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Salesforce v SuiteCRM - 3 year total cost of ownership comparison

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The number one CRM myth – “My software is better than your software”.

The number one CRM truth - "My software costs more than your software".

We compare SuiteCRM, the open source CRM with SalesForce Enterprise.

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Salesforce v SuiteCRM - 3 year total cost of ownership comparison

  1. 1. SalesForce v. SuiteCRM – the Open Source alternative SalesForce is the 800lb gorilla in the SAAS CRM room. They have first mover advantage, brand recognition, sales and marketing muscle and scale. They are the Microsoft of CRM. SuiteCRM is the free and open source fork of SugarCRM Community Edition and delivers the same core functionality found in SugarCRM Enterprise, SalesForce Enterprise, Microsoft Dynamics and Oracle CRM. The number one CRM myth – “My software is better than your software” Customer Relationship Management (CRM) is an overcrowded marketplace because it's commoditised business logic. The major CRM applications all do the same things. They do them in slightly different ways, they look slightly different while they do them, but they are all modelling the same business processes. There's no secret soup. So, here's your first major decision: “Do I pay heavily for something that's available for free?” In the pragmatic and competitive world of business, there are some reasons why the answer to that question might be “Maybe”. There are other factors that influence purchasing decisions such as support, customisation, availability, and training and in this article we'll look at each of these and compare the differences between open source SuiteCRM and SalesForce. But here's one question you might wish to consider before we get into the meat of the sandwich: “Why does SalesForce cost so much?” The answer is relatively simple: In the world of commoditised business logic what differentiates vendors is the quality and persuasiveness of their sales and marketing machines, not the quality of the application. Around 80% of the revenue that SalesForce receives goes into salaries for highly remunerated sales executives and for the kind of marketing you'll see any time you do a Google search for CRM or pick up a heavyweight business magazine. 80 cents in every dollar goes to feed the sales and marketing machine to replace the customers who leave (churn) and entice new ones. It's one of the world's greatest and most aggressive sales and marketing companies and that does not come cheap. Open Source CRM is precisely the opposite. 80% of the revenue for open source CRM goes into product development. There are no expensive sales teams leaving the office in fast cars every night. The network effect of community replaces the hype of marketing and the cost to acquire new customers plummets. A saving passed on directly to customers. SuiteCRM – the open source CRM – 3 year Total Cost of Ownership comparison with SalesForce || Page 1 of 10
  2. 2. 3 Year Total cost of CRM ownership SalesForce versus open source SuiteCRM - TCO For the purposes of this costing exercise, we will assume the following: 1. 40 users 2. You need Workflow to automate business processes 3. You need Analytics to turn data into information 4. You need to control access to different data types 5. SuiteCRM is being delivered as a SAAS offering with support and backup included. In order to access Workflow and Analytics, which are pretty essential functions, you must have SalesForce Enterprise Edition. At £85 per user per month, it doesn't come cheap. With SuiteCRM those features come as standard so there are no extra costs. Hosting, administration and support costs £15 per user per month. The first line of our costing matrix reads like this: Year 1 – Ongoing costs Requirement SalesForce SuiteCRM 40 users £40,800 £7,200 Total year 1 savings £33,600 SuiteCRM – the open source CRM – 3 year Total Cost of Ownership comparison with SalesForce || Page 2 of 10
  3. 3. Customisations Every mature business manager knows that no application will do what is required completely. No application will match your business process needs entirely. You will need to customise or start getting spreadsheets out and introduce lots of islands of information again. And you will need to continue to customise because business needs do not stand still. For this exercise, we'll assume 20 days of customisation are required each year. This is business driven and independent of application. You will always find things you need to change. To scratch that itch you will need to set aside a budget. SalesForce Customisations SalesForce has a custom programming language. There are many widely known and understood development languages in the world. SalesForce's Apex is not one of them. If you want to customise SalesForce, you're going to need a partner and you're going to pay non-commodity, highly specialist pricing. Be prepared to pay up to £2,000 a day for an accredited SalesForce Developer. SuiteCRM customisations SuiteCRM is built using commodity and open source development resources. There is an open market in skills and a large population of experts. However, SuiteCRM is a large and complex development environment and requires specialist knowledge. So you will need a consultancy that has either SuiteCRM or SugarCRM experience. But, it's open source. There's a competitive market in skills and so that drives cost down. An experienced SuiteCRM developer will cost around £600 a day. The costing matrix is starting to take shape: Year 1 – plus Customisation costs Requirement SalesForce SuiteCRM 40 users £40,800 £7,200 20 days customisation £30,000 £12,000 Total year 1 savings £51,600 SuiteCRM – the open source CRM – 3 year Total Cost of Ownership comparison with SalesForce || Page 3 of 10
  4. 4. Implementation Consultancy If you're going to implement anything that is going to have a profound impact on your business then you need expert assistance. Regardless of which application you choose, software is an investment and you're going to need Consultants. Consultants will provide the following services: • Configuration • Training • Workflow design • Report design • Data migration Both applications will need implementation skills to ensure that it's right first time. We have assumed 15 days of implementation consultancy. SalesForce You're in a walled garden. The plants, people, wildlife and layout of the garden is determined by the gardener. You have no choice but to see and use only what the gardener decides and provides. So you need to prepare to pay for that and use SalesForce Certified Consultants. Be prepared to pay premium prices. There's limited choice and not much of a market so prices are kept pretty high. Be prepared to pay between £1500- 3000 a day for an accredited SalesForce Consultant. SuiteCRM You're in an open world. You still need smart and experienced people. But there's a competitive market for skills. The good news is that SugarCRM Community Edition was the most deployed CRM on the planet and SuiteCRM is SugarCRM supercharged – there's a very large talent pool of experienced consultants and developers. An experienced SuiteCRM consultant will cost £600- 800 a day. SuiteCRM – the open source CRM – 3 year Total Cost of Ownership comparison with SalesForce || Page 4 of 10
  5. 5. Our TCO comparison is starting to look more interesting: Year 1 + Implementation Costs Requirement SalesForce SuiteCRM 40 users £40,800 £7,200 20 days customisation £30,0001 £12,000 15 days implementation £30,0002 £12,000 TOTAL £100,800 £31,200 Total year 1 savings £69,600 So, you're saving more than £1,700 per user. Assuming that 25% of these are your heavy hitter sales people, that's around £7,000 per sales person. That buys an awful lot of other investment in getting your sales moving. However, that's only year 1. We're going to look at this over three years. 1 We have assumed a cost of £1500 per day 2 We have assumed a cost of £2000 per day SuiteCRM – the open source CRM – 3 year Total Cost of Ownership comparison with SalesForce || Page 5 of 10
  6. 6. SalesForce versus open source SuiteCRM – TCO Year 2 Your usage of Salesforce makes demands of the application that the very tight contractual arrangement cannot accommodate within your current agreement. So you may need to buy more storage, or increase the number of API calls. There are numerous ways within the Salesforce ecosystem where you will find obstacles that can only be overcome if you increase your monthly contract spend. For the sake of this article, we're going to assume a modest £15 per user per month. Very little else changes. You won't need an implementation budget but you still need to pay for support, you should budget for some training, you still need hosting and backup. What does change are your business requirements. Business adapts to the competitive environment it operates in and you CRM must reflect that. So you should maintain an annual budget for customisation. Year 2 - ongoing costs Requirement SalesForce SuiteCRM 40 users £40,800 £7,200 10 days customisation £15,000 £6000 Additional license costs £7,200 0 5 days training and £10,000 £4,000 consultancy TOTAL £73,000 £17,200 Total year 2 savings £55,800 SuiteCRM – the open source CRM – 3 year Total Cost of Ownership comparison with SalesForce || Page 6 of 10
  7. 7. SalesForce versus open source SuiteCRM – TCO Year 3 With Salesforce you're probably going to need more storage. You need to understand the Salesforce model. You are in cycle of dependency and feeding the habit gets more expensive. The vendor needs to increase profits per customer and you're pretty locked in. So, increase your monthly spend by £10 per user per annum to accommodate the next demand on your budget. Otherwise we see little need to change the requirement. The software will automatically be updated as new versions are released. You may have some training needs to deal with this but these are included in the budget. Year 3 - ongoing costs Requirement SalesForce SuiteCRM 40 users £40,800 £7,200 10 days customisation £15,000 £6,000 Additional license costs £7,200 0 Additional storage costs £4,800 0 5 days training and £10,000 £4,000 consultancy TOTAL £77,800 £17,200 Total year 3 savings £60,600 SuiteCRM – the open source CRM – 3 year Total Cost of Ownership comparison with SalesForce || Page 7 of 10
  8. 8. Total Cost of CRM Ownership Saving. SalesForce against SuiteCRM, the open source alternative. 3 Year Total Cost of Ownership Requirement SalesForce SuiteCRM Year 1 £100,800 £31,200 Year 2 £73,000 £17,200 Year 3 £77,800 £17,200 TOTAL £251,600 £65,600 Total 3 year savings £186,000 SuiteCRM – the open source CRM – 3 year Total Cost of Ownership comparison with SalesForce || Page 8 of 10
  9. 9. SalesForce Analysis We didn't particularly think it was fair for us to write an article about SalesForce's weaknesses. It becomes a little tiresome reading one vendor bashing another. Instead, we reproduce a report from CRMSearch.com3, one of the independent CRM analysis websites. We have only modified the article to improve readability or to reference SuiteCRM. SalesForce Weaknesses As Salesforce.com continues its transition from a CRM company to a platform company, several CRM competitors have superseded Salesforce's CRM features, functions and capabilities. Lack of Choice Unlike primary competitors such as Microsoft, SAP or SuiteCRM and others whom offer both choice in deployment (on-premise, on-demand or a hybrid combination) as well as choice in cloud platform (vendor cloud, private cloud or public cloud), Salesforce.com does not support any public cloud (i.e. Amazon EC2, Microsoft Azure, Rackspace, etc.) which limits hosting options, prevents portability, threatens IT investment and significantly increases exit costs. For example, Salesforce.com customers who choose to extend their CRM software solution with custom development created with a single vendor tool set (Force.com) and which only operates on one cloud will likely not be able to transfer and protect that investment if they choose to leave Salesforce.com. Functional Weaknesses Salesforce.com marketing software is competitively weak in the SaaS CRM industry. To achieve lead management or marketing automation capabilities such as digital prospect tracking, lead scoring, progressive profiling, nurture campaigns and rich marketing analytics requires a separate product acquisition. Salesforce has introduced the Marketing Cloud, but its limited to social marketing and satisfies few or none of the previously listed lead management or marketing automation requirements. Many Salesforce.com customers turn to third party marketing automation software products from vendors such as Act-On Software, Eloqua, Marketo or Pardot, which deliver strong solutions but increase costs and multi-vendor management issues. 3 http://www.crmsearch.com/salesforce-strengths.php SuiteCRM – the open source CRM – 3 year Total Cost of Ownership comparison with SalesForce || Page 9 of 10
  10. 10. Poor Reporting Tools Salesforce.com is also without sophisticated business intelligence (BI). Customers seeking data warehousing, data mining, online analytical processing (OLAP) or predictive analytics will need to procure third party solutions from AppExchange or elsewhere. Enterprise and not suitable for small business marketing Despite an initial thrust and acceptance in the small business market, small business customers repeatedly opine that professional services options are few and extremely costly. For small business customers that require software customization, system integration or other professional services, the lack of channel options, combined with the lack of desire for smaller projects by the few partners available, leave this customer segment without many options. Price When reviewing features to features its apparent that Salesforce.com is the highest priced product in the SaaS CRM industry. Ecosystem Salesforce.com becomes less competitive when looking beyond CRM as a point solution. For companies seeking broader business software suites, including back office accounting or ERP systems, the inconsistency and relatively shallow integrations delivered with third party AppExchange vendors do not stand up well to single vendor solutions from competitors such as NetSuite and SAP Business ByDesign. Hosting Options – where is your data? The company operates fewer international data centres than many of its competitors. This can impact user performance (latency, hops, jitter, etc.) as well as pose regulatory concerns with regard to data privacy and government compliance. This may make Salesforce.com less appealing for customers that get progressively further away from the U.S. Services Surprisingly, Salesforce.com generally doesn't provide a SaaS Service Level Agreement (SLA) unless the customer requests and negotiates it. Even then, SLAs are inconsistent from customer to customer and fall below uptime guarantees of primary SaaS CRM competitors. SuiteCRM – the open source CRM – 3 year Total Cost of Ownership comparison with SalesForce || Page 10 of 10

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