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What Are The Total Costs Of Ownership?

You Built A Website! So Now What?

Do you know how to plan it, develop it, manage it, maintain it, perfect it?

Not just the content but the platform and the code?

“This is not just about keeping content updated. You have to invest in regular website maintenance to keep the website secure and in good shape. This should save you money in the long run and provide a better experience for your customers. Nothing is worse than a broken or hacked website.”

Understanding The Basics

Your web developers or agency have sent you a proposal or even completed a website for you.

Let’s begin by making sense of the costs you’re initially presented with.

You will generally see one of two types of offers at this point, either:

  1. a fixed price based on an agreed scope of work, or
  2. an initial cost to determine scope that then leads to a later price.

When you finally get to this agreed number (in option 2) what actually makes up this cost?

Divide Up Categories Of Cost

The cost categories defined

The categories that determine costs to build and manage your website:

  1. Business Analysis: Understanding the real objectives and goals for your web assets. This can include both customer-facing as well as back-office. Understanding how many types of users or customers, and what the core needs
  2. Value Demand: These are the costs that add value to your business. For example, functionality that provides a new offering opens up a new channel or improves the way you communicate with stakeholders. This may see usability improvements to your Ecommerce engine, a customer portal or a new blog.
  3. Operational Costs: Once your website is built, these are the ongoing costs that keep things running smoothly. Generally, you’re looking at website administration, hosting, monitoring, testing, updates, and security.
  4. Failure Demand: Sometimes things go wrong. These costs are the unplanned factors in the day to day running of a digital business. They are generally outside of your operational costs but with solid planning and maintenance in place, these costs can be minimized.
  5. Avoidable Costs: These are the wasted costs that with proper leadership and processes can be minimized. In many cases, these involve the organizational overhead or administration that extend project lifecycles or get in the middle of the project processes. Handoffs and governance are examples of avoidable costs. It also includes costs from avoidable mistakes or damage done by the wrong people having control or access.

Allocating your costs into the above categories makes it easy to measure Total Costs of Ownership (TCO) of a technology investment. Armed with this information, you can undertake a like-for-like comparison of vendors, products, and projects.

Unfortunately, not all of the costs are always knowable, but the more seasoned the professional, then better you will be able to estimate and project.

Major Hidden Costs:

Hidden Cost #1: Customization

You will often hear about open source solutions being free. Therein lies our first catch. Although software in an open source environment is often free of upfront charge, almost always, as soon as you go to customize the platform to meet your individual business needs, the cost begins to accumulate. Plus most open source platforms require additional plugins and options and many of these require subscription fees.

Hidden Cost #2: Updates

The value of a community of software developers begins to diminish rapidly unless you’re prepared to invest in the Value Demand and Failure Demand categories of cost. These ensure that your web property remains current, up to date and with the latest features. This means you have to update your website, themes, plugins, constantly to maintain the functionality and security of your website. But you also have to plan for the unknowns, such as when updates go wrong.

The dependency between your infrastructure and your software also hides considerable costs. You will need maintenance to not only keep your operating system safe from security threats but also current to ensure the performance of the software and the infrastructure.

Hidden Cost #3: Hosting and Management

SaaS (Software As A Service) or Cloud-based platforms are generally fully managed. What this means for the end client is that the development, infrastructure, and service costs are amortized across the whole installed community and built into your subscription fee. The costs that come after the initial build of an open source platform are already costed into a single fixed monthly payment for SaaS. This includes all of your Value Demand costs such as upgrades, new features and maintenance. Once you become part of the SaaS community you benefit from the existing value that has been created and from future benefits that are applied. However, most SaaS platforms have hidden support and maintenance requirements that need to be fully understood.

Hidden Cost #4: Re-platforming

Most clients expect that once they create their website or application that they are done. Nothing could be farther from the truth.

All websites may require a periodic review to determine if it needs to be moved to a new platform, hosting company, or SaaS. Nothing is constant and forever. Re-platforming is a natural part of the web property lifecycle. With SaaS platforms the need to re-platform vanishes sometimes, but not always because SaaS platforms go our of style, can be poorly updated and maintained, or simply do not stay current with the newer feature sets you will need.

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We Never Forget The Smallest Publishers As Well!

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Contact Us Today – Let Us Help You Understand Your Website Cost Of Ownership And How We Can Help You

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