This past fall, I decided that it was time to get a new car. It sounds like an easy decision to make, but it wasn’t. The decision involved my budget, what type of vehicle I wanted, features desired, gas mileage and maintenance plans; all of these would factor into my total cost of ownership (TCO). After finding a vehicle and evaluating the trade-offs of buying versus leasing, I decided to lease my car. In my experience, this process is analogous to determining which sales performance management (SPM) platform fits your organization’s needs: Do you go in-house with an on-premises platform (buy), or do you select a software-as-a-service subscription option (lease)?
Assuming that monetary costs regarding “warranty,” “maintenance agreements” and “fuel costs” are well understood, I’d like to take a slightly different perspective and focus on some other considerations that may not be direct inputs in the TCO equation for an SPM solution. There are a variety of costs that revolve around people, processes, support models and organization-specific idiosyncrasies in play.
Evaluating the Vendors
Once you’ve identified that there’s a need to automate your SPM processing, what do you do? Research, research, research! Evaluate best-fit SPM software vendors for functionality, support model, cost, culture, time in market, etc. Understanding that most of the research information available is generated by vendors, you need to read between the lines to remove vendor bias. Leveraging formal and informal channels to vet SPM software vendors—augmenting direct vendor communications—helps to ensure that all software vendors being vetted are evaluated based on your needs.
Monetizing the Costs
Line-item dollar costs associated with the SPM platform selection cover a wide range of cost categories, which include some or all of the following: software/licensing, hardware (mainly for on-premises) and operations. Each category has its own subset of criteria that need to be evaluated, monetized and prioritized when calculating TCO. It’s important to evaluate costs that are specific to your organization; cost criteria tend to vary organization by organization. Even though the financials might point to one vendor solution, make sure to consider the non-monetary costs while contemplating your decision.
Choosing a Platform
Vendors offer SPM solutions that are available on premises, through SaaS (in the cloud) and, in certain instances, both. If you determine that an on-premises solution best fits your near-term needs, identify which vendors support this platform and if and how long they plan to support it. With the advent and popularity of SaaS, it’s imperative to perform your due diligence regarding vendor support strategies. It’s common practice for on-premises SPM vendors to limit support to the current version and one previous release version, and they prefer that clients select SaaS as it tends to provide them more revenue over time with lower maintenance and support costs.
Weighing the Pros and Cons
When making the buy/lease decision for a vehicle, you should think beyond drive-off costs. There’s depreciation, interest, fuel, insurance and other costs associated with the cost of ownership. For the SPM platform, you also need to think beyond initial implementation costs.
|Pros||Cost||Lower upfront costs||Lower long-term cost|
|Storage cost||No monthly cost|
|Support and maintainence||Virtualization (can be shared)|
|Deployment & Scalability||Faster setup||Higher degree of control|
|Minimal IT support required|
|Cons||Cost||Price increases over time||Extra cost (training and maintenance)|
|Security||Policy (security only as good as you make it)||Policy (security only as good as you make it)|
|Industry-specific needs may not be addressed||Disaster recovery and backup|
|Lack of control of data/software|
|Deployment & Scalability||Customization||Customization|
While you can work on your old Civic, that new Ferrari in the driveway may need someone with specialized skills to help you with even routine maintenance.
Owning the Decision
Ultimately, the decision is yours, so make it wisely. Ensure that your TCO evaluation incorporates the other costs aligned to your business case. We encourage you to engage your vendors and consider their recommendations, but don’t allow them to drive the process and influence your decision.
What were the critical factors that influenced your SPM platform selection? Is there anything else that you considered?