How long is a piece of string? That question is analogous to asking how much CRM costs. There are just too many unknowns, too many variables to begin to construct an answer. So a recent (May, 2011) study done by Forrester Research, Inc. for Microsoft is illuminating for two reasons: it examines the external and internal costs of implementing Microsoft Dynamics CRM 2011, and it puts real numbers next to each cost item.

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How much does mid-market CRM really cost?

Forrester interviewed nine different Microsoft clients, all service sector firms, representing many different regions of the globe and a wide range of sizes based on annual revenue from $15 million to over $200 million. The construct Forrester representing many different regions of the globe and a wide range of sizes based on annual revenue from $15 million to over $200 million. The construct Forrester used was to boil their results down to represent a model composite organization with 50 users. Importantly, while the nine customers included some who chose traditional on-premise implementations, others who opted for partner-hosted deployments and some who started with using Microsoft Dynamics CRM 2011 as an online, on demand solution, the cost figures for the composite 50-person firm are based on the lowest cost of the three options, the on-demand model.

To cut to the chase, the total projected costs over a three-year period, including upfront costs, were $212,542.

The biggest single item was software license fees due to Microsoft. Microsoft charges $44 per month per user for a 50-seat license. Forrester added 15% to cover taxes, levies and duties to come up with an annual cost of $29, 568, or $88,704 over three years.

Implementation fees comprised the next largest line item. For the purposes of the study, Forrester assumed that the “customer” would employ a Microsoft partner, as did all the nine interviewed customers. A further assumption made was that the partner’s involvement took three months, which seems reasonable for an on-demand application. This work included business process analysis, project management, application customization, and implementation. Professional fees for this engagement were an initial $28,250 and an additional $4,800 annually in support charges. Total professional fees over a three-year period were $42,650.

Internal costs started with planning and design costs, starting with a four-person team from sales, marketing and IT staff to evaluate, test and pilot the application, establish business practices and work with the implementation partner on customization. Forrester’s assumption was that this four-person team-spent 20% of their time on the project over a three-month time frame. This seems a bit light, because typically an in-house team will be working for a few months before the implementation partner shows up. Still, the costs for this phase were pegged at $20,000. An additional $8,918 in internal time was costed against the implementation phase.

Forrester’s projected training costs are probably unrealistically low. They figured one person would spend a week developing the training module and that the 50 users would only need five hours each in training. Total cost: $13,269. To improve ROI it would not be unreasonable to double that figure.

Finally, internal administration costs are a nominal $13,000 per year, $39,000 over three years.

So, there you have it, ballpark estimates of what it would take a 50-person organization to implement and live with Microsoft Dynamics CRM 2011, roughly $6,000 per month.  Forrester also projected that payback on this investment took just four months. But that’s another story.

ERP systems generate so much rich data from every corner of the enterprise that it was natural that decision support systems, executive support systems, OLAP and the like would attach themselves to ERP as a module commonly called Business Intelligence (BI). Business Intelligence is a set of methodologies, processes, architectures, and technologies that transform raw data into meaningful and useful information used to enable more effective strategic, tactical, and operational insights and decision-making.

Written by :

tracey boxer