Calculating the Total Cost of Ownership of a Reference Management

By Lisa Hoesel, Reference Manager, RO Innovation

Total Cost of Ownership (TCO) is a vital part of the ROI calculation for enterprise software. Yet too often, we neglect to consider or underestimate the impact of elements of TCO beyond per-user license and specific budget line items in our analysis.

The approach you take when doing a cost analysis of a reference management software is similar to that of a new car purchase:  it’s not just the sticker price that should factor into your decision, it is the long-term maintenance from regular tune-ups to oil changes that should be factors in your final choice.

For example, I was gifted with my Mother’s college TR3; if not for the mechanical aptitude of my husband, the expense of keeping this fun toy in top condition would definitely break my auto bank.  When a foreign car expert even opens the hood of this gem, I may as well just burn my money!

As a reference management professional, the following should be key activities in your decision-making process:

  • Analyzing the benefits of any software that helps support programs at your organization
  • Predicting the investment returns you anticipate
  • Understanding all of the soft and hard cost implications of your choice

Many of us are attentive to the hard costs of reference management software investment, i.e., per-user license fees, staffing needs, additional software required, etc., but we often fail to consider ancillary expenses or resource dependencies. Whether your company has guidelines re the timeline by which ROI has been achieved or not, having a clear picture of all of the costs that you may expect to implement and maintain your program will not only help you prepare your questions for both the vendors you are considering and their customers with whom you are having reference calls, but also help you demonstrate the success of your investment vis-à-vis net revenue.

While you can use tools like a sales reference ROI calculator or a reference program ROI calculator to get you some preliminary data numbers, it is definitely worth taking a more in-depth look at the components of a total cost of ownership calculation now.  Some of the Reference Management Software TCO Categories that I suggest you should consider:

Understanding 5 Costs of Customer Reference Solutions


Obviously, the license cost per user for a reference solution is going to be one of your first costs that you consider as you are evaluating vendors.  But even this seemingly straightforward expense, should be explored with vigor.

Does the vendor include the following in the per user fees?

  • Regular updates/upgrades to features
  • Ongoing training support, either basic or tiered
  • Business or tool specific consultation
  • Dedicated account or project management resources
  • Access to customer support/technical support
  • Any configuration/customization beyond the basic fields/workflows that are offered
  • Integration with other software/tools that you depend upon for customer profile data
  • Compatibility across your hardware/user devices/browsers and basic office software tools

Do your users have to be licensed in other software, like your CRM solution, to access your reference management solution?

  • Just the cost of adding additional licenses for your CRM solution (if you are using it to manage your reference program) can be significantly more expensive than solutions that are independent of, yet integrated, with your CRM software.

Make sure you have a comprehensive understanding of what your license fees cover, some examples are suggested in other topic areas in this post.

HINT:  An item that could be considered in all of these categories, but certainly could be asked as part of your license fee questions, would be what tiered discounts are available; are there penalties for going over your contracted number of licenses; are there any limits to the number of times/ways/areas to which different user levels may access our solution and are there any limits to the amount of data that you can store or access in your solution. Many CRM solutions that are ‘retrofitted’ to accommodate reference programs do include hidden fees for API calls; custom objects; etc., depending upon the version of the software that you have installed.  As I mention in other areas of this post, deciding to use an existing solution rather than incur the costs of implementing something new, that is specifically designed for your reference management challenges, may end up costing more than you expect due to the hidden costs of custom objects, API calls to other solutions, time and resources needed from your SFDC or other CRM admins.


Most reference solutions will include a one-time implementation fee.  Just as it is important to understand what is covered by your per user license costs, having a very clear, itemized list of what your vendor includes in the implementation process is critical to your understanding of TCO.

Does the vendor you are evaluating include the following:

  • A detailed schedule of major milestones
  • A comprehensive list of resources required/recommended from both your team and provided by the vendor to ensure a successful implementation
  • Worksheets to help you identify not only the data that you want included in your reference program, but workflows for requests, nominations, actions, etc.
  • Workbooks detailing the business processes that are suggested for review, documentation, user and administrative access, help and training
  • Data normalization/import and testing
  • Provision of a sandbox, and detailed UAT processes
  • Clear documentation, processes, etc. around integration with your CRM and/or other software

But what if you use your CRM instead?

If you do intend to try and retrofit your existing CRM software to serve as your reference management solution, make sure that you know what version of CRM software you have and what it includes. Particularly as you determine that you will need additional, custom fields in order to capture and track reference information that CRM’s solutions are not traditionally designed to contemplate.   As an example, the Professional Edition of SFDC only includes 50 custom objects.  Any additional objects must be purchased at the cost of $900/user/year for 2000.   You cannot purchase a smaller number.  (Source:

Educate yourself about all possible/hidden costs in your CRM solution that may impact your ability to use it effectively for reference management.   The cost of custom objects in Salesforce is just an example. With this CRM or others, there may be other feature expenses that you will incur if you want additional reference contact/customer specific fields included in your workflow.  (As an example, this article discusses some of the fees in addition to licenses.

Data Migration

Although the bulk of your data export/import project may happen when you initially implement a new reference solution, the cost of analyzing your existing data for gaps and organizing it in a form that can be imported to your new solution and the exercise itself should be a part of your cost TCO calculations. It will be an initial as well as an ongoing expense if you anticipate acquiring new companies, the addition of large amounts of data from different sources in the future, etc.

Some questions to ask/things to consider:

  • How does your vendor support the import of existing data initially and in the future?
  • What gaps do you have in your existing customer and contact reference data that you will need to fill/consider as you implement a new solution?
  • Does the software that you are using now easily track all of the information that you need/want about your reference customers or do you have to create customized fields to capture that information?
  • If you plan on running your program using an existing software solution, such as your CRM, thus assuming that you will avoid the cost of data migration, are you certain that the data housed in your CRM is reliable and includes all of the fields that YOU need to have a complete picture of your reference companies and contacts?   If you are not planning on selecting a solution that is specifically designed for reference management, are you trying to fit a square peg in a round hole, thus potentially incurring customization costs and perhaps ending up migrating data from Excel spreadsheets or other sources anyway?


As the old cliché goes, you can bring a horse to water, but you can’t make her drink.   Getting your users up and running quickly on your new solution/program should be one of your major project considerations.

The cost of providing training not only to you and your team, but to any user of the system is an element of TCO calculations that often gets too little attention.  Of course, as suggested in other RO blog posts and in our Guide to Successful Advocacy Programs, making sure that you market the value of tech solutions supporting your program, and making sure that your new workflows and access to reference data is very easy and efficient will go a long way toward making the training burden less expensive and ensuring adoption.

Some other items to consider:

  • Does the vendor include training and on-going support as part of your contract?
  • Is the reference solution flexible enough to mirror some of your existing workflows/processes?
  • Does the vendor provide you with a dedicated resource that can also help you with training?
  • Assuming that using your existing CRM software and customizing it to accommodate your reference needs will make training and adoption by your users easier, is dangerous and potentially very costly. Choosing a solution that is specifically designed for reference management and can be integrated with your CRM so that it mirrors the processes and workflow that your sales and other users currently follow, truly ends up being a less costly and more useful path than trying to retrofit existing software.

Maintenance and Support/IT Resources

Including the cost of ongoing maintenance and support in a TCO calculation is a must. Beyond the training addressed above, it is important to consider not only any fees that are associated with software upgrades, new versions, new feature functionality and any specific support, but also evaluating the cost of downtime or lag time if your solution has scheduled maintenance windows during which you and your users are unable to access the solution.

Additionally, if changes that you need to your configuration or data fields require you to get on IT’s project schedule and be prioritized against all other jobs in a queue, calculating the lost opportunity cost of these delays is a critical element of your evaluation.   Consider the impact of having to wait an additional, even 48 hours, to fulfill a reference request for a large deal.

Finally, if your program and software are embedded in another application rather than separate, you are dependent upon the IT/BA resources available to you for any changes that you need in your solution. Not all reference programs are large or fortunate enough to have dedicated internal IT/development resources, so considering the cost of securing this support internally is important.

Some things to consider when making your assessments:

  • Maintenance and support fees from the vendor (and any internal assigned share of support costs)
  • Opportunity cost related to scheduled or unscheduled downtime in the application
  • Opportunity costs related to needing to get on a software project schedule and the risk of being prioritized at a lower level against all other projects in queue
  • Whether IT resources are dedicated to your program or not, the cost of IT/development/CRM experts is skyrocketing.   Considering not only the direct salary expense of this expertise and how much your solution is dependent upon this resource, but also the lost opportunity costs if you don’t have a dedicated development resource for your project are essential considerations for your TCO calculation as well as the success of your program. The average SFDC Administrator salary now is in the mid-$80,000 range but can be as high as $150,000 depending upon experience and specific certifications.

Finally, make sure that you have a comprehensive understanding of the features included in your existing CRM solution, if you decide that using it may be the most cost-effective, efficient way to manage your reference program.   Many reference managers have found that this route is akin to trying to fit a square peg in a round hole, as CRM’s were not designed to accommodate all of the data and specific workflows that contribute to a successful customer reference management program.   Additionally, if you do not have the most expansive version of your CRM solution implemented, the costs to retrofit fields, workflows, reporting and calls to other data sources in order to flesh out your reference profiles and implement request, nomination, and other workflows that make sense for your processes are exorbitant.

Additional Helpful Resources

If you have done your homework, you will have built a business case for implementing a customer reference management solution that is specifically designed to:

  • meet your needs
  • configurable enough to accommodate not only your specific workflow, but your product taxonomy and data from other software or human sources in your organization
  • can work for both users of your CRM software and non-users and for certain functions, be exposed to vendors/users external to your organization

For assistance with creating a business case or starting a reference program from scratch/relaunching an existing program, you may want to check out the following resources:

If you have any questions about this post or how RO Innovation can help you activate the voice of your customers without breaking the bank, please contact us.

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