Last week, I wrote an article comparing the R3 solution for GovCon BD and Capture Management with the leading classic CRM vendors: Considering a CRM system? Mid-sized GovCon now have a better option for BD and Capture. In this article, I go a step further to expose the hidden costs of CRM vendors. I examine the case of Salesforce and recount the story of an organization whose costs accumulated to the breaking point. I then compare this with R3’s solution on a direct cost basis and also the difference in our model which enables organizations to cost-effectively grow their usage with their business and improve how they work.
The Salesforce “Nickel and Dime” Experience
I recently spoke with a prospect that 1 year ago decided to go with Salesforce.com instead of our solution. They were about 100 employees. Their decision was based upon the fact that Salesforce was less expensive than our offering for the 5 business development users they had at the time. They appreciated that our solution was more relevant and comprehensive for the whole organization but they were just thinking about their business development people and capturing data. So, they started with Salesforce.com and the Group edition for $25/user/month for their 5 business development people. Just $1,500/year.
They got their Group edition going and started their work. Out of the gate, they started finding limitations. For instance, the Salesforce dashboard would only show reporting graphics in counts, like number of opportunities, not dollar values. With their Group plan they couldn’t customize it and they couldn’t add third party solutions from the AppExchange because they required 5 “Tabs” and their plan only came with 4 “Tabs”. Yes, the number of “Tabs” is a constraint that is used to drive Salesforce customers to the next level of plan.
To overcome these limitations they went to the next level plan, Professional, for $65/user/month that gave them up to 10 Tabs. It was only for 5 users – right? To get what they wanted in a dashboard, they then bought some AppExchange add-ons for another $40/user/month. Now, they had some decent reports so the executives wanted access which were 5 more users. This brought them to $10,500/year. A lot more than they had expected but affordable.
They were growing and maturing as an organization and wanted to add personnel and a new level of capture structure. There are some third party add-ons that address this by adding fields related to GovCon. To make it work they also needed workflow (and more Tabs). So, to get what they needed they had to upgrade to the Enterprise edition at $125/user/month and they added the AppExchange add-on for another $60/month/user (total add-ons now $100/user/month). They also had to add 10 new users.
With this step, they were now at $54,000/year. They had 20 users and the cost per user was $225/month – that is $2,700 per user, per year – every year.
They just called me. The reason is that they now have decided that they want to integrate capture with their proposal management system based upon SharePoint. Even if Salesforce could do this, they could not afford to do this because it would add another 10 more internal people. Further, they just won a prime contract on an IDIQ and want to start involving partners in their IDIQ work and RFP bids. This would add at least 10 more users. At this point, for them to take this next step this 150 person company would be spending at least $100,000/year.
They have hit the breaking point at 20 users.
The R3 Solution and Approach
In the article I referenced above, I presented a solution of R3 WinCenter and R3 Account Management. For this organization, to cover 50 users, they would pay about $30,500 (one time up front) and $8,500/year. For $39,000 one time and $8,500/year they can have unlimited users (say up to 500 users). This would allow them to expand the user base internally, add partners for their IDIQs and RFPs, and even open up the system to customers as needed for post-award Program Management.
So, over three years our cost is less than $60,000 vs. the Salesforce alternative which would start at $300,000. That is a 5x difference.
The story actually gets better when it comes to product scope and feature set for GovCon needs. We provide an industry specific, purpose built, comprehensive solution covering business development, opportunity management, capture management, proposal management, knowledge management, and teaming partner engagement. You can take a look at our information about WinCenter to get a feel for the richness.
Now, how about innovation and the cost of improving your way of working. Effectively, we provide a work management system for GovCon on the open SharePoint platform. What does this mean? It means that you are able to enhance, extend, and integrate your system at incremental costs that are individually business justified. So, you could:
- add any users from across the organizations, or partners, or customers – for no additional cost
- integrate this solution with your existing SharePoint proposal management system or your program or project systems – for no software cost
- enhance the system such as reporting or integration with your Financial system – for no software cost
- buy another R3 solution such as Subcontractor Administration for a flat one time fee of $8,000 – this equates to $4.44/user/month for 50 users over 3 years
- you can buy other solutions from other third-parties and add them into the environment – for their one time cost
- you can build your own applications and solutions leveraging the CorasWorks Application Platform and its wizards – again for no additional software cost
With the R3 approach you avoid the “nickel and dime” approach of Salesforce. The killer factor is the way that user-based, Software As A Service (SAAS) pricing like Salesforce.com accumulates. The bottom line is that with our approach the costs per user actually go down as your organizations builds out its system, gains skills in doing so, and gets greater adoption. Innovation and improvement is actually less expensive. This is a virtuous cycle for continuous improvement.