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The Irony of SaaS CRM Solutions as Less Expensive

by Michael Maoz  |  July 29, 2011  |  3 Comments

The 1500s had their Pied Piper of Hamelin, and our current environment has SaaS applications. The original pied piper was a rat catcher who didn’t get his way, only to turn his magical flute into a way to lure children away from their town. To listen to users of SaaS-based CRM applications, you might think that they are listening to the dulcet tones of the same piper. “SaaS is less expensive. SaaS is better long term. SaaS is easier to configure.” Some of the claims are true, though many are not. The comparisons are often not of like-to-like.

The first thing to notice in the SaaS versus on-premise cost/complexity argument is the chronic lack of real data. Despite millions of words spilled on SaaS, there is little hard evidence of SaaS lowering the cost of software over a five year period for a large enterprise or SMB. On the low end, a number of products are equally capable as some of the SaaS products but much less expensive over five years. And on the high end, virtually no one is measuring the cost of creating custom objects and custom workflows and maintanance, support, sandboxes and integration for SaaS, atop the eternal subscription costs. The same user organization that will say, “We had to build over 5,000 customizations into product X in 2004.” will say, in 2011: “This SaaS product is great: we’ve built over 5,000 customizations.”

SaaS is the wave of the present and future, but the oceans are vast, and there are many fine waves to ride.

Do you have hard and convincing data for your large scale SaaS-Based Customer Service Contact Center that it is less complicated and expensive than what you had five years ago? Let us hear your story!

Category: applications  cloud  contact-center  crm  innovation-and-customer-experience  strategic-planning  

Michael Maoz
VP Distinguished Analyst
13 years at Gartner
26 years IT industry

Michael Maoz is a research vice president and distinguished analyst in Gartner Research. His research focuses on CRM and customer-centric Web strategies. Mr. Maoz is the research leader for both the customer service and support strategies area and customer-centric Web… Read Full Bio

Thoughts on The Irony of SaaS CRM Solutions as Less Expensive

  1. As a user of SaaS, Eloqua, the attraction is getting is up and running faster than standing in line waiting for the project to float up to the top of the IT priority list! I agree, customizations R US!

  2. You are correct when you point out that customisation is customisation, and costs money regardless of the software delivery platform.

    But down at the SMB marketplace, where a typical user doesn’t have any customisation, SaaS costs are plummeting, helped by Freemium vendors. You can get a two user CRM system for free, a five user system for $30 a month.

    Cloud really is cheaper for SMBs.

  3. […] a large enterprise or SMB. On the low end, a number of products are equallycapable as some of the Saas Products but much less expensive over five years. Comments or opinions expressed on this blog are those of […]

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