(Updated 9/18/2023)
Microsoft Dynamics 365: CRM Implementation Cost
Implementation costs for CRM projects can vary significantly due to the unique
nature of each organization's structure, goals, and needs. Just as individuals have distinct personalities, companies have their own cultures, objectives, and operational procedures.
The Challenge of CRM Implementation
CRM Implementation projects often come with a set of unknown factors that make planning a challenge. Unlike their counterparts in Accounting or Operations, Sales teams tend to be more freewheeling and less accustomed to structured systems.
The key to a successful CRM Implementation lies in tailoring the system to enhance existing business processes, ensuring a fit that drives better outcomes.
The Path to Consistency
CRM Implementation should customize the system to get everyone on the same page and utilize the system in a consistent way.
This takes employee engagement, negotiation, user input, creativity, process redesign/development, and sometimes a bit of trial and error.
These factors (and more) could potentially add more time, effort and costs to your CRM Implementation Project.
The Key to Accurate Cost Estimation
Sounds impossible?
Well, it can be complicated, but it is possible to accurately determine CRM Implementation costs if you focus on two things:
(1) Clearly identify project scope.
(2) Set a fixed amount of time for the implementation.
CRM Implementation Constraints
Balancing Quality, Time, and Cost
Most people are familiar with the Iron Triangle of Project Management
which illustrates the interdependence between Quality, Time and Cost with Scope.
In determining CRM Implementation costs, you must first set the Scope and Time (given an acceptable level of quality). This is somewhat of an art-form based on experience however I can share a few guidelines:
Scope Management
A best practice is to keep the initial implementation as simple and lightweight as possible.
Don’t forget the K.I.S.S. Principle.
It is important to build a solid foundation, but you don’t need to have all the bells and whistles in the first implementation phase. Microsoft Dynamics CRM is very flexible and expandable, so it can easily grow with you.
Instead of trying to “complete” CRM, think about traveling on your Digital Transformation journey in steps - getting traction and doing your CRM implementation in phases.
Each new phase should add additional value on top of your existing CRM deployment.
For example, If you are currently using spreadsheets to manage your sales pipeline, then your initial scope could be limited to just replacing the spreadsheets.
Get that delivered first!
Then, when that project is deployed and you’re getting the benefits from a new, more functional Sales Pipeline, you can evaluate what to tackle next. Another great way to manage scope and control costs is to have a clear statement of purpose for each project phase.
In the example above, it would be “Replace sales spreadsheets to have a centralized Sales Pipeline”.
If you cannot clearly articulate what you are implementing in a simple statement, then you run the risk of “Scope Creep” and possibly exceed your initial budget.
Time Management
If you are a small business looking to get started with CRM, a 2-3 month implementation timeline is more than adequate for most. A mid-sized businesses should expect a 3-6 month implementation timeline, depending on scope.
As mentioned above, time and scope go hand in hand. If you let the project timeline exceed about 3 months, it gets more difficult to contain the scope.
As a rule of thumb, keep your CRM Implementation timeline down to no more than 3 months per phase.
If you need to accomplish more configuration or customization, then break your project down into 3-month phases and stack them on top of each other.
For example, a 12-month CRM Implementation Project would consist of 4 phases of 3 months each. Each phase should result in an output where working software is delivered/deployed for users to work with and provide feedback on.
Cost: Fixed-Price Model
Some CRM Implementation Projects can be done at a fixed flat rate, however, beware of limited, locked down scope and an aggressive change order process. Fixed-Price projects can work if the project requirements can be clearly documented and will not change.
If a fixed rate CRM Implementation sounds attractive, expect either a “cookie cutter” type of implementation that has limited configuration and customization, or anticipate having more up-front planning, design and scope than you might expect.
If done right, these up-front scope activities will account for 15% to 30% of the overall budget. As an example, a $100,000 implementation project would require $15,000 to $30,000 in up-front planning and design.
Cost: Time and Materials Model
Time and Materials (T&M) is the most common approach when doing CRM Implementation Projects. As mentioned earlier, CRM by its nature will have fluidity and unknowns that are difficult or impossible to predict and quantify ahead of time.
Costs related to a T&M approach can be managed by controlling the scope and timeline of a project. Additional thoughts on how to make the T&M Model work for your CRM Implementation Project can be found in our Dynamics CRM
Optimization blog:
CRM Cost: Rough Estimate
Keeping in mind that we are focusing on Microsoft Dynamics Sales Implementation, you can quickly create a budgetary estimate with a few simple techniques.
The first approach uses an approximate cost per user for the implementation.
The second approach uses a time box to estimate the approximate implementation cost.
If you are a small business just getting started, or a mid-sized company that is looking to take the next step, one of the following two examples below will get you in the right ballpark.
Example 1: Small business with 20 sales users
This example is for a small business with 20 sales users. The company is currently managing their sales pipeline with spreadsheets and doesn’t have a centralized place to store customer information.
The purpose of this CRM Implementation Project is “Eliminate the sales spreadsheet(s) and have a central place to forecast/manage the sales pipeline”. Here is how we would create a ballpark estimate:
Technique 1: Cost per User
$2,500 to $3,500 per User
20 Users
Low Estimate: $2,500 per user x 20 Users = $50,000
High Estimate: $3,500 per user x 20 Users = $70,000
Technique 2: Time box
2-3 months Implementation
$200 per hour Billing Rate
1.5 resources allocated at 50% of full time
Low Estimate: 2 months x 80 hours/month x 1.5 resources * $200/hour = $48,000
High Estimate: 3 months x 80 hours/month x 1.5 resources * $200/hour = $72,000
Example 2: Mid-size business with 50 sales users
This example is for a mid-sized business with 50 sales users. The company has been using an existing (but antiquated) CRM system to manage their contacts but hasn’t gotten traction with their Sale Team.
The purpose of this CRM Implementation Project is to:
“Move CRM functionality to the cloud with similar functionality.”
“Allow sales to access customer data from the internet or mobile devices”.
Here is how I would create a ballpark estimate for this sample CRM Implentation Project:
Technique 1: Cost per User
$3,500 to $5,000 per User
50 Users
Low Estimate: $3,500 per user x 50 Users = $175,000
High Estimate: $5,000 per user x 50 Users = $250,000
Technique 2: Time box
3-5 months Implementation
$200 per hour Billing Rate
2.5 resources allocated at 70% of full time
Low Estimate: 3 months x 115 hours/month x 2.5 resources x $200/hour = $172,500
High Estimate: 5 months x 115 hours/month x 2.5 resources x $200/hour = $287,500
The above are ballpark estimates based on several assumptions and simplifications. Actual costs to Implement Dynamics CRM will vary based on the details of your individual project.
Answering the question “How much does CRM Cost?” can be tricky, but the general rough estimate information that I’ve provided should get you into the right ballpark.
What does CRM Cost? (Introduction): This is the first blog in the series that introduces the different factors that impact the overall cost for having and deploying Dynamics CRM.
Licensing Costs:These are the monthly fees that you will pay to Microsoft to use their cloud-based software.
Support Costs: These are the ongoing monthly costs to do updates, ongoing training, feature enhancements, and general maintenance to keep the system running at peak performance.
A best practice in the industry is to work with a firm to review and assess your current infrastructure, business goals and detail your desired objectives. This process can take several days or weeks, depending on your business.
At the end of the process, you will have a detailed estimate that will allow you to move your CRM implementation plans forward with confidence.
Contact OPTRUA to get a more accurate estimate for your company (we offer a complimentary 30-minute initial consultation).
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