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Evaluating the Costs of Collaboration

At first glance, web-based collaboration tools can seem cheap: Basecamp’s price of $49/month sounds good in comparison with the $599.95 price tag of Microsoft Project 2010 (s msft). However, 12 months on Basecamp is $588. An organization with an obligation to account for its funds will have to go a little deeper in order to consider all of the costs that go along with working with a distributed team.

The Costs of Operating Software

Obviously, your team members have to have computers that run the software you plan on using. But those needs differ dramatically. In order to use web-based software, your team members need to have machines capable of running a web browser; not really out of the question for most people’s home machines. More complex software packages can require more powerful computers.

Depending on the type of software you choose, you may also need some additional hardware for your enterprise. Server costs are not insignificant and must be factored in. You may also find that with more hardware, or even software that must be installed on each team member’s computer, your organization will need a more extensive IT team.

The Costs of Team Size

While some web-based applications allow you to add unlimited users, it’s generally the case that the more team members you’re working with, the more you wind up paying. Even with “unlimited” users, the odds are good that as you add more team members, you’re adding projects, files or whatever items the app charges for.

On the other hand, you’ll need to have more software licenses available if you are installing project management software on your team members’ computers. However, certain solutions — such as a self-hosted web application — can help to avoid those costs. A larger team size, in turn, can get you reduced rates for the software that you use, but can also add to the costs in other ways: training, maintenance and upgrades can all make for pricey considerations.

Running the Numbers

Without running the numbers carefully, there’s no way to tell whether one collaboration solution or another will be better for a particular organization. Whatever you do, don’t assume that software based in the cloud is automatically cheaper to use: a monthly subscription fee can be incredibly deceptive and your business can wind up spending a lot more than you might expect. Dig deeper into those numbers before making your decision one way or the other.

Image by Flickr user Zack McCart

Related GigaOM Pro content (sub. req.): How to Manage Consumer-Grade Collaborative Tools in the Workplace

5 Responses to “Evaluating the Costs of Collaboration”

  1. I think the benefits of moving towards the cloud solutions greatly outweigh software such as Microsoft’s Project, even if they do end up costing more, which they usually don’t. Plus, many of these cloud project management solutions are getting upgraded on a weekly/monthly basis with additional features you don’t have to worry about installing.

  2. You should also weigh the “costs” of training your team on how to use the solution, as well as the costs for ongoing maintenance, upgrades and refresher courses for the team. These unseen costs can decrease the value of the solution as seen by the team and supervisors.

  3. George Rivas

    I agree that the business case should be evaluated — but you leave out a critical component. The cost impact of “not collaborating”. The MS Project environment enables the “master parallel planner” approach to Project Management. One guy, armed with a virtual clipboard, updating a plan only he can edit (and only he really cares about). I submit that ANY collaborative tool, will do a better job of of coordinating a team’s effort simply because the team is involved and has visibility ownership of the plan, not just periodic updates.
    You wouldn’t hire an engineer that requires a typist as an extra cost to write his emails… you shouldn’t hire one that keeps his schedule and plans his work. It’s early days yet but the collaborative PM approach will be to standalone broadcast tools like MS Project as email is to the bulletin board.

    Take a look at:

  4. I appreciate what you are saying about comparing costs, but I think your costs are a little off. If you want to provide web access to Project 2010, you will need to buy Project 2010 Server, which is about $1000. That runs on top of SharePoint, not the free MOSS but the $12,000 Standard Edition. Don’t forget that SharePoint 2010 requires a 64-bit infrastructure, so you might have to upgrade your server hardware and software.

    Basecamp and Project are very different animals. If you need the additional functionality of Project, then you will spend the additional money. Cost isn’t always the biggest driver (although it seems to be the loudest). If Basecamp provides most of the functionality you need, then save yourself a few grand and get and get signed up.