Salesforce v SuiteCRM - 3 year total cost of ownership 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 deliversthe 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'scommoditised business logic. The major CRM applications all do the same things. They dothem in slightly different ways, they look slightly different while they do them, but they areall 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 theanswer to that question might be “Maybe”. There are other factors that influencepurchasing decisions such as support, customisation, availability, and training and in thisarticle we'll look at each of these and compare the differences between open sourceSuiteCRM and SalesForce. But here's one question you might wish to consider before weget into the meat of the sandwich:

“Why does SalesForce cost so much?”

The answer is relatively simple: In the world of commoditised business logic whatdifferentiates vendors is the quality and persuasiveness of their sales and marketingmachines, not the quality of the application.

Around 80% of the revenue that SalesForce receives goes into salaries for highlyremunerated sales executives and for the kind of marketing you'll see any time you do aGoogle search for CRM or pick up a heavyweight business magazine. 80 cents in everydollar 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 salesand marketing companies and that does not come cheap.

Open Source CRM is precisely the opposite. 80% of the revenue for open source CRMgoes into product development. There are no expensive sales teams leaving the office infast cars every night. The network effect of community replaces the hype of marketing andthe 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 || 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 musthave 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 requiredcompletely. No application will match your business process needs entirely. You will needto customise or start getting spreadsheets out and introduce lots of islands of informationagain. And you will need to continue to customise because business needs do not standstill.

For this exercise, we'll assume 20 days of customisation are required each year. This isbusiness driven and independent of application. You will always find things you need tochange. 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 andunderstood development languages in the world. SalesForce's Apex is not one of them. Ifyou want to customise SalesForce, you're going to need a partner and you're going to paynon-commodity, highly specialist pricing. Be prepared to pay up to £2,000 a day for anaccredited SalesForce Developer.

SuiteCRM customisations

SuiteCRM is built using commodity and open source development resources. There is anopen market in skills and a large population of experts. However, SuiteCRM is a large andcomplex development environment and requires specialist knowledge. So you will need aconsultancy 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 experiencedSuiteCRM 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 yourbusiness then you need expert assistance. Regardless of which application you choose,software is an investment and you're going to need Consultants. Consultants will providethe 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 isdetermined by the gardener. You have no choice but to see and use only what thegardener decides and provides. So you need to prepare to pay for that and useSalesForce Certified Consultants. Be prepared to pay premium prices. There's limitedchoice and not much of a market so prices are kept pretty high. Be prepared to paybetween £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 acompetitive market for skills. The good news is that SugarCRM Community Edition wasthe most deployed CRM on the planet and SuiteCRM is SugarCRM supercharged –there's a very large talent pool of experienced consultants and developers. An experiencedSuiteCRM 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


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 heavyhitter sales people, that's around £7,000 per sales person. That buys an awful lot of otherinvestment 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 contractualarrangement cannot accommodate within your current agreement. So you may need tobuy more storage, or increase the number of API calls. There are numerous ways withinthe Salesforce ecosystem where you will find obstacles that can only be overcome if youincrease your monthly contract spend. For the sake of this article, we're going to assume amodest £15 per user per month.

Very little else changes. You won't need an implementation budget but you still need to payfor support, you should budget for some training, you still need hosting and backup.

What does change are your business requirements. Business adapts to the competitiveenvironment it operates in and you CRM must reflect that. So you should maintain anannual 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 theSalesforce model. You are in cycle of dependency and feeding the habit gets moreexpensive. 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 nextdemand on your budget.

Otherwise we see little need to change the requirement. The software will automatically beupdated as new versions are released. You may have some training needs to deal withthis but these are included in the budget.

Year 3 - ongoing costs


40 users £40,800 £7,200


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'sweaknesses. It becomes a little tiresome reading one vendor bashing another.

Instead, we reproduce a report from CRMSearch.com3, one of the independent CRManalysis 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 andcapabilities.

Lack of Choice

Unlike primary competitors such as Microsoft, SAP or SuiteCRM and others whomoffer 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, MicrosoftAzure, Rackspace, etc.) which limits hosting options, prevents portability, threatensIT investment and significantly increases exit costs.

For example, Salesforce.com customers who choose to extend their CRM softwaresolution 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 protectthat investment if they choose to leave Salesforce.com.

Functional Weaknesses

Salesforce.com marketing software is competitively weak in the SaaS CRMindustry. To achieve lead management or marketing automation capabilities such asdigital prospect tracking, lead scoring, progressive profiling, nurture campaigns andrich marketing analytics requires a separate product acquisition. Salesforce hasintroduced the Marketing Cloud, but its limited to social marketing and satisfies fewor none of the previously listed lead management or marketing automationrequirements. Many Salesforce.com customers turn to third party marketingautomation software products from vendors such as Act-On Software, Eloqua,Marketo or Pardot, which deliver strong solutions but increase costs andmulti-vendor management issues.

3 http://www.crmsearch.com/salesforce-strengths.php


http://www.crmsearch.com/eloqua-review.php

http://www.crmsearch.com/marketo-review.php

Poor Reporting Tools

Salesforce.com is also without sophisticated business intelligence (BI). Customersseeking data warehousing, data mining, online analytical processing (OLAP) orpredictive analytics will need to procure third party solutions from AppExchange orelsewhere.

Enterprise and not suitable for small business marketing

Despite an initial thrust and acceptance in the small business market, smallbusiness customers repeatedly opine that professional services options are few andextremely 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 highestpriced product in the SaaS CRM industry.

Ecosystem

Salesforce.com becomes less competitive when looking beyond CRM as a pointsolution. For companies seeking broader business software suites, including backoffice accounting or ERP systems, the inconsistency and relatively shallowintegrations delivered with third party AppExchange vendors do not stand up well tosingle vendor solutions from competitors such as NetSuite and SAP BusinessByDesign.

Hosting Options – where is your data?

The company operates fewer international data centres than many of itscompetitors. This can impact user performance (latency, hops, jitter, etc.) as well aspose regulatory concerns with regard to data privacy and government compliance.This may make Salesforce.com less appealing for customers that get progressivelyfurther away from the U.S.

Services

Surprisingly, Salesforce.com generally doesn't provide a SaaS Service LevelAgreement (SLA) unless the customer requests and negotiates it. Even then, SLAsare inconsistent from customer to customer and fall below uptime guarantees ofprimary SaaS CRM competitors.


Salesforce v SuiteCRM - 3 year total cost of ownership comparison

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