Top 5 Metrics to Measure TCO For Intellectual Asset Management Software

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Things are not always what they appear. What may initially seem like an excellent price on Intellectual Asset Management Software, may end up costing you more in the long run.

A myriad of other factors come into play such as cost of operations, cost of maintenance, useful life span, and training costs. Over the effective life of an intellectual asset management application, the cost of maintenance and support dwarfs the cost of initial deployment.

Let's take the example of purchasing a car. By no means is this the end to all car-related expenses. You will not get more than three hundred miles before the gas tank needs filling, oil changes, new tires, various filters, belts, hoses, taxes, insurance … all of this contributions to the total cost of owning the vehicle. The same metrics apply to Total Cost of Ownership (TCO) for Intellectual Property (IP) asset management software.

There are five major metrics of TCO analysis for the IP asset management software: Acquisition, Implementation, Operations, Maintenance & Replacement.

1. Acquisition

All too often, acquisition costs drive decisions relating intellectual asset management deployment. This forces attention to up-front, direct, and budgeted costs. Acquisition includes the capital expenditure of IAM software licenses in the case of on-premise software and the operating expense of the subscription fees in the case of hosted solution. Be sure to know the differences between Hosted or On-Premise IP Asset Management.

For on-premise installations, the acquisition also includes the costs associated with the necessary hardware and infrastructure (operating system, database licenses) to host the application.

On an average, acquisition contributions to 10-15% of the overall cost of ownership of the IAM software.

2. Implementation

The implementation includes services to make the system work for users.

The costs associated with the implementation of the intellectual asset management application include development (customization / configuration), integration, testing, data migration, and training.

It is critical that the system does not require software expertise for any customization. That will make you dependent on the vendor and will cost you dearly in the long term. Ensure that the IP management software provides supportable, off-the-shelf capabilities for data migration from legacyocking systems as well as integration tools to integrate seamlessly with existing systems. These capabilities should be easy enough for use by the IP team without the need for internal IT support or outside consultants. Read more on IP Management Data Migration.

On an average, the implementation contributions to 30-40% of the overall cost of ownership of the IAM software.

3. Operations

The operational costs occur in time and productivity loss. These costs are more difficult to quantify, tend to be process and people oriented, and often add significantly to the TCO. They can include unproductive end-user time, troubleshooting, and system downtime.

For measuring operational costs associated with intellectual asset management software, pay attention to how much staff is required to operate the application smoothly. Choose an application that can be managed without an IT / vendor team as opposed to the one that requires IT / vendor help for basic operational changes. These "people" costs contribute heavily to overall TCO.

On an average, the operations contribute to 30-40% of the overall cost of ownership of the IAM software.

4. Maintenance

The maintenance costs include country law updates, patches, upgrades and administration of the hardware, software, and databases.

Many hard coded IP asset management applications require significant downtime and break custom processes during upgrades. While determining maintenance costs, include the support labor hours and the management overhead to oversee any issues.

On an average, the maintenance and support costs contribute about 15-20% of the overall cost of ownership of the IAM software.

5. Replacement

It is important that you do not lock yourself into a specific IP asset management software vendor. During or after the expected life span, you should be able to transition to better software with ease. The software should provide you the tools to export the data easily into new applications. Often, this is difficult to determine upfront. You need to consider the extra support needed as you get up to speed with the new application.

On an average, replacement contributions to 10-15% of the overall cost of ownership of the IAM Software.

The long term goals of IP asset management deserve the most sustained attention; In the short term, tactical cost reductions should not impede the achievement of long term goals and priorities.

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Source by Jerry Lamigo