Over the last few years, the social media boom has forced Intranet portal vendors to rethink some of their licensing models and expand their feature functionality. “Traditional” intranet portals that are simply presentations layers with a back-end content management system just don’t cut it anymore. Instead, organizations want their employees to generate peer-to-peer content using 2.0 functionality like blogs, wikis, and tagging instead of relying on one-way messages from the top.
The collaborative efforts of the open source community have also delivered new products into the marketplace, driving the cost of software down and injecting healthy competition into the portal industry. On top of new features and pricing models, new hosting options such as Software as a Service (SaaS) and cloud hosting provide organizations additional options to consider when building or upgrading their portal. All of this spells opportunity for Intranet pros looking to make changes.
In future articles, we’ll take a look at some of the specific software vendors and new platforms that are reshaping portal price tags, but before we jump into the specific products, let’s take a look at a recent, real-world example of how much the climate has changed and how big the impact can be to a company.
In 2006, I was involved in an Intranet project for a Fortune 500 telecommunications company with an employee base of around 25,000. After identifying the requirements for the portal, the search for a suitable software package led the project team to three real contenders: BEA Systems’ Aqualogic portal (now Oracle WebCenter), Sun Microsystems’ SunOne portal (now defunct), and the Vignette Intranet portal (now part of OpenText). All three offered a customizable presentation portal, content management system, search, forums and emerging blog/wiki functionality. However, each solution also required significant server hardware to be purchased and resources to be devoted to the maintenance of the hardware and the application. After the final solution was selected and the appropriate hardware was purchased, the pricetag for the selected software and hardware tallied up to more than $2 million. Take note that the selected solution was the least expensive of the three.
Now, flash forward to 2009. I recently had lunch with the current manager of that specific Intranet solution and he and I were discussing the changes to the industry and the merits of both open source and hosted (SaaS) solutions. Knowing the price tag of the original solution and the annual software maintenance fees (20% of initial software costs), it took some simple math to come to the conclusion that he could take the annual maintenance of about $225,000 and easily replace the existing system for a hosted solution costing about $75,000 annually.
With the less expensive solution, he would get:
- A 37% reduction in software costs ($200,000 dropped to $75,000) in year one.
- A 93% reduction in annual software maintenance costs ($200,000 dropped to $15,000) in the following years.
- A reduction in hardware costs, allowing $200,000 in hardware to be re-purposed in the enterprise or decommissioned.
- No employee headcount required to maintain hardware, so reduced costs in employee overhead.
- The SaaS vendor would now be accountable for a 99% server uptime (No more outage calls at 3am when the servers stop responding or a load balancer fails).
- Continued evolution of the product since the annual maintenance buys him product upgrades from the vendor.
- New Web 2.0 functionality offered by SaaS vendors that isn’t offered by the current vendor.
So basically, this Intranet Manager gets more functionality for his users, a stable platform that allows him and his team to sleep at night, and a significant reduction in annual software costs that makes him a corporate hero with the Accountant and Execs!
A second option that we discussed was looking at a lower cost software vendor or an open source solution. In these situations, he would still reduce his annual software licensing costs significantly, but would still require the hardware and headcount to maintain it. The ROI, however, is still positive in year one due to the huge reduction in software maintenance fees.
Obviously, the ROI for this organization is magnified by the size and extensive software/hardware requirements of the company. However, it’s likely that any Intranet portal built on the traditional perpetual software licenses/standalone hardware model could benefit from a review of the existing system and an analysis of potential replacement technologies. So, before you cut that next software maintenance check, take a few moments to think about how much you’re paying and where you might get some additional bang for your buck.
Check out part II of this series where we’ll take a look at some of the existing replacement platforms that could positively impact your Intranet bottom line.