The ROI of SaaS Analytics Solutions for Sales: Have You Considered the Total Cost?

August 22, 2010 - 7 minutes read

Total Cost and ROI of Predictive Analytics for Sales Solutions

We are often asked, what is the Valgen philosophy to SaaS subscription-based pricing for our Salesforce app products. How is it a better deal?

Our answer always ties back to two critical dimensions: risk and execution. The “total cost to execution” of analytics solutions is a critical decision factor.

Traditional Analytics Solutions

Risk includes the cost of all components needed to just begin implementing an analytical solution. This is because at this point, it’s not known if the desired outcomes can even be achieved.  Analytics solutions typically involve these fixed costs just to get started:

  • Hardware – Beyond the cost of hardware (servers, desktops and laptops for users, etc.) needed to run databases and analytic solutions, extensive internal IT expertise and time is required to purchase and implement.
  • Software – Advanced analytics software is typically a commitment of tens of thousands of dollars, and you pay for all of its capabilities whether you use them or not. This software is extremely robust and typically users take advantage of only a fraction of its capabilities. When the software is upgraded with new features you want, you must purchase upgrades to take advantage of them. Although there is usually a per-user license pricing model, the “cost of entry” base price can be five-figures whether there is one user or many.
  • Analyst(s) – Budget for a good statistician with sales analytics expertise who understands sales, at least 10 years’ experience – at minimum $100K plus fringe, and up from there.
  • Cross-department internal resources – The time that IT, project management, business, and analytics folks are collaborating on all implementation and deployment phases; possibly involving external vendors as well.
  • Timeframe — Implementation time includes all phases required for these investments: Hardware and software vendor RFPs and purchase decision, analyst FTE search, hiring and “up to speed” time, extensive cross-department teamwork. This can easily take a year of time before you see tangible sales and revenue results from the investment.

Total cost of traditional analytics execution can easily exceed $250,000 — before you have any indication that the analytics solution will bring results.

There’s An Easier, Faster, Less Costly Way of Doing Business …

Previously there was no other choice but to follow the above pricing and execution model. We’ve followed this model many times ourselves in the past while wishing we could do the work faster, easier and better. Because our job is to make sales successful.

Thankfully developments in technology now bring a more advantageous way for you to fully benefit from your sales data. Here is how an analytics solution using SaaS, and priced according to SaaS’s advantages, differs:

  • Hardware – No additional hardware investment is necessary. Multi-tenancy reduces cost to one-tenth of what a company might individually bear.
  • Software – No software investment is necessary. Upgrades are automatically available to you with no extra cost. Plus, new features can be deployed immediately, much faster than software where there must be enough compelling new features to make it worth selling a software upgrade to you. A nimble SaaS solution allows companies with SaaS-based models, such as Valgen, to respond to your needs and add features truly beneficial to you.
  • Analyst(s) – You do not need to hire analytics FTEs, and search for candidates with specialized sales analytics knowledge that brings proven results. Recommendations based on the analysis should be delivered to you by your analytics provider, in a visual format easy-to-use by sales personnel.
  • Other internal resources – Not needing new hardware and software brings a much lighter footprint for IT involvement. Focus is on what the sales staff needs, and project management within the sales team.
  • Timeframe – Implementation time includes: external provider purchase decision, provider consult with your internal team and build and test analytics model, deploy to sales team. Your time is focused on what your sales team needs to succeed, not on all the mechanics of hardware, software, IT, etc.

SaaS Pricing Model

The SaaS pricing model includes a fixed-cost initial phase to build your analytics models and integrate them with your database(s). This is a fraction of the cost of investing in your own hardware, software, analysts and all the internal resources to accomplish this same phase. Once the solution is tested and proven during this phase, then a subscription model deploys the solution to as many sales users as you want. You pay only for those who use the solution.

The key advantage is, the “cost to entry” in both budget and time for this analytics approach is far less than the traditional business model first described here. Your investment is far lower before you see revenue results.

CRM Integration

There is yet another execution element that involves cost and time and risk – integration with your CRM system. This is a conversation worthy of enough information for another post, so watch for that soon, and we’ll cross-link it here.

Bottom Line

For the cost of one server under the traditional analytic process, Valgen’s SaaS-based pricing model takes you completely through the full cycle to your sales reps taking actions.

We  deliver a fully executed solution, so your focus remains on making money.

So the question when evaluating your analytics options is, what is your total cost through to execution?