Achieving Lower Total Cost of Ownership (TCO)
“Cause I’d have said
it couldn’t be done.
But it can be done”
I’ve written about the various options clients have to implement Salesforce. I discussed the common model of engaging consulting firms, or “SIs”, to implement Salesforce. I also talked about our model as product company (or a Salesforce ISV partner), where we provide a pre-built version of Salesforce which is fine-tuned to meet the needs of Institutional and Intermediary Asset Managers out-of-the-box.
Rather than hiring consultants and paying hundreds of thousands, or even millions of dollars (yep), to build a custom solution, Kyloe’s clients subscribe to a license which provides them best-in-class functionality, based on more than 80 implementations for Asset Managers. The subscription also includes future upgrades and direct input into Kyloe’s product roadmap.
I summarized the benefits of our approach, and the reason why we launched Kyloe after having previously founded two successful Salesforce consultancies, simply that as a product company, Kyloe can deliver richer capabilities, in less time, with less disruption, and at a lower total cost of ownership than custom implementations.
I’m going to write a separate post on all of these benefits in greater detail, but this post is going to focus specifically on Total Cost of Ownership (“TCO”). How can a product with a recurring license possibly cost less than a custom implementation when you only have to pay for it one time? The quick answer, 1) we can deliver our solution with significantly less upfront investment, and 2) there’s a lot more costs to a custom implementation than the original rollout.
We’ll look at each of these in detail.
Initial Investment
There are two components to our commercial model: the Annual License Fee, and the One-time Onboarding fees. While our product delivers 80 to 90% of what Asset Managers need out-of-the-box, there is still effort required to onboard our clients. The general list of work when we are onboarding a client includes:
Optimize the Kyloe page layouts for client's preferences
Configure Kyloe features to client’s requirements
Extended the Kyloe data model for any unique data elements
Build custom Flows to support client-specific processes
Configure the Security and Entitlements model
Build custom Reports and Dashboards
Migrate data from legacy CRMs
Integrate data to/from internal or 3rd party source (e.g., Financial Accounts, Assets and Flows, Territories, Prospects)
Configure application integrations (e.g., Outlook, SSO, RFP Tools, Seismic, Marketing Automation)
Test the integrated solution
Train the Users and System Admins
While this list may look like lot of the same things you’d do in a custom implementation, the fact that our solution is pre-built means that we are able to accelerate every aspect, even the data migration and custom integrations.
Some of these savings are obvious. First it starts with the fact that this is all we do. We already know your business. We already know your requirements. We’re not sitting you and your users in a conference room, looking at a whiteboard, asking you what you want us to build. We know what other tools you’re using and the data you’re subscribing to, and we know the best way to integrate them.
Then there’s the savings in the actual build. Kyloe includes more than 2,000 custom fields, over 150 pre-built page layouts, 200+ custom reports and more than a couple dozen dashboards. It includes utilities that allow us to configure logic that would otherwise require custom code.
“We have data mapping templates that accelerate all of the analysis regardless of what legacy CRM system you’re on or if you have a home-grown portfolio accounting platform, or sales reporting database.”
“But” you ask, “how do you generate savings on data migrations and integrations?” The answer for both includes the fact that we are migrating/integrating to a well-defined target data model. 95% of the data dictionary is already defined. We know exactly what data elements we are looking to integrate in or out of Salesforce. We have data mapping templates that accelerate all of the analysis regardless of what legacy CRM system you’re on or if you have a home-grown portfolio accounting platform, or sales reporting database. But more commonly we’re migrating from or integrating with one of the many sources we’ve seen dozens of times, and, in many cases, already have re-usable scripts.
With any project you have to test the solution and train the users. Testing is a variable of the build effort. Because most of the build is already done, there’s less to test. And for training, whether you want Kyloe to train your users, or you prefer a “train-the-trainer” approach, we have a library of re-usable enablement content that can be taken off-the-self or customized to your heart’s desire.
And all of this means our projects are faster and less complex. On average, we are able to deliver our solutions in half the time of a custom implementation (while delivering more functionality!). Shorter projects mean less project management overhead.
So how does that look when you add it all together? A comparison of Kyloe projects compared to more than 60 custom implementations for similar scope shows Kyloe can be implemented in half the time with an initial savings of 30-50%. Here’s how that breaks down:
Kyloe Onboarding costs compared to Custom Implementations
This analysis doesn’t even consider your internal resource costs. Because we’re not spending months learning your business, or asking you to tell us what to build, we’re minimizing disruption to your business stakeholders. Even where we share the integration development effort with your technology resources, we are guiding them through the process, saving them months of learning how to integrate with Salesforce. If you were to factor in your internal resource costs, our model would be even more cost effective.
The "hidden” cost of custom builds
So, the case for lower initial costs is relatively straight forward. But what about the fact that there is an annual recurring cost. Don’t you just pay for a custom implementation one time?
The reality is there are more ongoing costs associated with a custom implementation than you might expect. Actually many of these you probably would expect, so it’s not quite accurate to call them “hidden” costs. The important thing for any buyer is to identify these costs as best as possible and compare them to the ongoing costs (and benefits) associated with Kyloe’s subscription model.
For starters, there are so many things that can go wrong with a custom implementation. We have heard more than a couple horror stories of name-brand SI’s leaving major asset managers in such a bad state that they were forced to completely scrap their implementations and start over. These were sophisticated buyers, who ran comprehensive RFPs, and had strong PMOs overseeing the projects. The number of other implementations of less drastic fails, or project running well over time and clients getting massive Change Requests is shocking. The unfortunate reality is that it’s just too easy to get things wrong. But that that will be a whole topic for a future post.
(As an aside, when we look across all Kyloe projects since inception, change requests count for less than 5% of our total services revenue. So when you get an estimate from us, you can have high confidence in the numbers you are getting. It’s hard to find industry benchmarks, but one McKinsey study found that “on average, large IT projects run 45 percent over budget and 7 percent over time, while delivering 56 percent less value than predicted.” Now that’s the entire project budget including internal resources. But I’d encourage any buyer running an RFP to ask SIs for their average Change Request to Baseline Budget ratio. For many of our clients, our projects are their first experience with on-time, on-budget projects.)
“On average, large IT projects run 45 percent over budget and 7 percent over time, while delivering 56 percent less value than predicted.” -McKinsey
But, assuming a custom implementation goes as smoothly as planned, in every project there are always things that are deferred to the backlog or Phase 2 and beyond. Through our network and our membership in the SME Forum we have relationships with many of Salesforce’s largest and most mature Asset Management clients. Many have been going at it for 10 years or more and have invested tens of millions of dollars in their implementation. Yet when we are demoing our product, we are showing them capabilities they still have not been able to get around to. It is unrealistic to expect that any client could implement as robust a feature set as Kyloe provides, regardless of their timeline or budget.
Beyond that, your business will evolve. Your clients’ expectations will evolve. Salesforce will introduce new features. Your solution needs to evolve with these changes.
There’s an obvious cost associated with building new features. But there’s also a cost of mobilization. Do you re-engage the same SI who led the original implementation? Are you getting the same team from that SI? Or are you teaching a new project team or a new SI about your company and what’s already been built?
With Kyloe’s model, your subscription includes all Kyloe features, even if you wish to defer the rollout of certain features as part of your change management strategy. No need to re-engage a new team, or execute another SOW.
Kyloe delivers more capabilities out-of-the-box than can be built with even the largest custom implementation budgets.
More importantly, you have direct input into our product roadmap. So as your requirements evolve, we are working with you through our Customer Success checkpoints to identify the best solution for new requirements. And many of those requirements can be met through product upgrades included within your subscription. That’s a lot better than finding budget for another project with a consultant.
“A client once described us to their CFO as their ‘architects on demand.’”
Now there may be some requirements that are so unique to your organization they can’t be delivered through a product upgrade. These could be as simple custom reports or more complex like custom client onboarding workflows. You could argue these are a wash with the custom implementation approach. And we’re not suggesting there would never be custom work. But even in those cases, Kyloe is partnering with you to determine the best solution approach as part of our Customer Success Model. A client once described us to their CFO as their “architects on demand.” Unlikely you’ll have an SI “on-call” without an SOW.
Even if your requirements are relatively steady, Salesforce is always introducing new features. It’s all too common for Salesforce clients to find that their org has become stale over time, and they are not able to take advantage of new functionality. They are often faced with a choice to live with a lot of technology debt or migrate to a new org. We are tightly aligned to the Salesforce product development, and we continually incorporate Salesforce’s latest features in our product. This ensures our clients orgs don’t become stale overtime
So how does all of this look over time? The graphic below is a simple breakdown of the major costs categories of a Salesforce implementation over three years compared to the capabilities deployed over the same time. The variables in the model may change. Every organization will have their own assumptions on internal resource costs. Mature clients may shift the resource allocation from external consultant to internal resources. The duration of any one deployment will vary based on a number of factors. The exact Kyloe license costs will vary based on the number of users.
Kyloe will deliver more functionality at a lower costs than custom implementations.
But the overall results are the same. Compared to custom implementations, our clients have more capabilities, from Day 1. They incur significantly lower upfront initial investment, with faster time to value. They continue to receive more features through their subscription. And they realize lower TCO through savings on Internal Resources, and ongoing implementation and maintenance costs.
We call that solutions without compromise.
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