Business Analysis For Dummies
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Before you invest a considerable chunk of cash or time on a productivity tool, be sure your analysis considers what it’s really going to cost you and where the budget will come from.

The initial expense or “purchase price” of your productivity tool may be the most visible financial component, but it’s not the only financial component. You have to consider a few other things when thinking about what budget you have versus what budget you need:

  • Licensing or initial purchase of the productivity tool: What it costs “out of the box.”

  • Installation or distribution costs for individual users: What putting the system in-place so it works properly costs.

  • Training costs to get people up to speed:

    • Cost of time for people to attend training: Includes travel and expenses. Policies may differ among firms, so be clear on whether consultants get paid for any time they attend training.

    • Cost of effort for people or the vendor to deliver training: Travel and expenses and materials, books, and supplies.

  • Annual maintenance costs: Ensuring that you get appropriate software upgrades and/or functional support from technical or customer service teams.

  • Hardware costs: Basically, anything that may be paid for inside your company (or charged by the vendor) — such as servers, networks, backups, and security — that enables physical and technical support for your tool.

  • Opportunity costs: The areas or opportunities that will be lost due to your implementing the tool. What will you not be able to purchase as a result of investing in this tool? What projects or specific requirements won’t be worked on as a result of your team’s spending time implementing the tool? What risks may you incur?

  • Internal support costs: Whether someone inside the company needs to be a go-to support or help contact for the tool — both from the technical “help make it work” perspective and from the functional “help me work with it in our environment” perspective.

You may find other cost components, but overall you should look for and analyze the various cost components that contribute to the total cost of ownership over the longer term.

You should be able to clearly state to others whether the project will deliver as expected or you’ll need an extension, and whether the costs will end with the life of the product or project or go beyond the project lifecycle into the next project.

About This Article

This article is from the book:

About the book authors:

Paul Mulvey, CBAP, Director, Client Solutions, B2T Training, has been involved in business analysis since 1995. Kate McGoey, Director, Client Solutions, B2T Training, has more than 20 years' experience in application development and life cycle processes business. Kupe Kupersmith, CBAP, President of B2T Training, possesses more than 14 years of experience in software systems development. He serves as a mentor for business analysis professionals.

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