Yesterday a retail client of mine was seeking advice as to how to justify the use of SharePoint 2010 for its Staff Intranet. The Return On investment (ROI) was not looking good. Acquisition of the hardware, SharePoint CALs for 3,000 users and the branding costs were making SharePoint look very expensive – certainly as far as the Finance Director was concerned. This is becoming a common challenge. The solution is in fact very simple and uses a financing technique which is very familiar to Finance Directors and can help them feel more comfortable adopting SharePoint. It boils down to a widely used retail slogan “BOGOF” (Buy One Get One Free). Buy SharePoint 2010 for the Staff Intranet and get a Document Management/Executive Dashboard/Collaboration system etc for free. Assuming of course that you need one or more of these extra capabilities!
The following picture demonstrates the concept:
A SharePoint Farm (the hardware and software required to deliver a SharePoint system) will usually have the capacity to deliver more than one application concurrently. This means that a SharePoint Farm installed to deliver a Staff Intranet could also deliver a Document Management System, Executive Dashboard, Project Management, Social Networking System etc without needing to upgrade the hardware or software.
The Finance Director can then review the costs of the infrastructure independently of the “marginal costs” of each application. For the Staff Intranet the “marginal costs” include items such as the branding of the site, cost of planning the menus, taxonomy, and populating the pages. When determining the total cost of any application typically the Finance Director will allocate a percentage of the infrastructure costs to each application. The calculation of an appropriate percentage is a black art and there is no right answer, but at least this way the initial system will not be saddled with the need to justify the full infrastructure costs. Each application can then be reviewed equitably in terms of its Marginal Costs and its allocation of the Infrastructure Costs (this process is also known as the “overhead allocation”).
Hopefully this will enable my client’s Finance Director to see that SharePoint really can deliver an excellent ROI.
For the technicians in the audience – these Marginal Costs can also be applied to the Intranet Maturity Model.