Unified Communications Solutions

Hosted Microsoft Dynamics CRM In The Cloud

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These days there are many CRM options from which to choose – Salesforce.com, Microsoft Dynamics CRM, SAP, Oracle, are all examples of the big-name brands - in fact business-software.com recently published a feature comparison of forty (40!) CRM packages. Most of them provide similar features, like sales, marketing, customer service and so on, so the first decision point is to look at features that the business needs and winnow down the list of potential candidate systems based on feature/functionality. An additional consideration is the ability to customize. If customization is important that needs to be factored in too – some hosted systems permit only limited customization. A related issue is if there is the need to potentially link to other systems like line of business applications, point-of-sale, or financials. This latter issue is important whether the system is in-house or hosted, as the support of security protocols and authorization mechanisms vary and some implementations may not support business needs.

The next consideration is whether to run the selected solution on-premise, or to buy a hosted cloud solution.  This decision often tends to be driven by the size of the company. Larger companies with existing infrastructure and IT resources may prefer to retain control of their CRM. Smaller firms may not have the capital or expertise for an on-premise solution, so hosted CRM is a better fit.

Let’s look at a hypothetical case of a manufacturing company with 100 employees considering Microsoft Dynamics CRM. Typically only 10-15% of all employees need CRM access, so this company would need 10 licenses as a minimum. The economics for the two options for Microsoft Dynamics CRM are listed below. For the sake of simplicity I have assumed that the company will buy a new single server for the CRM system, and further that its sales team and executives will need access to the system over the Internet.

Initial capital costs for on-premise Dynamics CRM

Source: www.microsoft.com

Operating costs for on-premise Dynamics CRM

Source: Author’s estimates on market rates and support/admin needs.

Dynamics CRM on-premise 5 year total cost of ownership: $154,871

Yes, really! An on-premise system can cost as much to run each year as the original purchase price.

Note that these prices are estimates only and your mileage will vary.

By contrast, hosted Dynamics CRM costs $40/user/month. So the 5 year TCO for 10 users is $24,000, or about 15% of the equivalent on-premise system.

How is such a massive difference possible? Fundamentally, economies of scale. Hosting companies can share hardware and other services amongst hundreds or thousands of customers very efficiently. Microsoft licensing is monthly instead of an up-front lump sum. Patching, updates and backups are automated to reduce cost and risk. Moreover hosting companies replicate their infrastructure to make sure systems stay available even in the event of hardware failure.

Pricing across hosted CRM from different vendors vary widely. Certainly the company that creates a lot of buzz is Salesforce.com. Their pricing is a little difficult to pin down, at least for me. However I do know that Dynamics CRM offers equivalent functionality to the Salesforce Enterprise sales module that costs $125/month. To add basic customer service that is included in Dynamics CRM out of the box costs another $65 for the Salesforce Service Cloud Professional Edition. So to buy Salesforce with equivalent functionality to Dynamics CRM is over four times more expensive per month.

To recap here is how I would recommend choosing a CRM solution:

• Document business needs
• Short list CRM applications with the right feature set
• Determine importance of the ability to customize the system
• Assess the need to link to other external systems
• Review economics of in-house vs. hosted options

For an informative comparison of major CRM systems, please read Lauren Carlson's article at http://www.softwareadvice.com/articles/crm/salesforce-alternatives-5-systems-to-consider-1052011/

For further information on Microsoft Dynamics CRM please visit http://www.microsoft.com/en-us/dynamics/default.aspx .

To contact Chinook Communications please visit http://www.chinookcommunications.com .