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Cost of CRM - What does CRM really cost?


The total cost of ownership of CRM includes the costs of hardware, software, professional services (for ongoing maintenance, upgrades and optimization) and internal costs. According to a survey (2001) of more than 1,600 business and IT professionals conducted by The Data Warehousing Institute, close to 50% of survey participants said that they had CRM project budgets of less than $500,000. And the same survey showed many respondents with CRM project budgets of over $10 million. Implementation of CRM systems make take anywhere from a few months to a few years.

Costs of Hardware

Implementation of CRM systems routinely requires purchase of new computer hardware, systems software, network equipment and security software. The costs of hardware varies in a wide range dependent on the scope of implementation and platforms. For CRM implementation in mid-sized organizations, hardware may cost about a quarter million dollars.

Costs of Software

The cost of packaged CRM software depends on the scope of implementation (# of CRM modules), complexity of software and CRM vendors. CRM software that involves the integration with external business entities generally costs more. CRM vendors offer discount for organizations who invest in e-business software suite. Mid-sized organizations may commit a few million dollars to packaged e-business software. Organizations tend to purchase more software license than they need. According to a 2003 Gartner survey that 42 Percent of purchased CRM software goes unused.

Costs of Professional Services

Customization The big chunk of costs of professional services is customization. The cost of customization can easily out-run the cost of packaged CRM software. But it is the customization of CRM software that can realign the business processes in customer relationship management for a particular organization. CRM implementation without customization is often useless.

Integration CRM applications have the potentials to improve both efficiency and effectiveness in coordination of managing customer life cycle. This is largely dependent on how well CRM systems are integrated with other enterprise applications. The benefits of a CRM project is limited without the integration with enterprise IT infrastructure. Organizations face many challenges in CRM integration - 1) the challenges of integration of various functional CRM modules, 2) the challenge of integration with other e-business software applications (ERP, SCM and knowledge management), and 3) the challenge of integration with legacy systems. Testing The test of an ERP system is often limited to the workers within organization. The test of CRM goes beyond the boundary of the organization. It will involve the external customers. The cost of CRM testing varies significantly in terms of thoroughness of test and testing software used,

Data Conversion For many organizations, large amount of customer data may have been stored in legacy system and in various data format. New generation of CRM systems almost exclusively use relational database management systems (RDBMS). A significant amount of data has to be converted and stored in CRM backend database system. Data conversion from legacy systems to RDBMS could be both time-consuming and expensive.

Training CRM software automates complex business processes and transforms the way workers interact with customers and with each other. CRM training is expensive because workers almost invariably have to learn both a new software system and a new set of processes of doing business. To reduce the cost of CRM training and to ease the transitions from old processes to new, organizations often seek the help from training companies specialized in coaching workers on using CRM software from particular vendors.

Related Topics
Web Based CRM, Online CRM - Benefits and Vendors
Hosted CRM and CRM ASP - Benefits and Vendors
Mobile CRM and Wireless CRM - Infrastructures, Benefits and Vendors
Critical Successful Factors of CRM Implementation
Call Center and Call Center Software
Call Center Management Software - Features, Pricing and Vendors
Call Center Scheduling Software - Features, Pricing and Vendors


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