Implementation Cost Analysis for CRM Software

Company XYZ plans to implement a new Customer Relationship Management (CRM) system, including laptops for employees, Wi-Fi routers for high-speed internet connection, and antivirus subscriptions for security measures. The total cost of implementation is $34,152. The company will also require training for its employees on the CRM software at a cost of $3,000. The annual subscription costs include $300 per user for SaleforceIQ and $60 per subscription for Norton Antivirus, totaling $64,220 annually. The projected increase in revenue from improved invoice preparation, reduced storage costs, time saved creating reports, and existing software maintenance is expected to be $904,375. However, the cash inflows are initially negative due to the one-time cost of implementing the system, but it is expected that the project will start earning revenue for the company in year 2. The ROI of the project over a period of 5 years is calculated as 119.6%.

INDIVIDUAL ASSIGNMENT
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Part 1
In the given case study Jerry, owner, of Trusty Carpets has recently acquired Metro carpets for
growth and development of business. In addition to this acquisition another recent big change on
the working of Trusty Carpets is that Jerry and Mike (the installer) have decided to combine their
businesses into one carpet sales and installation business. The main purpose of this collaboration
is to improve the rate of carpet recycling and lowering greenhouse gas emissions through
WARM Program.
Due to these sudden changes in Trusty carpets, jerry is facing problems in efficient merger and
aligning the goals and strategies of all three units. All three units have separate working
mechanism and customer services. This might results in loss of customers for all three units
which will be financially negative for overall company.
The solution proposed for Jerry Montgomery’s businesses is application of a Customer
Relationship Management (CRM). A CRM system is a business tool that enables to manage all
different customers, partners and business information in one place. Nowadays best and cost
efficient method of implementation of a CRM is trough cloud computing. CRM trough cloud
computing is called Cloud CRM. Through implementation of cloud CRM all the three business
can be aligned by Jerry in a period of 30 to 60 days.
Currently best available service provider for such kind of service is SalesforceIQ CRM. This
CRM software will help the organisation to manage all the interaction with its customers. This
CRM software involves sales tracking software, marketing management module and customer
relationship and management module. With the help of these modules business development can
be dine on all the levels of organisation.
Resource requirements-
1. Hardware- The organisation after expansion has three sites of business. Hence for each site it
should acquire two laptop and four tablets. Hence total hardware requirement will be 3
laptops and 6 tablets.
2. Software- SalesforceIQ CRM is packaged software which enables one user to connect with
the cloud. Hence in total 9 connections will be required by the organisation.
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3. Connection- There should be availability of high speed internet connection for CRM. Hence
three routers will be required with high speed internet connection in each of the business
place.
4. How these work together to provide the solution- Saleforce CRM will allow the used to
connect with the CRM software installed in the clod with the help of used id and password
provided by the service provided. These backend servers can be reached by employees with
the help of web browsers on their laptops and tablets. In this process high speed internet
connection will be required.
How system will work
1. People- All the employees can use the system through laptops and tablets with the help of
allocated user-id and password.
2. Data- with the help of market automation module of the software we will be able to create
templates and email blasts which will be helpful in marketing of the company. Mostly CSR
software work by collecting leads and customer information. By analysis of the collected
data it understands the pattern of customer and market requirement. This will help the
organization in attracting new customers and satisfying current customers.
3. Input- major input data will be pattern of sales, customer interactions, feedbacks, interaction
with potential customers, survey data etc.
4. Processing- Processing will be done by the software on the basis of mathematical algorithms
of permutation and combination to give appropriate results.
5. Storage- In Cloud CRM uses is not required to worry about increasing the storage capacity as
all the data is stores in the backend service of the service provider.
6. Security- safety precautions on the store will be implemented by the service provider on their
end but we have to protect our system with the help of PIN, passwords and anti- virus
software.
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Part 2
All the major requirement of the proposed cloud CRM system and their functions are described
as follow-
1. Laptops and computer- For connecting to cloud CRM we will be required to have from end
devices. Therefore we will acquire laptops and android enables tablets.We will acquire a total
of 6 laptops and 12 tablets for all the three sites. There are CRM android applications
available for SaleforceIQ CRM which could be accessed with the help of tablets.
2. We will also be required to acquire annual subscription of SaleforceIQ CRM software. It will
be cloud based service; hence we will not be required to increase our storage capacity. This
version of SaleforceIQis called as lightning unlimited plan which has following features-
1. Unlimited customisation as per our requirement.
2. Availability of additional data storage.
3. Availability of online training anytime.
4. Multiple sandboxes.
5. 24/7 customer service support
Annual subscription cost for this software is $300 per year per user. Number of connection
required will be 15. (For 3 laptops and 12 tablets, remaining three laptops will be used in
warehouse)
3. Annual Antivirus subscription will also be required for internet security. The data stored on
the devices is of very critical importance as it contains all the details regarding customers. If
this gets in the hands of the competitor organization it could hamper brand value of company.
It could also result in financial loss. Hence there is a critical requirement of security
measures. For this purpose we have chosen Norton securities premium plan which will cover
10 devices per subscription. Hence two annual subscriptions will be required @ $60 per year
4. Wi-Fi router is required to be updated for getting high speed internet connection. As area of
the office is larger we will require 2 Wi-Fi routers for each place of business. In case one of
the Wi-Fi is damaged for faces any technical problem then we can use other router. This will
help in smooth working of organization without any loss of time and revenue.
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Structural design
Backend Cloud servers
Laptops Tablets Personal computers
Wi-Fi Router for high speed internet connection
SaleforceIQ Servers
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Part 3
Cost incurred by the organisation on the above mentioned CRM plan will be as follows –
Implementation cost
Particular Unit
cost
Number of
units
Total cost
Laptops 2089 6 12534
Tablets 419 12 5028
WIFI Router 299 6 1794
Training 3000 1 3000
The quotations for the above items are acquired from amazon.com. These prices are subject to
change.
Annual cost- These are the cost which will be paid by the organisation on an annual basis. These
costs include antivirus subscription and CRM software cost.
Particular Amount
Saleforce IQ annual cost
@ $300/user/month
64800
Norton antivirus annual
cost ($60per subscription)
120
Total annual cost 64920
Projected annual savings and increase in revenue-
Project cost savings / income
Improved invoice preparation 1000 1000 1000 1000 1000 5000
Reduced storage costs 250 250 250 250 250 1250
Time saved manually creating basic
reports
500 500 500 500 500 2500
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Existing software annual maintenance 125 125 125 125 125 625
increse in sales 30000 70000 130000 195000 220000 250000 895000
Total cost savings / income 30000 71875 131875 196875 221875 251875 904375
Cash inflows
Particular Amount
($)
Amount
($)
Amount
($)
Amount
($)
Amount
($)
Amount
($)
Amount
($)
Total expenditure 87276 64920 64920 64920 64920 64920 411876
Total cost savings /
income
30000 71875 131875 196875 221875 251875 904375
Cash inflows -57276 6955 66955 131955 156955 186955 492499
One time cost at the start of new system, cash flows are negative in the first year i.e. -57276.
This is also due to the fact that in the first year employees are familiar with using CRM software.
Also the company has just acquired metro carpets, hence taking over management of another
company and getting familiar with its working takes time. In first year the incremental sales are
only $30000. In the coming the management of the company is expected to be effective and
efficient.
This project is evaluated on the basis of cash inflows in next five years. In coming years
company’s sales are expected to increase as with the help of CRM we will be able to understand
customer preferences and change our product and services accordingly. Also we can develop
marketing strategies on the basis of the information provides by SaleforceIQ CRM on customer
behaviour. Expected increase in sales in coming years is as follows-
Year Increase in sales
0 30000
1 70000
2 130000
3 195000
4 220000
5 250000
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