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Understanding the TCO of a Hosted vs. Premises- Based ECM Solution
Yankee Group, The, Sep 2004, Pages: 10
The cost of ECM is significant to any organization and is worthy of detailed exploration to present the most accurate analysis. On average, many midsize companies or divisions of large organizations spend $315,000 to $880,000 on selecting, implementing and maintaining such systems. Large organizations spend upwards of $1.7 million on enterprise-wide deployments. The cost of solution deployments varies greatly because not all solutions are created equal, and every implementation is unique. In addition, each ECM deployment may vary substantially based on the following factors:
- Application focus: ECM software functionality has expanded dramatically during the past 24 months, and now envelops web content management, document management, collaborative information management, digital asset management and records management. These elements often have a degree of overlap with portal, application server and business process management functionality. Consequently, the richness of feature-functionality resulting from the various permutations of one or more of these application types spans an extraordinarily wide range, as does the associated pricing.
- Delivery method: There are two markedly different deployment options for ECM—
traditional premises-based licenses and subscriptions to hosted ECM as a service. Each comes with different cost, cash flow and operational pros and cons.
- Technical environment: Companies must address a number of issues, such as thin versus thick client, different hardware, operating systems, databases, repositories, application servers, storage systems, and security models (and integration of all of these elements) that will affect the ongoing maintenance and upkeep of the ECM system.
- Existing resources: The availability of existing IT support, infrastructure and application customization may also affect capital expenditures in the first year and beyond. Even with existing IT resources, many companies find external consultants and expertise necessary for advanced deployments and ongoing maintenance of premises-based systems.
- Hidden and intangible costs: A wide variety of departments within a company incur costs related to ECM. The inability of the software to meet specific business goals may result in significant opportunity costs, which are difficult to estimate. There are also major value gaps associated with long implementation times, lack of usability, low adoption, decreased employee productivity and hidden system downtime. Given these challenges, it is clear why companies struggle to understand the TCO of an ECM solution. However, TCO is a critical metric for assessing both the overall budget impact and the ROI of an ECM project.
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