Update Aug 2001

Total Life Cycle of Software

The "total life cycle cost" of a system includes many factors, and license fees represent one of the smaller ones. If you estimate that you will use an application for 5 years (a very conservative outlook), then the impact that the application has on the business is by far the largest factor - much larger than even the cost of implementation.

For example, assuming that the Task Assistant can save about 30 minutes per day for each individual in your company as we have found is the case, while a competitive solution actually took more time (assuming that both applications deliver the other benefits equally), then just the labor efficiency alone would offset other factors. Saving 30 minutes per user per day equals about $36,000 / year per vessel which far outweighs the entire lifecycle cost of the ISMS software. Saving unwanted incidents is of course an even further additional benefit. When solutions save time for those that use them, then the other expected benefits are even larger than they would be with more difficult to use solutions from user buy in and utilisation alone.

Implementation is typically 3 to 10 times the cost of licenses, even when the licenses are sold at fair market value rather than grossly discounted. The cost of customization is an important component, thought not usually the largest. An application that is easy to customize, particular if the customization can be done by business people rather than IT, then customization costs will be significantly lower. When IT staff is required, it takes two times the effort since a business individual is required any way. We have considerable experience, within our U.S. branch, of people who have studied the cost of implementation compared to the licence cost for many applications such as SAP, ORACLE, SIEBEL as well as our own system. We can provide further information at your request.

Training costs tend to be very high, and grossly underestimated when solutions are difficult to use. If IT support is required to customize the application, then the focus is often on the training of IT personnel in customizing and supporting the application. However, it is the cost of training the actual users that is the largest. Particularly users that are scattered over large geographical distances. On-going training, over the life of the solution is also much larger in these cases, and often overlooked. Training is important, but in our case, our customers can focus on training that will result in safer and more efficient ship operations, rather than on how to use the software!

A Ulysses training academy needed to teach users to use Ulysses software would be for us the ultimate failure.
Annual support costs for bug fixes and enhancements tend to be about the same for all "real applications". This may not be true for "free" applications, but you get what you pay for in these cases. Note that over a 5 year period, the customer essentially pays for the software again. Most of these costs, however, pay for the labour needed to troubleshoot and resolve problems, most of which will not be with the application itself. The customer receives significantly more value for these dollars, given that they purchase from a software company that has no choice, but to improve its product continuously. Companies where their primary business is not software, have many other business issues that impact their R&D investment decisions. If they do not charge fair market prices for their product, they are not likely to invest significantly in keeping their applications updated. The estimation of life cycle costs is not precise, but it often is as important to get the factors understood so that our prospective customers have the opportunity to consider which factors they should focus on, than to have solid numbers.