Case study CRM

TCO Comparison Analysis

TCO Case Study for Saas versus on premise software

Salesforce.com Confidential -- For Internal Use Only

Kaiser: “A Confederation of Feudal States”

Massive organization – 8.2 Million subscribers

– 1000 internal sales reps

Distributed Model– Separately managed divisions in 9 states + Washington D.C.

– Diverse selling audience: large commercial accounts, trade unions, brokers

– National accounts subject to federal AND state regulations

Disparate systems– Access, Excel, ACT!, Goldmine, Onyx, homegrown systems, index cards

– Databases included Oracle, Microsoft and IBM DB2

– Platforms spanned Java, .NET and IBM Websphere


Business Problems: No Unified Processes

No Account Intelligence

No Performance

Insight

No Single Customer

View

Cross-functional management lacked national oversight of critical data

Invoices due, division-level discounts, contract negotiation history

3-month wait to generate basic business reports

Sales had no understanding of key contacts or their engagement history

6+ sales reps would pursue a single customer

Inability to hold reps accountable for poor performance

Sales executives lacked insight into sales activities

No visibility of conversion rates

No understanding of reasons for deal loss


Solution: A Nationwide CRM System

Considered multiple vendors– Salesforce.com

– Siebel On-premise

– Siebel On-demand

Gathered prioritized business requirements

Conducted TCO analysis to make the right decision


Salesforce 85% Less Expensive

Cost Category Siebel On-Premise Salesforce.com

Development environment $1,112M

Testing & Pre-Production environment $1,340M

Production environment $1,340M

Disaster Recovery $1,650M

Documentation $6K

PC Upgrades $206K

Licenses (825 users) Waived $928K

Maintenance – 1 year contract $270K $21K

Customizations & Integration $2,800M $260K

Documentation $150

1 Year TCO estimate $8,732 M $1,290 M

…Siebel would have cost me $30 million to $40 million and taken a year to deploy. With Salesforce.com, we did it in four months at less than $1 million“ ”

— CIO Kaiser Permanente


Other Useful Examples


Morgan Stanley Research : 46% Lower TCO

Cumulative 5 Year TCO Siebel Salesforce.com

Number of Users 2,000 2,000

Total License/Subscription Cost $6,000,000 $11,250,000

Support/Upgrade Cost $1,000,000 $0

Implementation/Customization $10,000,000 $375,000

IT Infrastructure/Hardware $750,000 $0

IT Personnel $2,000,000 $0

Training $300,000 $150,000

Total $20,050,000 $11,775,000

Source: Morgan Stanley Equity Research. “Breaking Ground with On-Demand CRM.” August 2, 2004

Merrill Lynch Swaps Costly Siebel for Salesforce.com

ChallengeChallenge

Extremely costly Siebel

implementation

Little to no user adoption (most users

paid for ACT instead of using Siebel)

Slow performance across ML network

Complex user interface

Extremely costly Siebel

implementation

Little to no user adoption (most users

paid for ACT instead of using Siebel)

Slow performance across ML network

Complex user interface

SolutionSolution ResultsResults

Simple, Consolidated UI

Demand driven rollout to end users

with end user demand increasing

everyday

Created scalable conversion

process able to bring on 75 teams

per week (avg 5 people/team)

Simple, Consolidated UI

Demand driven rollout to end users

with end user demand increasing

everyday

Created scalable conversion

process able to bring on 75 teams

per week (avg 5 people/team)

Over 3,800 users live and growing

Satisfied users with high user

adoption

Salesforce.com now considered the

enterprise standard for over 25.000

users (full deployment expected by

end of 2007)

Over 3,800 users live and growing

Satisfied users with high user

adoption

Salesforce.com now considered the

enterprise standard for over 25.000

users (full deployment expected by

end of 2007)

First American Credco Swaps Inflexible Siebel System

ChallengeChallenge

Poorly qualified & neglected leads slowed revenue growth

Ineffective outreach into installed base

No visibility of partner lead generation performance

Sales reps unaccountable for sluggish performance

Poorly qualified & neglected leads slowed revenue growth

Ineffective outreach into installed base

No visibility of partner lead generation performance

Sales reps unaccountable for sluggish performance

SolutionSolution ResultsResults

“

” Integrated Marketing and Salesforce automation provides better lead to close process

Customized application to better fit sales process

Faster time to value

Integrated Marketing and Salesforce automation provides better lead to close process

Customized application to better fit sales process

Faster time to value

50% increase in qualified leads

Doubled lead conversion rates

100% increase in opportunity

closures

25% increase in sales calls

Consolidated 9 databases

50% increase in qualified leads

Doubled lead conversion rates

100% increase in opportunity

closures

25% increase in sales calls

Consolidated 9 databases

Other CRM companies made our business conform to their applications. Salesforce.com is the first solution that enabled us to map CRM applications directly to our specific business needs.”

VP Corporate DevelopmentFirst American Credco


Salesforce.com = Predictable TCO

Siebel On Premise Risks!

1. Large up front costs and greater deployment risks

2. Unexpected cost overruns are common as users are added and systems need to scale

3. As you scale to thousands of users, expenses become completely unpredictable

4. Salesforce.com costs are fixed and predictable

Case study CRM

Business

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