Experience will tell you a lot. If you have done these kind of processes for years, you can probably produce some good statement with your eyes closed. But more likely you wouldn't been reading this guide ;-).

But if you're not alone, and working for a company, there will be some valuable information out there. You just need to dig it up.  Look for rules of thumb, look for comparable projects and apply them.  If your company has some database with historical data on projects, that would be great. But some old geezers who have seen it all before may do the trick also.

Corporate rules of thumb may give you a clue about a fair price per user for a software license. For a specialized business application the consensus within your firm may be that $1500 would be a fair deal, e.g.  Without knowing exactly what system you will end up, you can fill in some data for software licenses. So management will get some feeling for the amount right from the start.

Also rules of thumb may be available on ratio's between components. So, by calculating a part, you will be able to deduct the others.  One I use is the ratio of the total cost divided between software:services:hardware, where every component will be roughly equal. Services, like people you need to do the implementation, are hardest to calculate. Be calculating all the software components you need, you can use the same amount to reserve for services you will take. It's no exact science, but normally serve it's purpose.

If your company has done already several software projects, you can put these past experiences to some great use: done already some complex interface between to systems? Use this information for your preliminary cost calculation. Have some hardware already? Use their cost to put into your spreadsheet, until you have some better specifications.

This entry was posted on Sunday, September 2nd, 2007 at 6:33 am and is filed under TCO.