|By Deepak Kumar||
|January 21, 2013 04:15 PM EST||
Corporations around the globe rely on having highly efficient IT networks, and introducing a new piece of enterprise software into the mix will have a far-reaching impact on the entire organization. The decision to purchase and implement new business IT software is not one to enter into lightly. The process may be convoluted because it may affect many different parts of the business and can be difficult to manage without a dedicated workforce focusing solely on software implementation and integration. This article will present a set of recommended cost/benefit criteria that should be considered when evaluating, implementing and measuring the ROI of implementing new IT management systems.
- Cost of Deployment Across the Enterprise - Enterprises today demand the rapid deployment of new software to get up and running quickly and reduce lag time in their operations. Reducing the time of implementation is critical to measuring accurate ROI, as organizations cannot afford spending large amounts of time and resources to install new IT software that takes away from the business benefit of adopting such technologies.
- Cost of Software - The range in cost for enterprise IT software is wide. But keep in mind that paying a high price does not ensure value, nor does it buy success. According to Gartner, Global IT spending will top $4 trillion by 2015 and in its Q3 forecast for 2012, IT spending growth has been reduced from 3.0% last quarter to 1.7% now. Don't be afraid to comparison shop and find the right software solution for your company that can scale with your business.
- Associated Risks of Implementation - Understand what it means to move from technologies you are currently working with to the new way of doing things. If you are replacing an existing tool or software package, consider the ramifications of doing so and evaluate any potential exposures to your organization by making the switch. Taking time to speak with other companies or leading analyst firms may also help mitigate the risks associated with moving forward with one software solution over another.
- Staffing, Training & Overhead - Some enterprise software packages have a steep learning curve and take quite a bit of training for system administrators to understand and use them on a daily basis. Calculating the costs of training existing employees for the new software and any decrease in the needs for support by adopting new systems is imperative. If the software provides a more streamlined way to centrally manage network maintenance with less overhead, include any reduction in the number of employees needed to configure and maintain such systems.
- Cost-Savings Resulting from Implementation - Enterprises need to focus on their business challenges and problems at hand, not on the product road map for the technology they are using, to help achieve their business goals. Additionally, speed-of-innovation is critical to ensure you stay up-to-date with the latest capabilities of the market. Business software evolves fast. Selecting a solution that has a large community of contributors, such as an open source solution, drives product innovation that traditional in-house or proprietary development teams cannot touch. Some systems also offer additional cost-savings through a reduction in variable costs, the number of required servers, or a through a decrease in the amount of energy that is consumed. These are all important factors to consider in your ROI calculation when evaluating new software for potential cost savings.
Evaluation of Cloud-Based Models
Firms almost always consider cloud-based software-as-a-service (SaaS) as a cost advantage over on-premise in the short run due to its quick implementation times and pay-as-you-go pricing but this is not always the case. It becomes important to assess the long-term value of the cloud, evaluating if the rent-versus-own model necessarily has a cost crossover point and if so, when? As the cloud continues to move into a broader range of applications and into larger, more strategic deployments across enterprise IT, this model has become a major consideration for businesses.
The cloud may eliminate the need for firms to acquire their own instance of hardware, as well as, associated testing, frequently offering a turnkey preconfigured solution that firms can turn on in days or weeks with minimal configuration. While functionality may be limited through cloud services, a hosted solution may also make it easy for firms to deploy incrementally and may offer short commitments of monthly or annual contracts, which means that purchasing cycles are often shortened as well. Some on-premise software solutions also offer subscription-based pricing options and these should be considered based on the requirements of your corporation.
Regardless of whether or not a corporation elects to adopt a cloud or on-premise IT solution, each organization has its own business requirements and needs when evaluating technology to meet business goals and initiatives. Incorporating each of these considerations in your evaluation process will help ensure you are implementing the right technology that will not only address your needs today, but will be flexible enough to grow with your organization through the future.
Achim Weiss is Chief Executive Officer and co-founder of ProfitBricks. In 1995, he broke off his studies to co-found the web hosting company "Schlund+Partner." The company "Schlund+Partner" later became the 1&1 web hosting product line. From 1995 to 2008, he was the technical director for several important projects: the largest web hosting platform in the world, the second largest DSL platform, a video on-demand delivery network, the largest eMail backend in Europe, and a universal billing syste...
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