TCO: A Surprisingly Misunderstood Metric

by Reza Soudagar, SAP

When companies evaluate CRM solutions, they often focus on TCO — but calculating this metric is not as easy as you may think. In this article, you’ll learn how to minimize your TCO and maximize the value of your CRM investment.

Categories: Customer Relationship Management

When companies evaluate different customer relationship management (CRM) solutions that all seem to promise similar capabilities, they tend to hone in on one key question before making a decision: What’s the total cost of ownership (TCO)? However, answering this question is not easy. In the current economic climate, companies are looking more closely than ever at how much solutions cost and how much value they can bring to the business.

While TCO can be an indicator of a solution’s value, too many companies oversimplify the metrics to determine it. As a result, companies often end up with costly solutions that don’t align with their business strategies in the way they had hoped.

In the following sections, I’ll show you the factors that make TCO such a difficult metric to calculate.

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January 5, 2010