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Total Cost of Ownership for Marketing and Customer Communications Management
In developing a business case for Customer and Marketing Communications Management, there are some significant consideration in developing the overall Total Cost of Ownership elements of the business case. There are many aspect to a customer communications solution that will need measuring in different ways.
A full implementation of Customer Communications Management will demand hardware, software and human resource. The differential in costs could be significant between the various vendors.
There is no single vendor that can deliver every aspect of your Customer Communications Management infrastructure although there are one or two that get fairly close. In designing you implementation strategy you will need to think about whether a best of breed approach with integration is better or, a minimal vendor approach is desirable.
Lets take a look at some of the key focal points for you customer communications management infrastructure:
Customer Communications Management Support & Maintenance for Software, Printers and Inserters.
Support and maintenance contracts with vendors will apply across the full spectrum of products. Within the software arena, It is likely that vendors will offer similar contracts terms and terms of service. But do check the terms of service. If the business is a 24hr operation, you are going to need 24hr support. Also examine the level of support offered in the regions in which you may install the software systems. If you are based in France and all support operations are based out of the US, how quickly can people be on site to support you if matters go critical?
The software elements of the Customer Communications Management infrastructure should also be examined. Will major upgrades come free of charge, or will there be an expectation that more money is spent to stay on the upgrade path?
Also, the upgrade policy should be examined in context with the development plans of the vendor. Does the vendor guarantee backward compatibility between point releases of the software or will the document applications have to be re-written to cope with the upgrade? This could be a very significant cost if you run a number of document applications. If your company is not able to swallow this, are you comfortable being left with a technology that will ultimately stagnate over a period of a few years?
There are at least two significant hardware components within a customer communications management infrastructure. These are high volume printers and the mail finishing devices or inserters. Both of these items will have significant capital outlay and will require regular servicing. You will need to ensure that engineers are available locally and quickly.
1. Hardware vendor service contracts. Look carefully at service contracts between vendors, as they can vary significantly.
2. Printer and Inserter Replacement Component Costs. Also look at the cost of components if they need to be replaced. How do they compare between vendors?
3. Print and Inserter Servicing. Are their charges for out of normal hours servicing?
4. Print and Inserter Component Inventory. To guarantee normal operations, it may be valuable to hold an inventory of hardware components at your own document production facility. What does the manufacturer recommend that you hold, and what are the costs of holding and maintaining this inventory?
5. Printer and Inserter Power Consumption. High speed colour printers and inserters are power hungry devices. What is that power likely to cost the company?
6. Building Environment Costs -A few printers require specialised working environments. They may require climate controlled environments. What are the costs of the space to provide this environment. What are the costs of adapting a building to deliver this climate managed environment. What are the acquisition and running costs of the climate control equipment.
7. Headcount Requirements – Realistically, how many people are going to be required to operate the inserters and the printers? Take along experienced document production managers when assessing the hardware equipment required and be pragmatic in this assessment.
8. Growth in document output volumes. Carefully consider current and future ouput volumes. If you anticipate a growth in output volumes, then plan this. Will the equipment that you buy today be able to meet those volumes? Will you need to invest in extra printers or inserters in the foreseeable future? Will the space you have be able to accomadate any growth in capital equipments.
9.Printer and Inserter Replacement costs. Unlike software, machines will eventually become ineffective and unproductive to maintain and operate. How long does the hardware vendor anticipate the equipment will last under your production loads? What is the anticipated replacement costs in the future? Take these figures, build in some contingency and plan for this.
10. Leveraging legacy equipment. You may already have printers and inserters that may be suitable for much of the output that you plan to undertake. What are the costs of getting this equipment suitable for participation in the process and how old is the equipment? Is it worth upgrading?
Speed of Customer Communications Management Software Installation, Configuration and Development
Not all software products are borne equal. Whether we are looking at data, authoring, composition, channel distribution, print management or print stream engineering the products differ. Some products are built upon ageing platforms whilst others utilise the latest technologies focused upon speed of deployment and overall cost of ownership. The differences can affect Total Cost of Ownership in a number of ways.
11. Devlopement Costs. Development and / or configuration of some kind will need to take place across all of the software components being installed. Document Composition comes with its own development environment and data products will require detailed configuration and embedding into the environment. Applications will also need to be developed if you plan on using print stream engineering technology.
12. Skill Levels. Depending upon the vendor, some applications may still require heavy IT skill to develop within whereas others will offer a strong GUI (Graphical User Interface) environment that take much of the rough work out of developing applications and linking systems together. Look carefully at this as long term cost of ownership could rise significantly if the software requires.
Customer Communications Management Application Component Re-Usability
13. Service Oriented Architecture. One of the key features of advanced service oriented architecture based platforms is the ability to re-use components across multiple applications in potentially widely different environments. The ability for software to integrate effectively into a Service Oriented Architcture model and leverage exisitng organisational components whilst contributing valuable new components will have a significant bearing on overall lifetime cost of ownership.
14. Marketing Communications Vendor Technology Trial. You may want to consider a ‘bake-off’ scenario once you have a vendor shortlist. Establish a set of tasks that test the speed at which an application environment can be brought live – make it challenging but not over complicated. The vendor will likely put their best resources on this and it will not only be a test of the software but, a test of the vendors ability to deliver skilled human resource when required. Give each vendor a level playing field.
Cost of Customer Communications Management Integration
For Customer Communications Management to serve the Marketing function effectively, ease of integration is a key factory. Look at the vendors experience here.
15. Data Integration. Can the data ETL and analysis tool-set integrate easily with your existing systems. Look at the breadth of systems that you are likely to want to integrate with in the future. How easily can the system talk to systems across multiple platforms that may range from z/os to SAP to Siebel to a wide variety of other applications.
It is not just the vendors components that are important, how open are systems containing vital data? Can you get this data out of them easily?
16. Marketing and Customer Communications Design and Authoring Integration. How does you company do this today? What tools are used and, will they integrate easily with the Customer Communications Infrastructure that you have or, will a change to a proprietary vendor design and authoring environment become necessary?. Will the vendors design environment meet the needs, goals and objectives of your design and authoring teams and what will the cost of change be?
Perhaps fundamentally will it be possible to push design and authoring out to the business community? This is a fundamental tenet of customer communications management but some vendors still won’t be able to do this very well. Pushing the responsibility back to IT will significantly raise costs and will reduce business and marketing agility massively.
Also look at work-flows, many companies have deployed standardised work-flow environments. Will your vendors solution be able to integrate here? All these factors have a bearing on cost.
Customer Communications Management Vendor Licencing policy
17. Customer Communications Management Software Environments.
This is a big one and there are differentials between vendors. As a minimum, you will need development and test environment and a production environment. What are the vendors policies for development licences.
18. Multi Site Licence. The other key factor that may affect you is multi site licencing. If you operate in different places around the world, what are the costs of rolling out mirror environments to new sites? Examine carefully the vendors policy here.
19. Cost per seat. What is the cost per seat for the elements of the customer communications management infrastructure? Does the vendor of bulk purchase discounts. Are the number of seats likely to grow over time?
20. Operating System. Some vendors charge different prices depending upon the operating system in use. How do vendors compare?
21. Additional non-vendor components – Here we might be looking at factors such as obtaining mail compliance databases, Websphere components or other factors. What additional software components may you need to source to deliver the application that your business needs?
Management of Legacy Applications
22. Leveraging new and old. Some document applications may not justify redevelopment. However, what is the cost of integrating the legacy into the environment to obtain say production integrity benefits? Can this be done easily or are you going to be running some applications out of scope of the customer communications environment?
Customer Communications Management Server and Desktop Hardware costs -
23. Server Requirements. Don’t forget your going to need servers to run this all on. Consult with the vendor carefully in respect of the required hardware configuration and get costs from your hardware vendor early. There will be a difference depending upon the operating system you are running. Is the desktop configuration suitable? Will you need upgrade licences for the desktop?
Business and Technical Training Costs
24. Training Considerations in Customer Communications Management – At the very least, you will require administrators, some level of application development capability and training for end users.
What are the vendor training costs and, do they offer ‘train the trainer’ courses to help you reduce overall education costs? What are machine operator training requirements going to be? What level of skills are you going to need across the infrastructure, and what is this going to cost?
Production Mail Health and Safety
25. You will need to ensure health and safety compliant environments for the physical print and mail elements of the Customer Communications Management infrastructure. What are the costs and training implications. Will you need to adapt the building to meet health and safety guidelines?
As can be seen, there are many factors to be considered in developing the Total Cost of Ownership equation for Customer Communications Management. The multi-point nature of Customer Communications Management means that there is much to be considered and deriving truly accurate figures is likely to be a near unachievable goal. However ball park understanding is achievable.
What should be clear from this is that in developing the business case arguments for the implementation of a Marketing and Customer Communications Management infrastructure Total Cost of Ownership should not be ignored as it is a significant element of the overall budget and perhaps over a period of a few years, far more significant than the initial capital outlay.
For more information and articles related to marketing and customer communications management please visit Customer Communications Community.
About the Author
The author owns and runs the website Document Projects. The site provides commentary, news and articles related to the world of Customer Communications Management.
The author provides consulting services to companies wanting to improve the way they communicate with their customers.
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