The Total Cost of Ownership of Web Development

MRMedia Group have a strong belief in supplying impartial business advice and those of you who are in the process of developing an internet strategy will benefit greatly from a clear explanation of costs so your financial planning can be appropriated. Particularly for Small to Medium Businesses and Business Start Ups, the information enabling you to make an informed choice can save you literally thousands of pounds per annum.

Total Cost of Ownership or TCO is the guage used to determine how much any given business function needs set aside in budget provision annually. One of the big decisions any business needs to make about working with the internet is how to fund this business growth and what options have you available to lower the TCO so that you can leverage new technology without become financially enslaved by it. Is it something that is best handled internally or is it better outsourced to a strategic partner like MRMedia Group? Let's take a moment to weigh up the pros and cons of each.

Outsourced Web Design

When seeking an outsourced solution to web development, you get many key benefits:

• The expert technical staff you call upon are not directly upon your cost centre

• You do not need to provide IT hardware and software for them to use

• You are not responsible for holiday or sick pay or any other benefits

• You do not need to release management time to oversee their work

• You're only paying for what you need as opposed to having to justify their full time employment by other means

• You have no need to worry about providing training and career progression opportunities which, if absent, are likely to cause staff turn over amongst technically adept employees. They'll expect rapid career progession in line with their skill set and often leave companies who's business focus is elsewhere since there are no "senior" web developer positions - there's one web designer in the company and no justification for more!

These factors make an outsourced web design solution extremely attractive, as typically you'll be able to get cutting edge web design, marketing, facilities, updates and support for between 5-25% of what it would cost you to do the same internally, depending on your exact needs.

In-Company Web Design

Let's take a quantative walk through this. Mouse over the pictures below for further explanation and to see the maths.

1. Finding the Right Person

Key Points: Finding a suitable candidate costs and takes time Salary cost is added to with Employer Tax Contributions Retention of skilled technical staff often requires a comprehensive benefits package Training and updating skills costs

2. Infrastructure Costs

Key Points: A PC with a license for Microsoft Windows, Office and a professional design suite like Macromedia Suite can easily cost £3,000 for that alone Assets depreciate and incur support costs

3. People aren't Robots

Key Points: Full Time Staff are entitled to holiday pay People also get sick or need time off You also pay for days when they're only working at 10% efficiency

4. Management Responsibility

Key Points: Managing skill sets outside your core competancies and business remit drains time and focus Can you tell if a job is being done efficiently when you're not versed in it?

Given these extremely reasonable estimates of what make up the TCO of In-Company Web Design staff, we can easily project the average cost for a run-of-the-mill web designer to be part of your organisation to be between £40 and £60,000 a year. If we take £50,000 as an average first year cost, how can you justify that expenditure of time, money and resource against the Return on Investment (or ROI)?

If your web site gets deployed and nets you a higher return than your expenditure, you'll be up on your Profit and Loss account. Let's say your web site brings in an additional £100,000 of business into your organisation. That's a tidy profit of £50,000. Nice, right? Perhaps it's less sweet when you consider that set up, marketing and updating of a large e-Commerce web site could have cost you well under £10, 000 if you outsourced it on a 12 month contract to MRMedia Group. You'd have less headache, less cost and more money to celebrate with.

£50,000 profit or £90,000 profit - which would you rather?

This dramatic difference in TCO and it's resulting knock on effect on ROI and profitability give extra benefits:

• Management burden is reduced because if you decide to add something new, the huge savings you've made in TCO are released to fund further projects

• Start up costs are slashed

• Cash flow is freed up for other purposes by monthly payments

• If you doubled your web presence, it would still cost less than employing in-house web designers!

The Future of Technical Infrastructure?

Without doubt, the cost efficiency of outsourcing your web design needs to a strategic partner are hugely compelling leverage in decision making. Businesses today that know how to manage their budget for maximum Return on Investment with minimum Total Cost of Ownership have huge advantages over those who mistakenly beleive that centrally holding and managing everything is the way forwards. They are able to deploy more technology at less cost, with quicker time to market.

Expert support outside of your business' core objectives is actually a time proven model. Henry T Ford, founder of the Ford Motor Company was able to create one of the world's largest automotive empires, yet he was personally criticised for his lack of education. Ford often cited that he didn't need to know everything since he knew an expert who could advise on each topic for him, and the resulting freedom to concentrate on his business that this gave him is attributed to his great success.

Today this principle is being embraced by many pioneers of the new business frontier - Channel 4 and the BBC for example are primarily TV networks. However they outsource parts of their online presence and have reaped rewards as a result of not having to find all the answers from within their own pool of expertise.

Start up and e-Businesses also derive a great deal of benefit from contract web design services since cash flow can be better managed, funding projected accurately and costs kept to a minimum.

If you can see the value in having lower running costs and greater experience to draw on, please either call us on 0845 056 4413 or see our details on contract web design services.