In my recent interaction with one of customers, customer informed me about their plan to upgrade PLM system. Out of curiosity,
I asked him about the cost for the upgrade. To my great surprise the costs which were considered were only a very small portion of cost involved in an Upgrade. The customer responded that their project will be executed by internal resources. So the cost of upgrade is very low. During the discussion informed him about “Cost due to Loss of Business”. So the next question is why there should be loss of business if PLM system is upgraded?
I explained – “Cost due to Loss of Business“: Organizations generally take a decision of major system upgrade only when there are major changes to the PLM software. A major upgrade brings many UI & functionality enhancements. For a user, it changes the feels of software, so user need to un-learning and re-learning way of working . Research shows, when there is a significant change in the way user need to perform day to day activity there is a huge drop in productivity of certain amount of time. Due to this change, organization’s response to business slows down.
But it is not easy to calculate the cost associated with loss of business, as it is not immediate most of the times. But some level of cost should be apportioned to loss of business which may occur due to disruption to business.
Other major cost involved in a upgrade project are
1. Actual upgrade cost – Cost of Resources
2. Downtime cost
3. Licence & hardware cost
4. Data clean-up
5. Productivity Loss
Conclusion: To calculate total cost of upgrade project may not be straight forward, but when these costs are considered it gives a better picture of “Cost of Upgrade”. Upgrade for me is more critical than initial implementation most of times.
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