Understanding CRM TCO: How SugarCRM Optimizes Costs and Value
Investing in a Customer Relationship Management (CRM) solution is a critical decision for any business. Beyond the initial price tag, the CRM TCO – total cost of ownership – sums up all the expenses of acquiring, implementing, and maintaining the solution over its lifecycle.
For companies that seek greater control over their CRM, SugarCRM offers an attractive solution with features and flexibility designed to reduce hidden costs and boost value. Sugar users can lower total cost of ownership by up to 32% compared to Salesforce, while delivering similar functionality, Nucleus Research report finds.
In this blog post, we’ll dive into all the elements that stack up and impact a CRM’s TCO analysis, as well as how Sugar is an excellent solution for enterprises aiming for higher levels of flexibility, usability, and configuration, while maintaining optimal levels of control over the TCO.
What we'll Cover:
What is the Total Cost of Ownership (TCO)?
TCO is the overall cost of a product or service over its lifespan beyond the initial purchase or subscription fee. To calculate TCO for CRM solutions, you must include software licensing, implementation, integration, training, customization, and maintenance fees. In addition to these investments, a CRM’s TCO also refers to any potential downtime or productivity losses during the transition and migration phases.
In terms of TCO, SugarCRM offers transparent pricing, a flexible deployment model, and tools designed to maximize ROI while minimizing unexpected expenses.
Key Components of CRM TCO
There are many variables that can impact a CRM’s TCO, some obvious upfront costs, and some hidden costs. Here’s a breakdown of the expenses included in a CRM’s TCO you should account for before committing to a vendor or another:
Software Costs
TCO software can be differentiated between licensing fees and perpetual licenses.
- Licensing Fees: Most CRMs today work on a SaaS model, with fees per user per month/year. These costs depend based on the number of users, features, and chosen plan.
- Perpetual Licenses: These apply to on-premises CRMs, where businesses pay a one-time license fee. However, other hidden expenses, like upgrades of server maintenance, sometimes occur.
SugarCRM offers subscription-based and perpetual license models, catering to businesses that prefer predictable operational costs or upfront capital investment. Unlike competitors with tiered user-based pricing, SugarCRM provides straightforward pricing with robust features across all plans.
Implementation Costs
Implementation costs sum up all the fees billed for setting up the CRM, customizations, and consultant or implementation fees.
- Setup Fees: Initial setup fees can include, but are not limited to, account creation, initial data loading, and basic configuration.
- Customizations: Tailoring the CRM to meet specific business needs (custom workflows, layouts, or integrations) can also significantly increase costs.
- Consultants or Implementation Partners: Sometimes, businesses opt for external help for complex implementations, which can increase expenses.
Sugar’s built-in administration features (i.e. Studio, BPM, etc.) allow companies to tailor the configuration to meet business needs without investing in expensive customization.
Besides, unlike many other vendors, Sugar does not charge for API usage. Usually, hidden costs related to API usage can quickly add up as integrations are added or usage scales over time.
SugarCRM’s open API architecture allows businesses to tailor the CRM to their unique workflows without relying heavily on expensive third-party integrations or proprietary tools. On-premises or in the Cloud, Sugar’s implementation documentation and support reduce consultant or partner fees.
Infrastructure Costs
CRM solutions can be deployed in two types of environments, which also impacts the solution’s pricing:
- On-Premises: These CRMs require investment in servers, storage, and networking equipment and renting physical space to house the infrastructure.
- Cloud-Based Solutions: Although cloud-based CRMs eliminate the need for on-premises hardware, they may have extra costs for additional storage, features, or specific compliance protocols.
Sugar offers businesses both on-premises and cloud deployment options. This allows companies to effectively manage infrastructure costs based on their preferences for control or scalability. For on-premises users, Sugar’s flexible architecture lowers hardware and maintenance costs compared to bulkier platforms.
Integration Cost
Many businesses must integrate their CRMs with legacy tools (ERP systems, email platforms, marketing automation software, etc.). Sometimes, using APIs or connectors to facilitate this integration comes with extra costs.
Sugar’s deep integration capabilities with ERP systems, marketing automation tools, and third-party apps make it easy to connect existing systems.
Training Costs
To efficiently use a CRM, employees must be trained in-house or during vendor-led sessions. Sometimes, CRM vendors charge by the hour or during training sessions.
SugarCRM’s intuitive interface minimizes the learning curve and reduces the time and cost of employee training. Besides, SugarUniversity offers self-paced training and certifications, which gives companies access to learning materials tailored to their needs. Sugar also supports tailored training, like the sessions available in SugarClub, a hub built for customers and future customers to help them take these tips and turn them into action.
Support and Maintenance
Support and maintenance costs can be split between vendor support, system maintenance, and user support:
- Vendor Support: For example, premium support plans with 24/7 assistance and dedicated account managers often cost extra.
- System Maintenance: These costs apply to on-premises CRMs, where the company must manage ongoing hardware and software upgrades.
- User Support: Companies usually need to pay extra for ongoing training for new employees or advanced feature adoption.
Sugar provides ongoing updates for its cloud solution, which are included in the subscription cost. For on-premises deployment, businesses have full control over system updates, avoiding the mandatory upgrade fees usually charged by other vendors.
Sugar’s customer support plans include some premium options, allowing businesses to get the help they need without unreasonable costs.
Opportunity Costs
Downtime and adoption lag are two main concerns when it comes to opportunity costs:
- Downtime: Poor implementation or system failures can lead to downtime, loss of sales opportunities and productivity.
- Adoption Lag: If employees take longer to adapt to the CRM, businesses might face inefficiencies and slower returns on investment.
Sugar reduces downtime risks during transitions, offering reliable performance. Sugar’s custom workflows also increase efficiency. With built-in customization capabilities, Sugar helps teams work smarter, preventing productivity declines that often appear when adapting to CRM systems.
Scalability Costs
As businesses grow, they may need to add more users, upgrade plans, or expand functionality, leading to increased subscription or customization costs. Customization ensures the CRM aligns with specific business processes, but extensive modifications can escalate costs and complicate future scalability. It’s crucial to balance customization needs with scalability to prevent excessive expenses during system expansion.
Nucleus Research found that Sugar has a 32% lower total ownership cost than Salesforce, with 42% lower implementation costs.
This is one reason why Sugar is heavily preferred by growing businesses that need both customization and scalability power at transparent and affordable pricing. Unlike its competitors, Sugar focuses on enabling users to implement configurations themselves. This way, companies can shape the CRM to their needs, not vice versa.
To be more precise, Sugar lets you quickly modify fields, dashboards, and workflows using its simple drag-and-drop capabilities. This makes it perfect for businesses that want a CRM capable of adapting to their expanding business needs without the expense or time typically associated with IT-heavy customization.
Hidden Costs
Although most vendors are relatively upfront about their solutions’ pricing, there are some factors that can inflate the overall costs:
- Change Management: Transitioning from an old CRM or manual system may require significant time and resources, which usually impact a company’s bottom line.
- Data Migration: Cleaning, organizing, and migrating data into the new system can be labor-intensive and costly and is often overlooked by companies looking to implement CRM solutions.
- Compliance and Security: Companies that need to adhere to more stringent data protection laws (like GDPR or CCPA) might face additional costs, depending on the compliance and security protocols they need to implement.
To minimize these costs, companies need to carefully evaluate and select their CRM vendor. For example, Sugar offers robust tools and support for efficient data migration, which helps companies save time and reduce risks associated with transitioning from legacy systems.
As for compliance and security, Sugar is GDPR, Soc2 and ISO27001compliant, offering built-in tools to meet regulatory requirements without additional software purchases.
Calculating TCO: SaaS vs. On-Premises CRM
Depending on their deployment needs and preferences, businesses must expect different overall costs, as well as specific downsides and advantages.
SaaS CRM
Saas CRMs have lower upfront costs, and companies don’t have complex infrastructure needs. Similar solutions also have automatic updates and predictable subscription pricing.
On the other hand, costs can escalate with added users or features, and long-term subscriptions may exceed the costs of an on-premises solution.
On-Premises CRM
On-premises CRMs offer buinsses more control over data, making them a preferred option for enterprises with stringent security demands. They also have no dependency on third-party servers and no recurring subscription fees.
However, the downside is their high upfront costs, ongoing maintenance costs, and limited flexibility for scaling or remote access.
SaaS CRM Vs. On-Premises CRM: Comparative Table
Here are some factors companies need to account for when deciding between the two deployment options: licensing, infrastructure, maintenance, customization, and scalability. All these differences all matter and can impact on a company’s bottom line.
| Cost Category | SaaS CRM | On-Premises CRM |
|
Licensing |
Recurring subscription fee | One-time license fee |
|
Hardware/Infrastructure |
None | Significant upfront cost |
|
Maintenance |
Included in subscription | Internal IT responsibility |
|
Customization |
Vendor or third-party cost | In-house or external partners |
|
Scalability |
Easy, but may increase costs | Limited by infrastructure |
Calculating TCO: How SugarCRM Stacks Up
How is Sugar helping customers have more control over their CRM TCO and how can enterprises minimize costs? Depending on deployment model, Sugar might be suited for different types of enterprises.
SaaS SugarCRM
Sugar’s SaaS solution comes at lower upfront costs, includes automatic updates, and offers flexible scalability for growing businesses.
Just like all SaaS solutions, long-term subscription costs may add up, but predictable pricing mitigates surprises and lowers the chances of unexpected subscription cost increases.
On-Premises SugarCRM
Sugar’s On-Premises solution fully controls infrastructure, data security, and upgrade timelines.
However, like all on-premises deployment options, SugarCRM requires an initial investment in servers and IT expertise, though its lightweight architecture keeps these costs manageable.
| Cost Category | SugarCRM SaaS | SugarCRM On-Premises |
|
Licensing |
Predictable subscription fee | One-time license fee |
|
Infrastructure |
No hardware required | Control over on-premises resources |
|
Maintenance |
Included in subscription | Managed by internal IT |
|
Customization |
Open API for flexibility | Extensive tailoring options |
|
Scalability |
Modular upgrades | Limited by hardware resources |
Strategies to Minimize CRM TCO
While some enterprises think they have almost no control over a CRM’s TCO, some strategies might help companies minimize the overall costs:
- Choose the Right Vendor: Select a vendor that offers transparent pricing, scalable plans, and extensive support.
- Negotiate Contracts: Businesses can negotiate multi-year contracts or bundle additional features to reduce recurring costs.
- Focus on Training: Invest in in-depth training and support upfront to maximize employee adoption and productivity. In the long run, this reduces the TCO.
- Leverage Standard Features: Avoid over-customization by leveraging out-of-the-box features whenever possible or opt for a CRM with included configuration capabilities.
- Monitor Usage: To avoid unnecessary costs, ensure you review user licenses and deactivate those no longer in use.
- Plan for Growth: Go for a CRM that aligns with your company’s growth trajectory to prevent costly migrations later.
How Sugar Helps You Minimize TCO
Sugar’s easy configuration and no-code/low-code customization options are two main factors that help companies stick within a more affordable budget. Apart from that, the pieces of advice below will help companies successfully minimize Sugar’s TCO:
- Leverage Deployment Flexibility: Choose cloud and on-premises options to align with your infrastructure strategy.
- Invest in Training Resources: Use SugarUniversity‘s affordable training programs to ensure efficient employee adoption.
- Optimize Customization: Use SugarCRM’s open API and robust integration capabilities to reduce reliance on third-party tools.
- Plan for Scalability: Use modular add-ons (e.g., Sugar Market, Sugar Serve) to grow functionality as needed.
- Monitor Usage and Adjust: SugarCRM’s transparent pricing model makes it easy to scale users or adjust plans without unexpected fees.
Bottom Line
The TCO for CRM solutions goes beyond the sticker price. By carefully evaluating all direct and indirect costs, businesses can make informed decisions and maximize their CRM investment. Companies must select a solution that helps them balance functionality with affordability, scalability, and long-term needs. All these are essential for achieving a positive return on investment.
SugarCRM is a great option for businesses wanting more control over their CRM TCO while gaining robust functionality and capabilities. Sugar’s transparent pricing, flexible deployment options, and tools for minimizing hidden costs empower companies to align their CRM needs with their unique goals and budgets. By understanding and optimizing Sugar’s TCO, businesses can achieve long-term implementation and adoption success while maintaining financial clarity.
Interested in diving deeper into Sugar’s TCO and how it compares to competitors? Download Nucleus Research’s: Anatomy of a Decision – SugarCRM vs Salesforce Full Report.
