James Bond is notorious for getting exactly what he wants when he wants it, while keeping the world safe from oppressors and sabotage. But his efforts come with a hefty price tag. Ever since the beginning of the popular movie franchise, film budget over-runs have been the norm. It is apparently an ongoing pattern. Anxious producers expect the current Bond film to be close to $100 million over budget.
One would think that with the experience of releasing 23 James Bond movies over the years, seeing beyond the tip of the iceberg and getting the cost model right would not continue to be a challenge. Fortunately for them, given that the James Bond franchise has realized $6 billion in revenues overall, the producers can probably relax, at least a little. While Bond is pure fantasy, the profits, in spite of the spend, are very real. So is your e-commerce replatforming project.
Building your e-commerce business case
Because it is unlikely that your e-commerce project has the luxury of a $100 million slush fund for unexpected costs or hidden “extras”, getting your TCO model right is a critical cornerstone for success. And similar to Bond’s film producers, your e-commerce replatforming mission is to invest in a project that will succeed by quickly realizing new profits across multi-channels from happy, loyal customers.
To help you avoid some of the traps and oversights along the way, here are the top 10 most missed areas of consideration.
1. Extend laser focus beyond the technology
The emphasis in any e-commerce replatforming project is inevitably on the technology. Getting the platform right and selecting the ideal e-commerce vendor is typically given the most attention when defining the TCO, but in reality it is simply the tip of the iceberg. Ensure that your TCO model considers elements that will span the full life-cycle and impact of your e-commerce decision.
2. Build a diverse team responsible for TCO
Traditionally, IT has been tasked with putting together the budget and ROI requirements for most technology initiatives; however, as the complexity and value of technology has evolved, this often places an unfair burden on IT who juggle an expanding role that includes traditional support, project implementation and business strategy. By building a diverse TCO committee that includes cross-functional members including finance ensures a more rounded emphasis on both upstream and downstream areas of impact.
3. Know your hardware leasing lifecycle
Understand how leasing might impact both capital and operating budgets and take advantage of tax or other incentive programs. Knowing the leasing refresh cycle for your organization means you won’t be caught implementing on a platform that is end-of-life. Parallel data transformation projects can provide consolidated infrastructures that might reduce your overall cost of ownership while driving better application performance.
4. Establish end-to-end platform monitoring and support
Once your platform is in place, extended monitoring and health checks will likely need to be implemented, along with appropriate service-level agreements across all parties (internal and external) and escalation plans. Multi-channels, multi-currency and multi-geographies will be impacted by maintenance or non-scheduled outages. Customers will quickly abandon your multi-channel platform if you are perceived as unreliable which will not only add project costs but will negatively impact platform support.
5. Predict your power consumption
One of the hidden costs that needs to find a home in someone’s budget is the increased power consumption that an e-commerce replatforming project may introduce. Demands for energy rise with 24/7 usage and a hardware footprint that is found in both a traditional data center model as well as one that extends out to store-fronts or branch locations.
6. IT, developer and end-user training
Great people need great technology to deliver amazing results. But implementing the best state-of-the-art platforms means ensuring all of your stakeholders are properly educated and trained on new roles, responsibilities and the “how to” of the technology platform. It is not a myth that many projects when trying to cut costs begin first with slashing the training budget, but it can be an expensive practice with lost time, lost revenues and lost clients. And don’t under-estimate that your customers may also need easy online training tools if your system includes new self-service options.
7. Consider third party upgrades
Your e-commerce platform does not live on an island. It will need to connect to internal and external systems to deliver promised value. Understanding any compatibility issues, risks and impact around change management is important and should be forecast for financial impact.
8. Facilities in need of a refresh
Rolling out new technologies such as mobility platforms like tablets to personalize the buying experience in retail locations is a great idea. But if your facility was last modernized in the seventies, you might need to invest. Logos, branding, advertising, and facilities improvement should be considered as part of your overall project investment.
9. On-going development costs
The world is changing at light-speed and you will want a flexible e-commerce platform that has the ability to adapt. This will likely mean on-going development and enhancements to your platform. Consider how easy this is to do, whether you will need third-party assistance and if your architecture is scalable and supports open APIs.
10. Business growth
As your e-commerce platform meets its objectives of making it simpler and easier to do business with you across multiple channels, expect that your revenues will grow. Your TCO model should project for success. Will you need additional software licenses, will you have to expand your core infrastructure to add more compute power and what will be the required investment if you expand into other locations? While this is a great problem to have, it is even better if you have planned for the price of success.
READ THE SERIES:
E-commerce Replatforming Pitfall #1: Walls before Foundations
E-commerce Replatforming Pitfall #2: Lack of Governance
E-commerce Replatforming Pitfall #4: Business Process
E-commerce Replatforming Pitfall #5: Unrealistic Expectations
E-commerce Replatforming Pitfall #6: Scope Creep
