How to Estimate The Duration of Consulting for Software TCO

Executive Summary

  • Brightwork Research & Analysis uses an assumption regarding how long it takes to implement an application.
  • This is a critical point in determining the TCO.

Introduction

Of all the many factors that go into the implementation duration, the most important is the quality of the application itself, and specifi cally its implementability. At SCM Focus we assign an implement-ability score to every application that we review. This is important, because so many companies simply assume— implicitly—that all software applications included in the software selection exercise are equally implementable. They don’t differentiate based upon this factor. However, this is a false assumption. Some software is designed to be sold more than it is designed to be implemented. One of the best examples of this is SAP. At SAP, Sales has most of the say in the organization, and that the application “has” functionality is emphasized rather than making the functionality implementable. Therefore, SAP projects typically have many problems and take a long time to implement—and continue to have more problems after implementation.

How Configuration Ease Fits into Implementation Duration

The best of breed applications that we compare to SAP are much easier to configure. More of the functionality works and the users find the application interface easier to use, so the implementation time is shorter. Companies that are unhappy with how long their implementations are taking, need to look at the software they are selecting because the application is the greatest determinant to both the project duration and the success of the implementation. We are really starting to see this happen in the business intelligence market, where the overwhelming cost and implementation time of self service applications like Tableau are making the TCO advantage almost too obvious to ignore versus older solutions in the market.

Realistic Project Implementation Duration

Estimates Most vendors would not be happy with the implementation duration estimates developed by Brightwork Research & Analysis. However, these estimates are based upon years of analyzing how applications are actually implemented, which is far from the optimum values that are often quoted. We have performed the research, and the statistics are clearly on our side—enterprise software implementations take much longer than is generally assumed, not only by the software vendor, but also by the project management of the implementing company. There have been many attempts over the years to reduce implementation timelines, yet they remain sticky. One exception to this is SaaS, which consistently has shorter implementation durations than on-premises applications. SaaS delivered applications allow a company to get closer to the optimum implementation time.

One reason for this is there are fewer hiccups and the infrastructure is already in place. In addition, more of the vendor’s expertise can be leveraged at any time (the SaaS vendor has one hundred percent access to the application at any time because they control the box)—and that can mean literally any time; some SaaS vendors offer twenty-four hour support and since so many SaaS vendors offer some support from countries on opposite time zones—notably India—work can be done when clients are asleep in the US or Europe. These are just a few factors that explain why SaaS implementations tend to be so much faster and smoother than implementations of on-premises applications. But most applications are not delivered through SaaS; they are delivered on-premises, and realistic implementation times are necessary because we are not developing TCO estimates for a perfect world, but for companies that have to implement software in this world. Nucleus Research addresses this exact issue with other similar applications like i2 Technologies.

“Nearly 70 percent of the i2 deployments lasted longer than project teams had planned. For these companies, deployment took, on average, nearly three times longer than expected while increasing consulting personnel costs and slowing the realization of benefi ts from the solution. “Don’t let vendors dictate your expectations of how long it will take to deploy a certain tool in your environment. Make an independent estimation based on internal planning and the experiences of similar companies that have implemented (the application).”

Including Problematic Impementations as Part of Durations

Another factor that can lessen an application’s overall implementation duration is that often people will not consider the durations of problematic implementations, as if for some reason problematic implementations don’t count. It is unscientifi c to remove problematic implementations from the equation unless there is a very good reason to do so (such as the company stopping the implementation to work on a different project before returning to the implementation of the fi rst application). This is called “outlier removal,” and is a primary method by which research is falsified across disciplines, as discussed in the following article.

I was recently contacted about a re-implementation project. For two years the company had attempted to implement a combination of SAP modules and never brought the system to a live state. It then waited a year and a half, and then attempted a re-implementation. What is the duration on this project? There are other examples of problems in time estimation. Often an application will go live, but the company fi nds the application is not adding value to the business. I have seen this numerous times with applications where the confi guration and settings were not set up in such a way that the business could benefi t. Instead of adjusting the settings, which would have been the right thing to do, the faulty configuration was simply rolled out to more regions in order to keep on target with the initial timelines. A person in management may measure the time the application officially went live as its implementation time; however, the way this is measured at Brightwork Research & Analysis is that the application should not be counted as live until it begins to add value to the business. It is, in fact, quite easy to bring up an application so that it is “live.” All that has to be done is client specific master data setup, integration performed to other systems and a generic confi guration used. I refer to this as a 100% IT implementation—the system is working and all the server lights are blinking.

Conclusion

Implementing the software in a way that adds significant value is the actual goal not simply hitting a deadline. However, in multiple studies it has been found that companies have no other way of objectively determining project success beyond the meeting of project deadlines.

Custom TCO Estimates and Consulting

  • Want Help with TCO for your Business?

    It is difficult for most companies to estimate TCO without outside advice. Vendors and consulting companies do not want their customers to know what they TCO is. Getting TCO advice from consulting companies leads to underestimated TCO. We do offer remote unbiased multi-dimension TCO estimation.

    This article is free, we do not answer questions for free. Filling out this form is for those that have a budget. If that describes you, just fill out the form below and we'll be in touch asap.

References

TCO Book

TCO3

Enterprise Software TCO: Calculating and Using Total Cost of Ownership for Decision Making

Getting to the Detail of TCO

One aspect of making a software purchasing decision is to compare the Total Cost of Ownership, or TCO, of the applications under consideration: what will the software cost you over its lifespan? But most companies don’t understand what dollar amounts to include in the TCO analysis or where to source these figures, or, if using TCO studies produced by consulting and IT analyst firms, how the TCO amounts were calculated and how to compare TCO across applications.

The Mechanics of TCO

Not only will this book help you appreciate the mechanics of TCO, but you will also gain insight as to the importance of TCO and understand how to strip away the biases and outside influences to make a real TCO comparison between applications.
By reading this book you will:
  • Understand why you need to look at TCO and not just ROI when making your purchasing decision.
  • Discover how an application, which at first glance may seem inexpensive when compared to its competition, could end up being more costly in the long run.
  • Gain an in-depth understanding of the cost, categories to include in an accurate and complete TCO analysis.
  • Learn why ERP systems are not a significant investment, based on their TCO.
  • Find out how to recognize and avoid superficial, incomplete or incorrect TCO analyses that could negatively impact your software purchase decision.
  • Appreciate the importance and cost-effectiveness of a TCO audit.
  • Learn how SCM Focus can provide you with unbiased and well-researched TCO analyses to assist you in your software selection.
Chapters
  • Chapter 1:  Introduction
  • Chapter 2:  The Basics of TCO
  • Chapter 3:  The State of Enterprise TCO
  • Chapter 4:  ERP: The Multi-Billion Dollar TCO Analysis Failure
  • Chapter 5:  The TCO Method Used by Software Decisions
  • Chapter 6:  Using TCO for Better Decision Making

How It Works

How It Works

Each TCO calculator is self-service allowing you to continually change different elements in order to see the impact on costs. They are designed to adjust to the specific project factors such as the number of users, the general level of customization, the number of post go live adjustments to the application, etc..

The TCO calculators can improve your ability to plan your purchase.

How It’s Unique

How It’s Unique

Our self-service calculators have been developed through detailed analysis verified by many years of project experience combined with all the available research – all in order to develop a series of uplifts to costs based upon inputs. The formulas used are nuanced, and do not simply “scale” in direct proportion with changes to the inputs.

  • Our TCO calculators are designed to scale to any sized implementation and different levels of implementation complexity and customization.
  • We offer a true TCO by estimating internal costs (such as the time spent by internal resources on implementation and support) as well as the external costs. In comparison with the very limited TCO studies that exist on enterprise software, our TCO calculations are easily the most comprehensive.
  • Having performed this analysis for many applications, we have brought key observations between these applications as well as between various software categories.

What Is Included

What Is Included

Each package is a combination of two analyses. The first analysis is the interactive TCO Calculator which is provides a total TCO based upon the individual costs of software costs, hardware costs, implementation costs, maintenance costs as well as Lifetime Improvement Costs (the costs of the estimated improvements and adjustments to the application over its lifetime). Both these individual component costs as well as the aggregate of all the costs constantly change given your input to the calculator.

What It Is

What It Is

This offering provides buyers with the detailed information they need to for both the total cost of ownership of a single application, as well as the comparative total cost of ownership between multiple applications. This is the only self service TCO calculator that exists on the Internet, and it is available currently for 57 of the most well known enterprise software applications. This calculator receives input from you and automatically adjusts the costs so that they are customized for your intended way of implementing and using the software.

Transforming a Complex Analysis into a Simple Cost Breakdown

Even though all of the calculations behind each TCO calculator are complex and have been extensively tested and validated, they are easy to use. All that you need is basic information about your project such as the number of projected users, whether the implementing is more simple or more complex, etc..

Each package covers a single application including a comprehensive total cost of ownership analysis that takes into account the following costs:

  • Software Costs
  • Hardware Costs
  • Implementation Costs
  • Maintenance Costs
  • Lifetime Improvement Costs