Posted by David Aponovich on October 5, 2012
What’s the correct ratio of web content management software license price to implementation cost?
Clients frequently ask us some variation of the ratio question. As they try to do more with digital, they realize this stuff gets complex and costly pretty quickly.
The answer to their ratio question is: It depends. I can’t endorse a standard ratio of software to services because I don’t believe one exists. For very modest projects, might you expect to spend two dollars on services for every one dollar in software? It’s possible. But I’ve seen it more commonly grow to five-, six-, or ten-fold (occasionally more), as projects like these have long tentacles that reach beyond just software. The cost of software? That’s table stakes. WCM vendors may whisper sweet nothings in your ear about how easy it is to implement; I say ask someone who’s done it before with that product – and get them to be specific about ‘what’ was done as part of their project.
The more urgent question is whether you can keep your eye on the prize, focusing perceptions at your organization on the value of the total solution you’re trying to create. Although WCM technology may occupy the spotlight and serve as an integral part of the total solution, there’s usually a lot more to consider. The scope and cost estimate of your initiative may make executives’ eyebrows pop up. But what really should make their eyes pop is fairly assessing the opportunity cost of not tackling the initiative in a way that reflects the importance of the digital channel to your business.
Too often, technology buyers and project leaders (especially in WCM) come to their projects with preconceived ideas around cost, complexity, and time. (There’s a common refrain spoken by project managers trying to bring clients back down to Earth: “You can have this WCM project done fast, cheap, or well. But pick only two. You can’t have all three.”)
This is where the ‘Car Talk’ brothers (who dispense car advice during a weekly show on National Public Radio here in the States) enter the picture.
On last Saturday’s show, a caller vented his frustration at the cost of a new part (a front crank seal, which was leaking oil) versus the labor/installation cost.
The part cost $4.10. The labor was $358.
“Why do people think there ought to be some correlation between the price of the part and the price of the labor?” one of the brothers (Tom or Ray, I still can’t tell them apart) asked. “If it was the other way around, if the part had been ($358) and the labor had been $4.10, nobody would complain.”
In WCM projects and in car repairs, the cost of “parts” (like software) don’t have a neat correlation with “labor” (implementation) across the board. Like any business initiative and investment, there are value drivers that need to be weighed. And, some things are just more complex than others. Some things are within your powers to cost control: how deep is your redesign, how complex are the features you want to build with the WCM, how many systems do you integrate with your WCM? Do you have internal staff participating on the project team? How skilled are they in the technology?
Rarely have I seen a WCM project of any complexity deployed at or below the anticipated cost. Requirements and requests change, beginning at the first meeting. The upfront license cost is probably the only solid benchmark you can take to the bank. Labor rates and experience levels at implementation partners, such as interactive agencies and system integrators, vary widely, adding or subtracting value from the total solution cost. (What's it worth to you to get it done right the first time?) Service providers are loath to provide fixed-bid project pricing unless requirements are airtight (to which I might say: there’s no such thing as airtight; priorities change and evolve in real time on these projects), or they scope it with more padding than a La-Z-Boy recliner.
Yet tech buyers often cling to cost expectations at the expense of what I say matters more: delivering a successful WCM solution to support stellar digital experiences that will differentiate the business – and fulfilling your strategic business need. In the delicate dance between budget and cost, you need to realize: at this point in time, in this competitive environment, you really don’t have the luxury of failing to get WCM and digital (and mobile and social) done right.
I’ll say it another way: Your digital presence is that 15-year-old leaky Subaru in bad need of a new crank seal. Pay for the part and the labor to solve the overall project, or else that car’s not going anywhere at all.
Tell us below: Can you share your wisdom around cost and software versus service ratios for your WCM-centric project?
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