Cost Analysis and Cost Assumption Services

Accurately forecasting the cost of an enterprise software system is a tough job. Most accounting professionals have experience with enterprise software. However, experience with enterprise search systems is less common. More importantly, search systems pose different challenges from other types of enterprise software. The differences may be subtle, but the differences have signfiicant financial implications.

Customization is an obvious risk in any enterprise software system. Customization in search translates to two costs that are unique: [a] the need for manual (think headcount or costly consulting fees) work to handle the “problem content.” If you don’t know that touching a single document can cost as much as $17 offshore, you have a “data void.” [b] As more content is processed, the computers, storage, and network infrastructure must be upgraded continuously. Most upgrades occur after a fault. If a fault occurs in enterprise search, employees may not be able to do their jobs. What is the upgrade path and what are the costs that these upgrades incur?

Arnold IT has developed a worksheet that identifies more than 50 distinct cost categories. We maintain benchmark costs for small, mid-sized, and large-scale enterprise search deployments. (See a snippet of a hypothetical cost breakdown.)

The cost of enterprise search is one of the best kept secrets in the search system industry. And for good reason. More than 80 percent of the enterprise projects costs more than the customer originally budgeted. The operational costs do not decline in the second year of operation. These costs go up due to the need to upgrade the search system infrastructure. The costs of an enterprise search system can reach $1 million per year when license fees, professional services, hardware, and network systems and services are included.

Remember: Just because an accountant does not identify a cost does not mean that an organization won’t have to pay the bills. Search system vendors do a poor job of identifying the actual cost of ownership. Arnold IT is not a search system vendor. We identify the costs and provide the services needed to keep “hot spot” costs under control or minimized.

Does your financial analyst know that adding custom features to an enterprise search system can increase its cost by a factor of two and set the stage for vendor lock in?

Get your project on track today.

Contact Arnold IT by calling (502) 228-1966 (Eastern time zone).