resellers) normally charge an annual software maintenance and annual technical support fee, the cost of which is approximately 20% of the total cost of the software.Operating system and database licenses are often additional costs, although certain contact managers include SQL Server licensing in their price. CRM applications that run on open source components have little or no licensing costs beyond the cost of the software. With an in-house system, a dedicated server or servers are recommended by the vendors. The cost of server hardware should be factored into the overall cost of a CRM deployment Hosted PricingWith a hosted, multi-tenant solution, there’s no software to purchase or install. Instead, the service is rented on a monthly, annual, or multi-annual basis. Typically, the longer the term that a company commits to, the better the price. The per user, per month list prices range from $20 to $120.Most providers charge extra if the total disk space used exceeds a certain level. Premier support plans can also cost extra. Professional ServicesWe have run into a number of CRM buyers in the past, who, when they embarked on a CRM selection process, assumed that professional services were included in the license or rental price. Unfortunately – this is not the case. In fact, for many companies, the cost of implementing CRM exceeds the cost of licenses or subscription fees.Implementation services are invariably more than most CRM buyers had expected going into the process. Why is this? First, CRM professional services are typically provided by experienced professionals with both extensive product training and considerable accumulated knowledge about how to effectively automate business processes. They have also “stubbed their toes” a lot and know what not to do procedurally or technically. Second, there are a variety of components to a successful CRM implementation. Deploying CRM is a lot more than running setup.exe. In fact, CRM has an entire implementation cycle that can include: needs analysis; functional requirements documentation; prototype and review; installation; data migration and integration; custom report development; user training; administrator training; follow up modifications and support. Without investing in some of these services, your company might not be able to achieve a discernable ROI. Implementing a CRM system is a process, not an event. As such, you should consider breaking your implementation up into phases. Address your key business issues in Phase I and add functionality over time, in subsequent phases. LeasingLeasing is an often overlooked option for companies that decide to go with an in-house system. With a lease, you can spread out all your costs over time – software, hardware and professional services.If you decide that an in-house solution is better for your company, but you have short term financial constraints, leasing provides you with a monthly payment structure – similar to that of a hosted, rental model with the added bonus that professional services can also be amortized. Generally leasing companies prefer to finance businesses that have been in business for over two years. For newer businesses, leasing companies will often request a personal guarantee from the owner or president – something that owners are usually reluctant to sign. Add-on ProductsMost CRM applications have fostered a cottage industry of add-on products to handle functionality that is not built into a given CRM application. This functionality may not exist because it is extremely specialized, or because the CRM vendor may have not yet gotten around to adding the functionality to the application.For example, detection and/or merging of duplicate data records may be core to one CRM system, but an add-on to another system. Add-on products might be used for the following:
Ongoing CostsA deployed CRM solution is a living, breathing entity. As such, there will invariably be changes to the system over time. Rarely will a CRM system run itself. An ongoing training strategy is also a must.There will be a level of ongoing application management required, whether by internal staff, external consultants or a combination of the two. This application management, in turn, represents some level of ongoing cost. |
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