Total Cost of Ownership for Enterprise 2.0

Posted by Sean Lew on Wednesday, 27 May, 2009 under Enterprise 2.0, Financial, IT strategy |
2 Comments to Read

I have been on this topic for ages and I truly believe that this is an answer that could only be answered once I have experienced it. Here we go. I think the total cost of ownership is something that is very difficult to calculate. First of all, alot of the “gardeners” or “champions” I have seen and worked with work extra long hours to ensure that the platform is “nice” and “clean” and still perform their day jobs extremely well. So if effort is invested after hours could we consider this as part of the TCO equation? Some might argue there is a opportunity cost involved and they could be working on real work after hours. But if they are not motivated by their day job scope and prefers tending the “garden” then would they work after hours? I do not think there is an answer to this.

What I have seen is that champions move in and take control of the maintenance of the platform and look after it. All of them have day jobs and generally their day jobs is not affected by their extra work load. IT seldom gets invloved in maintenance other than the standard harddrive replacement, server upgrades and stuff like that which applies to all software that is running in house. These costs can be calculated easily. It seems to me that the human maintenance costs is relatively low as well – as long as you have the right people maintaining it. Do you need a dedicated team to maintain a large Enterprise deployment? Maybe.

I think the TCO arguement for Enterprise 2.0 is still very new and unclear. I do not know all the answers but the above is something I have observed.

The true cost and savings of Enterprise 2.0

Posted by Sean Lew on Thursday, 14 May, 2009 under Enterprise 2.0, Financial, IT strategy |
2 Comments to Read

Buying an Enterprise 2.0 platform is pretty cheap. There are not much complexity in the software or hardware requirements unless the purchasing organisation decides to modify and change things around extensively. Even that, its still not as complex as an Oracle / SAP type enterprise implementation. However, being cheap and easily installed, many people forget the soft costs involved in the implementation.

Enterprise 2.0 is about social networking, collaboration and innovation. Whether it is a bottom up or top down driven implementation, alot of time is required to educate, excite and experience the true benefits of it. Champions have to spend time to educate people and change people’s working mindset and habits. Alot of preaching of the goodness is required too.

So even though an organisation might be paying small amounts of money per user, the amount time time employees spend to push this out into the wider organisation could be quite substantial. This is the communication cost required to get it running. How much would it cost your organisation?

Another thing organisations need to look at is an analysis of the transaction cost and how much savings can an organisation make out of it. I will not go into the theory and concept of transaction costs but there are means to calculate and analyse it even before deciding to take a step into the Enterprise 2.0 platform.

There is never a one size fits all model. Enterprise 2.0 will work for some and not for others. What is discussed above is specifically from the financial perspective only as well. There are many other factors that needs to be considered.