Salesforce and SuiteCRM - 3 year TCO comparison

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

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

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
40 users £40,800 £7,200
20 days customisation £30,000 £12,000

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.

Our TCO comparison is starting to look more interesting:
Year 1 + Implementation Costs
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
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

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
40 users £40,800 £7,200
10 days customisation £15,000 £6000
Additional license costs £7,200 0
5 days training and
consultancy
£10,000 £4,000
TOTAL £73,000 £17,200

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
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
consultancy
£10,000 £4,000
TOTAL £77,800 £17,200

Total Cost of CRM Ownership Saving.
SalesForce against SuiteCRM, the open source alternative.
3 Year Total Cost of Ownership
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

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

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.

Salesforce and SuiteCRM - 3 year TCO comparison

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