As I visit customers, partners and prospects around the globe, one of the top ‘pricing and licensing’ questions they ask is how to compare the value of the deployment choices we offer. In other words, knowing that we are quite unique in offering both on-premises and cloud offerings, they ask for guidance on how to evaluate both options.
Today, I offer the following points to help frame the conversation. There is also new research by IDC(1) which has been summarized in a great infographic that offers guidance on this. In addition to the infographic, we asked IDC’s Mary Wardley, VP of Enterprise Applications and CRM Software, for her perspective on this hot topic(2).
First point is to understand who is responsible for both managing the solution and the total cost of managing the solution. This goes beyond just the acquisition and must consider the entire lifecycle of the solution: evaluate, acquire, deploy, manage, support and grow.
A typical ‘on-premises’ deployment will use a virtualization, or physical, installation of the solution on the customers’ own data center. IT will be responsible for managing all aspects of the solution: purchasing, installing software and hardware, providing the necessary storage, network and data centers needed to achieve global scale, trouble shooting, support, updates and upgrades and work hard to achieve security and compliance as required by the business and regulators. As needed, IT will lead business cases to invest / de-invest, build more space, add more resources, re-orient resources based on load requirements and usage patterns.
To estimate the total cost of managing the solution, it is useful to think of an allocated cost per user. For on-premises deployments, license prices reflect the cost of accessing and using the software, not the cost of managing the solution. Given the number of variables involved in managing an on-premises deployment for the complete lifecycle of the application, customers often do a total cost analysis to determine the inherent costs of an on premises solution. IT and Finance tend to partner on this and consultants are often involved.
With Microsoft Dynamics CRM Online, Microsoft manages networking, storage, servers, middleware, runtime, O/S, hardware and software. We also deploy upgrades and updates into our growing network of global data centers. Our Dynamics CRM Trust Center explains our principles on privacy, transparency, security and independent verification, so customers clearly know what to expect from us, what certifications we hold and what our auditors think of our practices. Our security practices and policies are the result of more than 15 years of experience in providing security for online data and we provide a 99.9% financially backed Service Level Agreement (SLA). Security and privacy are incorporated by design, from development to service operations. Further, we offer simple and transparent pricing and licensing options, with plans priced on a per user per month basis. That price reflects the complete value of our Dynamics CRM Online solution that is managed by Microsoft.
Very clearly, the exercise of comparing on premises and online should not stop here, but should look at the value of the solution.
For on premises, IT has total control of the server infrastructure, CRM deployment and ongoing support. This is a somewhat more familiar scenario for many, as it has been the practice for well over 20 years. However, there is an associated opportunity cost with this option. Mary Wardley, from IDC puts it best: “you need to look at what the opportunity cost is in the marketplace- the time and money you spend on in-house resources versus pursuing your core business opportunities in the market.”
For online, there is value for both IT, and end users. IDC’s research shows that with cloud deployments, IT staff spends 20% less time on routine service maintenance and has twice as much time to invest in IT strategy. Because deployments are three times faster in the cloud, 54% more of sales staff will adopt the solution and in half the time. Once deployed, users will enjoy 93% less service down time.
In summary: less time on maintenance, more time on strategy for IT; increased success rate and productivity for end users. Less service down time for everyone. It is no surprise that two of every three of our new customers are choosing our cloud offering vs. our on premises software. The total value our customers find in our cloud solution is simply put, a very compelling reason to choose Microsoft Dynamics CRM Online.
What do you consider when comparing on premises to online? We're eager to hear back from you.
Gina Timm
(1) IDC Infographic title: The Business Value of Cloud-Based Customer Relationship Management. 2015
(2) IDC Analyst Connection: Cloud-Based CRM: Optimizing the Customer Experience, Mary Wardley, (February 2015)