11.3 Cost-benefit analysis

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During this process the organization has to make a list of benefits that this technology will provide. This should be obtained not by mere theoretical means, but using prototyping and simulating methods. These prototypes and simulations should validate from all venues including:

• Current application architecture

• Current database structure

• Future database structure

• Future application architecture

• Expanded business

• Increased users

• Failover

• Scalability

• Manageability

• Recoverability

• Maintainability

All the possible reasons as to why this specific technology was selected should be examined to collect statistics that could be used in the costing model.

Before determining the benefits and the cost to obtain these benefits, it is important that a determination be made as to the time frame over which these are to be realized. Once these benefits, which are also called intangible benefits, have been validated and all the business requirements have been satisfied from the simulation or prototyping model, the next step is to arrive at the cost of implementing such a solution.

A costing model that determines the cost benefits over a certain number of years should be prepared, as shown in Table 11.1.

Table 11.1: Costing Model

Costs and Benefits	Year 0	Year 1	Year 2	Year 3	Year 4
Software cost
Implementation cost
Training cost
Recurring maintenance cost
Increased speed of activity
Improved management
Saved time in updating data
Error reduction
Increased flexibility
Increased availability
Increased scalability
Increased manageability
Hardware cost
O/S training cost
Recurring maintenance cost
Improved management
Increased flexibility
Increased availability
Increased scalability
Increased manageability

It should be noted that all the benefits that have been validated via prototyping and simulation should be spread over a span of five years. This cost is compared against the cost of the product and its implementation, basically the amount of money spent during year 0.

Once the cost-benefit analysis is completed and the results of analysis provide an indication that the entire migration process would be favorable to the enterprise, the next step is to start preparing and planning on the actual migration itself.

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