When evaluating any technology solution for your business, the two biggest questions to address with the decision maker(s) are: “How much is this going to cost, and when will see a return on our investment?”
As you build the business case for your eCommerce re-platforming project, you’ll need to look at the big picture to accurately calculate total cost of ownership and return on investment. Detailed below are things to include as you build these models.
Step 5 – Evaluate the total cost of ownership and return on investment models
According to Forrester Research, 43% of commerce implementations have an actual total cost of ownership (TCO) that’s higher than predicted by TCO models. To avoid this mistake, you should calculate more than initial setup and implementation expenses, and estimate total costs for a two-to-three-year horizon.
A TCO model for a commerce platform needs to include:
- Initial set up and implementation of the platform
- Changes or enhancements to the current user experience
- Platform integration and customization
- Platform licensing costs
- Licensing costs for other supporting platforms
- Costs of various hosting options (on premises, cloud, SaaS or PaaS)
- Ongoing platform and application support
In addition to including TCO in the business case, you will also want to understand the return on investment. While evaluating the time it takes to see the return is important, timeframes have been compressed over the years.
ROI models have shifted from a single dimension of time to looking at multiple factors that influence the return. For example, volume carries more weight when determining a ROI. How many more customers do you need to make a return on the platform investment? What conversion lift do you need from your customer base to meet the ROI, and when will that happen?
Shifting to a new technology platform that powers your eCommerce requires buy-in from across the organization. Not only is there a financial investment at stake, but also an investment of time and resources – your IT and digital marketing teams. By thinking through and creating models for TCO and ROI, you bring data to the conversation to gain the necessary buy-in for this aspect of digital transformation.
Where do you go from here?
Our experience shows that while most clients have given some thought to the business case, it’s not fully formed. Part of our process is to provide guidance and help you identify the true business challenges to solve and objectives to achieve. Then, we help you build your business case using a framework that provides processes and best practices to achieve your goals. By building models around TCO and forecasting ROI based on your business case, we work within your timeframe to hit these targets and ensure you achieve your KPIs.
If you’re ready to get started, contact us to learn more: sales@perficient.com
Or, to learn more about the other essential steps to preparing a business case for your eCommerce project, download our guide – Best Practices for Choosing a Commerce Platform, Part 1.
