Why You Must Consider Total Cost of Ownership

There’s a good reason why industry analysts commonly use time horizons of at least three years when helping CRM vendors and customers set expectations for the total expense of a CRM project. Few organizations have unlimited budgets; and CRM is not a one-time cost. It’s important to understand the full costs of a CRM implementation to help plan, budget, and select systems appropriately. As SugarCRM notes, “The total cost of ownership (TCO) is the purchase price of a product, plus the costs of operating and maintaining it. So, you should consider software licenses and employee salaries to run it, training associated with the technology, onboarding, ongoing support, maintenance, upgrades, and more.”

Whether your company chooses a Cloud CRM or an on-premise CRM, both can be tailored to fit your budget and work style. To manage cost expectations over time, TCO analyses should be conducted with a clear view of the overall strategic expectations for a CRM project. A sound framework for measuring results over the life of the project must be stated at the outset.

The up-front costs of implementing a CRM system have driven the popularity of on-demand and software-as-a-service (SaaS) models for CRM, which are often priced on a per-user monthly fee basis. While this solution is thought to be more expensive in the long run, it is less prohibitive up front, allowing for more leeway in budgeting for initial customizations and integrations. Moreover, companies utilize enterprise application software for their increased reliance on automation which inevitably further reduces costs. While having ballooning costs is an issue that should not be disregarded, due to their support of automation and low up-front cost, enterprise application software is an excellent tool for companies looking to make the most out of their CRM at an affordable price.

Furthermore, given the importance of modeling a company’s unique processes within their CRM system, on-demand software offers incredible flexibility and customizability to meet the needs of mid-sized and large businesses. For companies looking for a CRM specific to their industry, cloud CRM’s can be easily customized to fit your every need. Consequently, this pertains especially to those companies with complex processes or requirements. As a result, while an on-demand model might not be able to significantly lower your total cost of ownership (TCO), it does provide valuable customization, integration, and pre-built automations tools that do help lower overall costs.

While cloud CRM’s are popular for our customers, an on-premise CRM software similarly offers many of our customers the confidence, flexibility, and control they need. While there are many CRM platforms available, SugarCRM is a strong option as it can be installed in the cloud or on premise.

Instead of looking to eliminate up-front investments, some companies look at ways to minimize the TCO over time. This can include taking a phased approach to CRM deployment, rolling out the system in manageable stages, and validating results before expanding. Another strategy is looking for a system whose features closely match the company’s needs from the outset.

Given that customization can account for a large share of CRM implementation costs, finding a solution that more closely matches your needs “out of the box” can significantly further reduce the cost and time it takes to roll out a CRM system. Adapting a CRM system to your company’s specific needs is critical to success; nonetheless, if you can choose a solution that more closely meets these needs from the outset, you can minimize the amount of customization needed. This is one of several reasons more and more companies are choosing industry-specific CRM.

While all companies have unique processes, companies within the same industry typically have broad similarities in the kinds of data they need to capture, the kinds of workflows they use, and the different processes they want to automate.

For example, no two industries will track customer information and sales processes the same way. Consequently, companies in the Homebuilders industry will track customers and sales significantly differently from those in the manufacturing industry. If an industry-specific CRM solution can meet the majority of your industry’s typical needs right from the start while still providing the flexibility for cost-effective additional tailoring, this allows you to focus your implementation expenditures on higher-value activities such as integration with back-end systems or modeling the processes that make your company truly unique.

When looking for technology solutions, don’t immediately gravitate to the “huge” systems as it may inflate your budget parameters. Instead, focus on finding a few flexible solutions that fit your budget and your industry needs.

While finding a basic system that would fulfill your immediate needs sounds appealing, it’s important to find a business partner with a broader suite of solutions and capabilities that you can add as you progress.

A flexible and industry-specific CRM provides the most pre-defined functionality for lead management, sales automation, and customer care. Customization is then only needed to implement unique business processes and integration points. The total cost of ownership for software acquisition, customization, training, implementation, and support are among the lowest in the industry, allowing your company to realize benefits quickly.

The total cost of ownership for a CRM system can be hard to predict due to the uniqueness of each implementation and the differing levels of complexity among enterprise technology environments. Cloud CRM’s provide as an excellent opportunity to reduce time, effort, and costs with their extensive reliance on automations. Coupled with their low up-front costs, companies can shift their budget to invest in customizations and integrations fit for their company and industry. Companies selecting on-premise CRM face more of their CRM costs up-front. Although sometimes daunting, this allows companies to budget for and address most of their CRM costs at the outset, measuring ROI against an initial investment and declining costs over subsequent years. Whether you pick a cloud CRM or an on-premise CRM, both offer tremendous value and customization that your company can utilize to outperform the competition.

How Tokara Solutions is ready to help you get the most out of your CRM: 

The business landscape is anything but static. Having a fully integrated, end-to-end CRM for every step in the customer journey is essential for any business looking to achieve the most while maintaining an ease of mind! Tokara Solutions offers help in providing the best CRM for you and your company! With an average of over 18 years of CRM consulting, Tokara’s wealth of knowledge in integrating and maintaining CRM systems is rooted in our devotion to supporting small, medium and large size enterprises.