Calculating Total Project Cost For Your Software Implementation

Many people are disappointed, upset or downright distraught when the total project costs of their new software blow out. Over-budget projects often still deliver huge benefits to the organisation.  But if margins or cashflow are tight, the extra cost can turn a project from saviour of the business to a death knell.  

At Opsis, we specialise in CRM, but the cost elements of any software implementation are similar.  Here we outline the key cost components of any software project. It should help you understand what is involved, so your project can be one of the success stories. Our e-book 14% of CEOs are so disappointed with their CRM that they would like to junk it and start over again explains how you can succeed with your project.

Firstly, compare with apples with apples. This is especially important if you are looking at more than one solution. You need to know the total costs of each option in order to make a wise decision.  And this is not made easy for you by the vendors.

Five areas of cost incurred in any software project

When assessing total project cost, be sure to look at each of these five key areas.

1. Hardware

Yes, we're looking at costs for a software project, but without the right hardware, your new software may not function at all. Or it may function, but so slowly that all productivity gains are lost while your staff wait for the system.  Even in our current, cloud focussed environment, you may need to consider new laptops, mobiles or tablets if your users are to get the most out of the solution.

The commonest hardware items to include in a costing are:

• Server
• Desktop upgrades / replacements
• Mobile or handheld devices

2. Software

Remember to look at both ongoing costs (e.g. monthly subscription fees for a cloud or Software-as-a-Service solution) and upfront costs.  Many software solutions incur both types of cost.  Think carefully about whether you want to include ongoing costs for one year, two years, five years or more. A good question is, 'Over what time period will I amortise this software project?'

Software costs to consider include

• The actual application
• Any associated platform costs and,
• Perhaps desktop upgrades.

3. Implementation

This is the nitty gritty of getting the software to work in your environment.  It's often the part where a consultant is employed.  Ensure your total project cost includes anything needed to achieve the following goals.

• Changes to the application itself
• Integration to other applications
• Data migration of legacy data

To achieve an estimation of this that has any chance of being close to accurate, you will have to do a scoping workshop, which looks at:

1. The KPIs - or what is particularly important to you for the project
2. Your business processes, at least those that are used by the parts of your business that will be using your new CRM solution.  Here you should look at the desired process which acknowledges any issues with the current process, not just the current process.
3. The reporting and business intelligence that your processes deliver and which therefore need to be made available to your users - this will include reports, charts and dashboards.
4. Data that may need to be brought into CRM
5. Documents that you may be able to get CRM to produce automatically
6. Your users, including their roles and their current level of IT skill and confidence

We give you more details and help with this part of the project including some templates here.

4. Training

Most projects include some budget for initial user training.  Software can be very powerful.  If you want your users to get the most out of it, they need to know how to use it.

Depending on the size and scope of your project, you may also want to consider other kinds of training.  There is more information about the different types of training that will improve the success of your project here

5. Support

This is the cost of maintaining the application after go-live.  A support contract may be optional or mandatory.  Like licensing, you have to determine what time period to assess costs over.

You may also want to budget for training new staff, or existing staff if your project is being rolled out to more of the organisation over time.

For any given project, the cost for some of these items may be $0. That's fine, as long as you have asked and answered the question. This reduces the risk of surprises.

While I have outlined key cost areas for your project above, remember, every project is different.

A realistic estimate for your project is only possible once a detailed scoping of your particular situation and requirements is completed.

This is why Opsis prefers to run a scoping workshop as the first step in any CRM project we undertake. (An alternative option is to download our scoping workshop templates and develop the scope in-house – if you have the expertise to do this.)