According to Gartner, a global IT research firm, the annual cost to own and manage software applications can be up to four times the cost of the initial purchase.
Introduction to Total Cost of Ownership (TCO) as related to Document Management Software
The Total Cost of Ownership (TCO) of a document management software acquisition includes: software licensing, the hardware or any third party components required to operate it, installation, configuration training and ongoing support required to keep the software fully operational over several years.
Sometimes, included in the TCO will be the migration of documents or data from existing servers or legacy systems. This can include the capture of metadata relative to those documents and OCR scanning to make them full text searchable. Finally the documents have to be deposited into a logical filing structure. There may be a need to provide integration with other systems such as document scanners or other software applications.
Keeping TCO of Software Predictable and Manageable
If you have been asked to help select and purchase document management software you will want to be able to give your business manager a budget of the total cost to get the system into full production. It is relatively easy to determine the licensing cost and the cost of needed IT infrastructure to install the software. What is much more difficult to determine is the expense that will come with the implementation and ongoing support efforts. Implementation costs will be even greater if they require outside consultants to travel to your workplace to provide configuration and training. FileHold believes it is important to determine all of the TCO out front and provide installation and support guarantees to ensure on time / on budget implementations.
The META Group, a consulting company, determined that “in today’s economic environment, even minimal cost savings per seat are tantamount to freeing up discretionary IT investment dollars that might be applied in the enterprise technology portfolio or elsewhere in the organization. Companies no longer have the luxury of looking solely at hardware and software procurement costs and run rates of their technology investments but must examine the purchase decisions across their life cycle as well as how their people are spending their time servicing the application. While companies understand and scrutinize the cost of software and hardware very well, personnel costs are usually not examined as closely as they should be. Examining all these cost factors as a whole and how they impact the total cost of ownership (TCO) is paramount in running an efficient organization.”
December 9, 2002: The Wall Street Journal printed "Microsoft says that the initial purchase is usually only 5% of the total cost of owning and maintaining a program."
How FileHold Software Manages TCO
FileHold believes the TCO of software is established long before a single line of code is written. It is determined during the software design process when the objectives of the software relative to installation and ease of use are determined.
FileHold was committed to managing TCO costs from the beginning and started the design and TCO management process with four premises:
TCO premise #1: The software must be “easy to install” and “easy to use”. Installation, set up, configuration, training and ease of use will ultimately affect the TCO to the customer in a greater way than will the initial cost of purchase. FileHold software was in a large part designed by our customers and “mimics” the traditional document and record filing tools users are familiar with. Common words like cabinets, drawers, folders and files create a familiar, friendly environment.
TCO premise #2: Manage the software cost over its lifetime.
As a general rule in software, the more complex and more uniquely configured a software solution is the more expensive it will be to support. FileHold produces a standard version of software and provides an ongoing FileCare support program that ensures that all customers receive the benefits of new FileHold features as they are introduced and that the software remains current as Microsoft operating systems, bug fixes and security patches are introduced.
TCO premise #3: Built data migration and integration into the product.
FileHold provides supportable, off the shelf capabilities to migrate data from legacy systems and provides flexible integration with document scanners. These capabilities can be used by the Library Administrator without the need for internal IT support or outside consultants.
TCO premise #4: Take travel and on site work out of the equation.
Travel costs for sales, installation, configuration and support can add substantially to TCO. In our modern internet world, FileHold believes it is possible to sell, install and support our customers remotely with a superior level of service at a fraction of the cost.
Focused Software Expertise
In the book, Living on the Fault Line, Author Geoffrey Moore advocates companies should focus on their core activities and outsource all other activities. “For core activities, the goal is to differentiate as much as possible on any variable that impacts customers’ purchase decisions and to assign one’s best resources to that challenge. By contrast, every other activity in the corporation is not core, it is context. And the winning approach to context tasks is not to differentiate but rather to execute them effectively and efficiently in as standardized a manner as possible.”
FileHold has one core activity, building and installing document management software using modern web technologies. FileHold evolved from a consultancy in the document management domain to a manufacturer of software and understands the pain of installing and training customers on enterprise grade software. We have applied real world document management software expertise to the product. We offer this “core” competency to our customers.
TCO of DMS Summary
Our company is committed to managing the TCO of the document management software acquisition. We provide:
Exact information on the needed IT requirements out front. FileHold will identify everything you need to complete the software installation before you purchase.
Server Software Licensing is based on concurrent licenses with a “start small and grow as needed” philosophy. Cost per user reduces as users are added.
Optional productivity modules because not everyone needs all of the features of the software, if they are not needed do not purchase them.
Fixed price Installation: Included in our licensing is a proven installation methodology and as much support as is needed to complete your installation.
Free Configuration advice. Even though much of FileHold is configured out of the box we still provide free configuration advice from senior experienced consultants as needed.
The FileCare program provides unlimited technical support and free product upgrades ensuring no surprises after implementation.
For a firm price quotation on the TCO, contact [email protected]