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Understanding the TCO of a Hosted vs. Premises- Based ECM Solution
Yankee Group, The, Sep 2004, Pages: 10
Many companies are unaware of all the costs involved in selecting and implementing an enterprise content management (ECM) system. Few companies understand that the application license represents only 13% to 38% of the overall cost of ownership over 5 years. The remaining cost comes after the initial licensing costs are incurred. Companies have typically evaluated capital expenditures, such as hardware and software, but rarely account for the complete spectrum of post-deployment costs.
Companies seeking to document all expenses of ECM need to understand the many
hidden costs, which can be challenging to estimate in advance. TCO analysis for an ECM deployment falls into the following major categories:
- Needs analysis
- Software purchases and license support
- Implementation and deployment costs
- Ongoing operational support
- Strategic development costs
Businesses require a complete grasp of the subcriteria within these five categories, along with their associated costs over a 5-year period. Without a thorough knowledge of these details, ECM cost estimates will likely be inaccurate.
To provide a more reliable cost perspective, the authors have applied vendor-pricing models to both typical departmental implementations of hosted and premises-based ECM solutions and to representative enterprise deployments of a premises-based solution. To these scenarios, we have added industry-average costs for each of the categories outlined above. The first scenario is based on a 100-seat, single CPU (for premises-based products) implementation of the core content management application; the second is based on an unlimited-seat, four-CPU implementation of the core content management application and three to four add-on modules.
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