Realistically Estimating Total Costs

Summary:

TCO (Total Cost of Ownership) refers to the total cost of an IT project,
including all direct and indirect costs incurred over the lifetime of the project.
A comprehensive and realistic TCO assessment is important to ensure that all
costs are taken into account and that the project budget is not exceeded.
An external consultant can help to carry out an independent and objective
TCO assessment and ensure that all relevant cost factors are taken
into account, especially in the early Y1 phase of a project

In Detail

PREPARATION

Internal Efforts

Preparations for PIM project requires internal efforts, such as taking note of all stakeholders’ requirements, structured and consolidated recording of functional, technical, and organizational requirements, as well as a complete picture of the current processes, system landscape, and the degree of use of product refinement.

External Costs

When selecting a system for a PIM project, external costs may be incurred if an external consultant is called in. The costs for the vendor presentations themselves are usually not included. However, if an external consultant accompanies or carries out the system selection, costs may be incurred for the same aspects that must also be taken into account for internal expenses, such as gathering the requirements, preparing the tender documents, and evaluating the offers. It should also be noted that the software manufacturer is not automatically the implementation partner and must therefore be selected separately.

IMPLEMENTATION

Internal Expenses

Workshops make up a large portion of internal expenditure. It will depend heavily on the number of participants, usually three to five, and of course, the number of workshops.

Migration costs are also a significant expense aspect. However, this is very difficult to determine in advance, as it depends on how far the current data model and data quality deviate from what you want to achieve. This can only be validly estimated once the future data model has been roughly outlined and the current data status has been analyzed.

Training must also be taken into account, although it accounts for a small part of the effort.

In addition to training, installation and integration, change management is also an important factor in the implementation of PIM. This involves taking into account employees’ workflows, addressing their questions, and observing technical constraints in order to ensure the smooth use of PIM.

Modern PIM systems also require a high level of configuration, which is often carried out by the companies themselves. This trend is steadily increasing. Involving companies in the configuration of the system can simplify the go-live, reduce training costs, and lower external project costs.

External Software Costs

When considering the external costs for the implementation of PIM, both the software costs and the implementation costs must be taken into account.

The software costs usually include the license costs, which make up the largest share. However, it is also possible that update or support costs will be incurred during the project term. It should therefore be clarified whether these costs are necessary and whether they have been included in the implementation costs.

The implementation costs are made up of various elements, such as the creation of the data model, the definition of processes and system components, the development of interfaces, training and, if necessary, the creation of data sheets or print catalogs. The quantity and complexity of the interfaces can vary greatly from project to project.

Between 15% and 20% of the external costs should be budgeted for project management.

External Service Costs

There are various aspects to consider when calculating the implementation costs for a PIM system:

Firstly, the creation of a viable data model is of great importance. This is not about simply transferring an existing, developed and partially analog data model to the PIM system. Rather, a construct must be created that guarantees the maintenance, acceleration and error robustness of the system.

Another important point is the definition of processes and the structure of the relevant system components. These include workflows, user administration, dashboards, and the user interface.

The structure of the interfaces is also an important factor for external expenditure. In particular, the interface to the merchandise management system deserves a special mention here, as well as the export interfaces to the web store or marketplaces. The number and complexity of interfaces can vary greatly from project to project.

Training should also be taken into account when calculating the costs, even if it does not represent a major expense item.

Data sheets or print catalogs may also need to be created.

Last but not least, between 15% and 20% of the external costs should be budgeted for project management.

OPERATION

Once implementation is complete, the PIM project moves into operational mode. It is important to emphasize that the introduction of PIM is not just a software implementation, but a continuous process of business optimization. Therefore, even after the project is completed, internal and external resources should be allocated to the topic of product information management to ensure that the system is continuously improved and updated.

Internal Expenses

When considering the internal costs of a PIM system, the duties of the content administrator should be taken into account. This individual is responsible for managing the system from a content perspective and should not be confused with the system administrator or the PIM owner.

Another important role, but one that requires less effort, is that of the PIM owner. This person or group of people makes decisions on current and emerging issues relating to product information management, including requirements management.

The costs of training should also be taken into account in the long term, even if they are not significant. This concerns both the training of new employees and the introduction of new software functions.

If the software is hosted, additional costs for the hosting service must also be considered. License costs and the cost of software updates (including testing) must also be taken into account in the long term. Another important factor is the support costs for technical matters and bugs, which must also be included in the calculation.

External Software Costs

For long-term planning, license costs must be taken into account on an ongoing basis. In addition, the costs for software updates, which usually include testing, should also be included. Another important factor is the support costs for technical questions and bugs, which must also be included in the calculation.

If the software is hosted, additional costs for this must be factored in.

External Service Costs

In order to successfully manage a continuous process such as PIM (Product Information Management) in the long term, it is advisable to maintain and utilize continuous contact with a competent partner. This way, new ideas and best practices can be incorporated in order to always remain up to date.

As a rule, additional interfaces or system connections are added after the initial project, which must be taken into account. Support costs for technical issues and bugs should also be factored in to ensure smooth operation.

GOT QUESTIONS? FEEL FREE TO ASK!

Each company has unique requirements, prerequisites, and data, which is why every PIM project must be approached individually. On behalf of Y1, I can offer you a customized solution and personally advise you. Get in touch by arranging an initial consultation.

Marc Kulow berät zu PIM-Lösungen, egal ob PIM-Integration, PIM-Upgrade oder allgemeines PIM-Projektmanagement.