Feasibility Assessment

The Custom Roadmap

The Itemized Budget

IT Budget Forecasting

Budget Forecasting Model

A thorough IT adoption budget should include the following categories of expenses:

1. Licensing: direct costs to the foundation of acquiring and using a software platform. This cost could be a traditional up front fee or an annual pay-as-you-go model, and could include hosting costs or not depending on the provider.
2. Technical Services: these professional service costs are directly related to implementation and are typically paid to the provider.
3. Professional Services: these costs bring needed skill sets into the organization to make the transition to a new system possible.
   

The astute observer will note that hardware costs are not on this list. This is symptomatic of changes in the IT landscape:

• In the early days of IT, 70% of a project cost was hardware, 20% software and 10% "installation" related.
• During the 1990’s, this ratio flipped so that hardware accounted for 20%, software 60%, and installation 20%.
• Today, hardware is 10%, software 30% and installation services 60%.
  

These changes are due to declining hardware costs, the increased sophistication of software and the out-sourcing of IT staff functions.

What kinds of things are being done in deployment?

• Installation/ Conversion:

  • These include expenses related to the setup of the application so that it can be used by a client. This configuration would include the setup of a chart of accounts, vendors and banks within an accounting system or the preparation of an initial set of web pages within a CMS system.

  • Conversion expenses relate to moving data from a prior system into a new data base. These can vary depending on whether the systems have been mapped to each other or not.

• Integration

  • The ongoing synchronization of data between a new system and other systems (existing or new) is distinct from the initial conversion. In a sense, it is like running the conversion every night.

• Training

  • New systems are acquired to promote change, and training is how staff learns to change how they process their work based on using the system. It is ironic that this line item is so often shorted.

   Professional Services

• Business Planning

  • This includes going through the process of identifying the business needs that need to be addressed, including:

    • Requirements for new software configuration (so that you tell the provider exactly what you need).

    • Redefinition of processes that may or may not be handled by the system but have been identified for improvement.

• Process Improvement

  • The resources devoted to process improvement set an expectation that simple installation and configuration of the system does not guarantee success. Given all that is "new" in a system, and given all the difficulties in converting "old" data, a first generation implementation of a system will not, as a rule, take advantage of its capabilities. More likely the staff has figured out how to get their old work done in the new environment.

  • Projects for process improvement are designed to lag implementation by 9-12 months – enough time for the system to have settled in but not too much time for it to lose its "new software" smell. It will cover much of the same ground as business process planning, but in a new context and enable the foundation to take processing to the next level.

• Data Cleanup

  • Most new system deployments trigger a cleanup effort. This effort is directly proportionate to the degree in overlap between the new and old systems. It is usually handled through use of data entry temporaries.

Is it possible to reduce these budget numbers? In a word, yes. But doing so will introduce an added risk factor in achieving success. These resources are designed to address a skills gap within the organization. These are not skills that will be required long term to administer and expand use of the systems being deployed.