Feb 27, 2004 (07:02 AM EST)
ROI Comparison Report: Portals
Read the Original Article at InformationWeek
Editor's Note: This article is a summary of the Nucleus Research Report "ROI Comparison Report: Portals."
Many companies have looked to portals to leverage existing applications and data assets. The right portal strategy for any organization depends on three key factors:
Nucleus looked at three vendors with portal offerings that reflect their technology strengths as well as their view of the market. Standalone portal vendor Plumtree provides integration tools and services such as collaboration, content management, and search, positioning itself as a central interface for accessing multiple data sources and applications. Application server vendor IBM provides a portal framework for developers and partners to build scalable applications supported by the underlying server technology. Enterprise resource planning (ERP) solution vendor SAP provides a portal interface that integrates and streamlines access to data within its own applications, with some additional integration and collaboration functionality.
To help clients understand the cost and benefit drivers associated with each technology strategy, the ROI challenges of the strategies, and the way to choose the best portal strategy, Nucleus analysts contacted customers of Plumtree Enterprise Portal, IBM WebSphere Portal, and mySAP portal solutions about their experiences. This analysis is a comparison of the ROI factors of the three approaches. The vendors were notified of the analysis and invited to provide the names of customers for the sample. All these customers were contacted, and all who agreed to participate were included in the report.
Nucleus interviewed companies about various aspects of their deployments that would impact ROI, including the following:
Of the 51 Plumtree customers Nucleus identified and contacted, 20 agreed to participate in interviews. Eighty-five percent of Plumtree customers interviewed had achieved a positive ROI from their portal deployment. Sixty percent of deployments were completed on schedule; 71 percent were completed on budget.
Of the 82 IBM WebSphere customers Nucleus identified and contacted, five were still using the portal and agreed to participate in interviews. Eighty percent of IBM customers interviewed had achieved a positive ROI from their portal deployment. Twenty percent of deployments were completed on schedule; 60 percent were completed on budget.
Of the 96 SAP customers Nucleus identified and contacted, 12 were using the mySAP Enterprise Portal or mySAP Workplace Portal and agreed to participate in interviews. Forty-two percent of SAP customers interviewed had achieved a positive ROI from their portal deployment. Fifty percent of deployments were completed on schedule; 67 percent were completed on budget.
Existing Applications and Data Sources
The goal of a portal is to create one access point at which users can find data, information, and tools to meet their needs. Because the cost, time, and effort to integrate information sources and applications as well as the benefits from providing users with access to them are key factors driving the ROI from a portal investment, existing applications and data sources can be key decision drivers for a particular portal strategy.
For many SAP customers, the ability to provide integrated access to SAP solutions was a key decision driver in investing in the SAP portal. A number of IBM customers cited an existing investment in WebSphere Application Server or other IBM technologies as a driver for investing in the WebSphere portal. Those with a J2EE application strategy and existing developer skills also found a positive ROI strategy from the WebSphere portal. Many companies looked to Plumtree because they recognized that their IT environment required a solution that could integrate data and services from various sources.
Existing applications were also factors for deciding against or delaying a portal decision.
The Scale of Benefits
To achieve a positive return on investment, companies must manage project costs while ensuring that expected benefits deliver impact to the bottom line. Nucleus found companies achieving benefits from a portal in a number of areas, including the following:
Overall Solution Cost
Nucleus analyzed five key areas to quantify the total 3-year costs associated with a portal deployment: software, hardware, personnel, consulting, and training.
The software investment of portal customers in this analysis varied widely. The largest software investment, made by a Plumtree customer, was for an initial license of $1.25 million for a global enterprise license. For many SAP customers, there was effectively no software license investment because the SAP portal licenses were included as part of an overall SAP license deal. The average license maintenance rate for Plumtree customers was 16 percent, and the average for IBM customers was 17.5 percent.
The hardware investment of portal customers ranged from nothing for companies that leveraged existing hardware to support their portal deployment to $1 million for one global deployment. Average/median costs were $125,400/$50,000 for Plumtree, $105,000/$15,000 for IBM, and $95,056/$10,000 for SAP.
The consulting investment of portal customers ranged from nothing when internal staff performed the deployment to $1.2 million for one SAP customers global portal deployment. In some cases, companies did not make a separate consulting investment or their consulting fees were bundled in the license contract. Average/median costs were $272,250/$60,000 for Plumtree, $31,000/$3,000 for IBM, and $338,000/$63,000 for SAP.
The average cost of personnel to deploy the Plumtree portal was $299,211, and the median cost was $90,000; the average cost of personnel to support a Plumtree portal for three years was $1.02 million, and the median cost was $540,000. The average cost of personnel to deploy the IBM portal was $42,225, and the median cost was $45,000; the average cost of personnel to support an IBM portal for three years was $402,300, and the median cost was $202,500. The average cost of personnel to deploy the SAP portal was $188,864, and the median cost was $90,000; the average cost of personnel to support an SAP portal for three years was $394,875, and the median cost was $270,000.
Most companies made a minimal investment in training to support the portal. For Plumtree customers, the average training cost was $38,018, and the median cost was $10,817. For IBM, the average training cost was $4,543, and the median cost was $0. For SAP, the average training cost was $82,091, and the median cost was $21,635.
Nucleus also explored the cost per user to deploy and support a portal over a 3-year period and found Plumtree had the highest average cost per user at $2,813 for three years, followed by SAP at $1,945 per user and IBM at $1,063.
A number of SAP portal customers that had not achieved a positive ROI pursued their portal strategy as part of a broader SAP strategy and thus had no specific goals or return objectives for the portal itself. While the perception was that the portal was free because it was bundled in a larger software investment, the other supporting costs associated with the portal drove a negative return on investment. The more closely a portal is tied to an underlying data source or application, the more difficult it is to integrate with other data sources.
Even if the relative cost of a project is small, if not enough benefits are realized, the return on investment will be negative. Nucleus found in many cases that portal projects that delivered a less-than-positive ROI did so because companies simply didnt achieve the benefits they expected. Many customers that didnt achieve positive ROI also made simple but common mistakes that delayed or hampered returns that would lead to a positive project.
Each portal strategy presents a different cost structure, and in most cases, SAP was simplest and cheapest to deploy in a mostly SAP environment. However, one SAP portal customer found that portal performance and development challenges limited its ability to deliver a positive ROI to users.
For many portal customers, a cost-effective means of integrating content was a challenge they discovered during deployment. Rather than slow the project or have cost overruns impact the ROI, one Plumtree customer let budget dictate what content would be included in the first launch of the portal and integrated the additional content later as resources permitted. For IBM customers, increased personnel time sometimes affected the deployment because of a lack of clear and detailed product documentation or knowledgeable staff.
The portal with the lowest total cost of ownership is not necessarily the best choice for an organizations bottom line. All the vendor portal solutions profiled in this report produced a positive ROI for a number of customers interviewed by Nucleus Research.
Plumtree customers rated the highest in terms of ROI and in on-time, on-budget deployments even though the costs of a Plumtree deployment were greater than those for the other two solutions. IBM customers fared well too, with many companies getting significant returns. Many SAP customers deployed free or nearly free portal licenses with little consideration for how the SAP portal would deliver benefits. SAP customers considering a portal investment today should evaluate if and how the SAP portal can provide value beyond providing simpler access to SAP data. A SAP portal can deliver value when companies treat the portal like any other investment and carefully assess the benefits and deployment strategy before beginning a deployment.
Rebecca Wettemann directs and manages Nucleus Research's quantitative research team. She has written and presented extensively on the subject of enterprise applications, CRM, collaboration, and integration technology and its impact on business. She is an expert on the financial analysis of technology and is the author of numerous return on investment (ROI) studies and reports. Prior to joining Nucleus, Ms. Wettemann directed IDC's European Collaborative Technologies programs. Ms. Wettemann holds a BS in Political Science and a BA in French from Oklahoma State University and a Masters of Law and Diplomacy degree from the Fletcher School at Tufts University.