To evaluate the total cost of ownership (TCO) for a business intelligence (BI) deployment, you need to assess the full spectrum of costs incurred over the lifecycle of a given project. The initial purchase cost, one that obviously gets the most attention, is only one of the many factors that you have to incorporate into a thorough cost analysis. You must also consider the costs related to the integration, maintenance and operation throughout the lifecycle of the deployment.
- System acquisition costs (hardware, licensing, and maintenance fees)
- Implementation costs
- Production systems/IT operations costs
- Key business unit/End user-based costs
We define a common scenario for a BI deployment and compared the initial and recurring costs based on comparable deployments of On-Prem BI versus SAC on the Cloud with Dataworks Managed Service (DMS). The deployment focuses on a common BI functionality profile— query, analysis, and reporting. This scenario is based on a deployment for a furniture manufacturer that needs to provide a community of 1,000 employees and distributors with real-time access to business critical data for improved decision-making. The manufacturer seeks to transition from an outdated Excel and Access reporting infrastructure to a BI solution.
Based on a comprehensive TCO model, which uses common scenario data to calculate costs for each
component, the breakdown of cost elements over three years are:
Acquisition Costs
Acquisition costs between On-Prem BI and Cloud SAC differs. In the case of a cloud subscription model, it would include the monthly subscription fees per user. On-Prem BI include the software licensing fees and the required hardware to support the deployment. Maintenance contracts are also included in this fee because in nearly all cases they are negotiated as part of the acquisition, even though the payments are spread out over time. The acquisition costs for this scenario are based on an in-house deployment with a perpetual use license. It is assumed that all hardware required for the deployment will have to be purchased. The cost is calculated based on list pricing for software and estimated street pricing for hardware, with vendor discounting factored in, as described in the detailed assumptions.
Implementation Costs
Implementation costs include those items that allow an end user to go from acquisition of the software to a production deployment and include:
- installation and initial configuration
- internal staff training
- creation of semantic layers (models)
- setting up the initial access controls
- initial report (story) creation
- full report integration
The TCO model assumes that the vendor professional service (or SI partner) organization perform elements (1), Part of (2), (3), and (4) and that the internal customer staff perform the remainder.
Production Systems/IT Operations Costs
Integral to analysis of TCO is the cost to administer and maintain the BI system over the long term, particularly as changes are introduced that result from organizational or functional requirement changes. The key elements of cost during this phase are: a) costs for report changes; b) changes to security/access control; and c) server/database administration.
Business Unit/End User-Based Costs
Some costs of a system deployment are attributed to the business unit or end-user community, as a BI deployment is rolled out over time to various user groups–with user training as a key cost driver. The assumption in this scenario included a 66% user rollout in year one and the remaining 33% rollout in year two.
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