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Archive for the tag “Lifetime cost”

A monthly cost you should ask your CRM vendor about

Buying an inkjet printer: lessons when selecting a CRM

Allow me two minutes as I get to the point.

We have all bought a printer, from the very basic to more advanced. While we haggle the price down to the last Rs 50/- (~USD 1), we postpone the thought of the cost of printing – the ongoing relationship on even a monthly basis you have unknowingly signed up for.

Yes, right. I am talking about the cost of the print cartridge.

Okay, now to the point – why is all this relevant to CRM?

Simply, when you buy a CRM software, you are so “into” negotiating the per month license fees per user and beating him down on the customization, you fail to notice the one item on the table, which unnoticed today, will bleed you big going forward.

It is the storage cost.
In an earlier post, I have talked about The real cost of CRM implementation.  Let me spend a little more time on how you will slowly start bleeding on so-called low-cost CRMs.

You buy a CRM (SAAS) for USD 25/- per license per month. Let us say you have 10 users. So, your outgo on license fees per month is USD 250/- per month.

But, you only get 500MB of free storage for your entire organization! Go above that, and you pay USD 4/month/GB.

500MB?? You will run through it in the first month with your ten users generating activities, mailing literature, quotes and invoices and so on.

Let’s do a back of the envelope calculation for how much file storage can really be needed.

Quotes pdfs: 10KB per file

Invoice pdfs: ditto

Literatures send on email as attachments: 500KB to 1 MB each.

How long will it take for you to reach your limit or free storage? 1 month? 2 months? Know this; more time you spend on the system, more will be the storage that will pile up.

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CRM Contracts, Negotiations, and the Hidden “Gotchas” | CRM Magazine Blog

CRM Contracts, Negotiations, and the Hidden “Gotchas” | CRM Magazine Blog.

I am quite puzzled to read this recent post in the CRM Magazine blog. The post itself is largely based on what Gartner Analyst Jane Disbrow said in the Gartner CRM summit in Arizona.

To quote:  “Offers, promotions, and discounts are appealing, but you might end up with something you don’t really need.

Often people just think ‘We have to buy new software,’ but they don’t think of the additional aspects,” Disbrow said. There are many (hard and soft) hidden costs involved with implementing new projects that must be taken into account:

  • Training costs,

  • Customization of code,

  • Implementation time and manpower,

  • Database management, and

  • Data conversion.

Not only are those important to look out for, but Disbrow said that customers need to be aware of the silent software-as-a-service “Gotchas.” Many people think that SaaS lets you scale up and down with users whenever you’d like, she said. However, that’s truly not always the case. On-demand applications can bring along a tailwind of additional expenses including:

  • Storage fees,

  • Premium main fees,

  • Data protection and rights to data,

  • Set-up fees and customization fees,

  • Sand-boxing fees,

  • Fees for customers and business partners,

  • Document functionality, and

  • The ability to reduce or re-level volumes midterm.”

How different is this scenario from any other purchase?
Upfront cost is not the same as lifetime costs; most people get it; corporate purchasers certainly do. And, a product sold as a service will have to embrace some of the same uncertainties of a service sale; just as a service is more difficult to specify than a product, so it is more complicated to price.
Would it be fair to say though that a CRM product sold as a SAAS would typically be, in spite of the uncertainties identified above, cheaper, friendlier and easier to set up and customize than a similar enterprise class software product?
Nothing is as good as it is marketed to be; but nothing is as bad as it is often dismissed as 😉

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