I was recently asked: Can you tell me how to build a good first order estimate for the total IT implementation costs?
This inquiry came from a large company, so this response is tailored primarily to buyers in large companies. However, the general areas of cost apply.
Having been around digital asset management for over 15 years on both the vendor and buyer sides, as well as an industry analyst, I can provide some insight into the areas of cost commonly identified. These are typical for most organizations, regardless of your end choices of installed / hosted / SaaS / Open Source or not…
There are 13 areas of cost for a DAM system:
1. Software. An obvious cost area. Of course this varies from vendor to vendor, and hosted/SaaS v. Installed (and no cost for open source DAM system software… but other costs still apply). Depends largely on scale of system and features required.
2. Technical Infrastructure (Computers, Networking, Storage). Again an obvious cost. You will pay for it in one form or another even in SaaS or more so in the cloud. Also varies from vendor to vendor, and depends largely on scale of system, number & size of assets (storage), type of assets (bandwidth — e.g., video and large graphics files will be expensive to move around), and processing required (e.g., doing a lot of video file format conversions? It will require more compute power for transcoding).
3. Installation and configuration. Vendors usually charge for this, and may include initial metadata definition, user interface (UI) branding / configuration, and other configuration costs. There may also be costs for building out support for your specific workflows if the system supports automated workflows or rules. Not included here, but a cost nonetheless, is the metadata definition work that MUST be done prior to implementation or configuration at this point. That may involve brining in external consultants who can help you discover, determine and structure a metadata model appropriate for your use cases. This is money well spent, but keep in mind that you’ll need a system that can evolve the metadata model — as it is a living structure that changes over time as your business and use of the DAM changes.
4. Customization. Most organizations, particularly larger ones, have specific customization needs — or the software out of the box is missing certain capabilities and the vendor will add them at a cost to win the deal. This is not only for installed software, but can often be for SaaS as well. It is common for larger organizations that opt for SaaS will want some kind of integration with a corporate system — typically a security system like LDAP, Active Directory or a single sign-on (SSO) service or possibly other ERP or marketing automation systems. I’ll add here that one consideration is that customization potentially has a hidden cost — who will maintain the customization and at what cost? Does it get rolled into the base product or not? What happens with upgrades to the base product — do you have to pay to move it forward and keep it compatible? This is a fair question for both SaaS and installed versions, and another item to keep in mind.
5. Integration. Does the system need to integrate with any other systems you have or is it another silo?
Many DAM implementations have to talk to a variety of other software — from creative tools and video editing suites to security/authentication systems, to Web CMSs, to ERP and billing systems. Can the system integrate? What is the cost to integrate? What is the ongoing cost to maintain the integration(s)? Who will do the initial integration and who will maintain it?
6. Migration. Are you moving from an existing system or systems? Or what is the cost to convert, prepare or otherwise ready content for movement into the new DAM system? This is a one time cost and varies depending on the complexity of the existing and desired metadata models and the volume of existing assets or files. Video can take a lot of time to prepare and may need to be staged over a period of time.
7. Initial Product Training. There are several elements to training. What will it cost to get a few key people in your organization fully up to speed on the system so you have resident experts? Do you have the right people in the first place – I mention this because in some cases, you don’t have these people on staff and have to hire them, or train them, or possibly buy these skills/roles from a 3rd party or even the vendor. In almost every successful DAM installation (hosted or not) that I am aware of has 1-3 people (depending on the size and breadth of the organization) who is/are the DAM “master(s)” – more than a librarian or governance provider for the assets, this role(s) oversees the DAM from a combined business use and technical perspective. It expands and updates the metadata model (assuming the system supports that after it’s initially established
, enforces consistency, updates the folder/collection hierarchy for consistent access, and is usually involved in the soliciting, vetting and resolving all modifications to the system. They may provide internal training and problem resolution as well (see 10. Business Support below). Secondly, what will it cost to roll it out and train end users on their workflows? Their training needs are different than the core DAM managers, and you will have different roles with different workflows requiring different focus on the training — e.g. a “search and download” user vs. a librarian/metadata manager.
8. Ongoing Product Training. This is often a hidden cost. It is needed every time the vendor updates the core DAM features or you purchase additional capabilities. It also is needed as you roll out new capabilities, changes to the metadata model or existing workflows, or roll out to new parts of the organization (e.g., a new geographic region with language issues).
9. Maintenance. Usually an annual cost related to the software. Often rolled into the pricing in a SaaS model. Typically Ranges from 18%-25% and provides for software fixes and product upgrades over the course of a year.
10. Business Support. This is commonly overlooked. This is an organizational cost, and companies that are successful at DAM use a variety of organizational structures to support a digital asset management system, especially if it on a global, company wide, broad basis (e.g., integrates with external agencies). This includes the role referred to in Product Training above, and goes beyond that to include the extended organizational infrastructure (people, systems, etc.) that need to be put in place to maintain both the business support around the DAM (i.e., how the DAM maps to the business, validating proposed changes to the system, etc.), and the proper governance across your organization. It is particularly important in global companies with multiple regional users (e.g. a global product or services company, manufacturer, consumer product provider or media/entertainment company) – or for that matter any company that works with Ad agencies on a global basis! Costs vary widely and depend on the size of this organization and degree to which automation can be used instead of people. Both are required and different structures work for different organizations. I’ll state it here because it too is overlooked – digital asset management is different than content or web content management and requires a different support structure (and training). It is an important cost – to establish and maintain this organizational infrastructure that is largely specific to the DAM. This is critical to the success of any DAM and often the area that most companies fail to fund and it ends up killing the digital asset management efforts. It must be addressed and supported with senior management support and organizational backing.
11. Technical support. There are two kinds: vendor provided and internal (i.e., help desk). Cost depends on the size of your organization and complexity of the technical implementation. On the vendor side, it is included in the maintenance but there are often levels of support and quality of service agreements (e.g., basic; 24x7x365; on site, etc.). Internal cannot be over looked. Large organizations typically have a help desk that handles a range of application questions. With DAM this service can be augmented by both an online help system that is often included in the DAM product, or instructional assets such as video, audio, PowerPoint presentations and Flash animations, that are developed and deliberately stored in the DAM to facilitate training and ongoing learning/help. This is a best practice of many successful digital asset management implementations.
12. Hosting. This applies to both SaaS, Cloud and to managed services approaches to the system. The difference is with a managed service, you own the hardware and software licenses, but you pay for it as either an external 3rd party service or internal shared service (e.g. provided by IT or a marketing operations group via a line of business or departmental chargeback).
13. Project Management. This is often overlooked, and is especially important in larger implementations. Someone, either you or the vendor, is providing this during discovery, implementation, testing, and rollout phases. Make sure you account for it.
Note that all of these costs are the financial costs. There are others in terms of risk, time, and effort, and need to be balanced and traded off. For example, if customization or additional features are required, what is the risk that it/these will be completed on time and fit the needs of your organization? This cost needs to be weighed from a risk perspective, and may lead you to trade off functionality or other areas of cost or approach other vendors who provide lower risk. Note that these costs vary from vendor to vendor and it’s important in your selection process to get as close to an apples to apples comparison, and then discuss/weigh/tradeoff the costs/risks/rewards in your decision making process.
That starts to cover it. It is a great and deep question and it deserved a full answer.