Adoption costs – Are you giving a blank check to your vendor

If you are part of a bigger organization chances are high that you are either using enterprise social software or you are in the middle of selecting what kind of enterprise social platform you will be using. Besides standard selection criteria such as Magic Quadrants and license fees, there is often one huge item that is not listed on anybody’s list: the adoption cost of the new platform.

Adoption costs does not equal just implementation costs

Don’t confuse adoption costs with implementation costs. Implementation costs are the costs required to implement the solution. Such as: installation on premise (in some cases Cloud deployment is not a choice), configuration, styling, data migration and often some project management and integration with existing systems. Adoption costs are the costs to make it really work: to ensure that people will be using the solution.

Every vendor, system integrator and boutique will be able to give you a clear overview (and big discount) on license fees, most of them will also be able to provide you with a clear view on a structured implementation with predictable costs. Many of them still might also have a structured approach for adoption. However what most of them are still lacking is a clear commitment on when and how much the platform will be adopted and any references particularly ion adoption timelines and uptake. Having no predictability around adoption is like providing a blank check for that piece of work. Which means that you completely jeopardise your enterprise social platform since it can turn into a black hole sucking all the money out of your company.

Not license fees, it is about value delivered

Therefore when selection an enterprise social platform don’t focus on license fees too much. These are often one time or recurring fees that can be negotiated. However these fees don’t provide value. The value is provided by the level of the adoption of the platform in the organisation and how it is used by the people. The earlier during and after implementation your people are using the platform in a way that adds value for them and the organisation, the earlier you will see a return of your investment.

There are several social enterprise platforms that are notorious for low license fees and implementation costs, however they are just as notorious that most of the organisations buying into those low fees will switch to another platform. Since low initial costs are great, however when adoption is lacking, there is not so much return on investment.

What are the criteria you should select on

If you are selecting these kind of platforms select on the following:

  1. License fees: often recurring on a yearly basis. Negotiating a long-term contract might often lower these costs dramatically. Make sure also to negotiate a maximum increase after the contract period. Some vendors can double their prices. Since when you are using a platform it is hard to switch.
    Reasons to not go forward with the vendor: short-term contracts, not willing to go for a fixed fee for a longer term period, not able to explain the reason why the vendor is billing the platform in a certain way, no guarantees for renewals.
  2. Implementation costs: not really important, since these are one time costs. Make sure that there is a structured plan, proven track record and experience especially when you need (standard) integration with your application landscape.
    Reasons to not go forward with the vendor: no structured approach, no track record, no experience around integration.
  3. Service and maintenance: depending on your type of deployment, though often upgrades, patches and other changes are or just aren’t included. Make sure that it is clear what the process is for new versions, who is doing this work and who is responsible. Similar agreements are to be made around service levels. Since this platform is likely to become one of the most critical in your organisation it is most likely that you don’t want service just within office hours with while allowing the service organisation to take on calls somewhere between instant and six hours since the incident had happened. Short timelines are necessary, though they come with a cost.
    Reasons to not go forward with the vendor:  no service organisation, not willing to discuss upgrade paths, geographically disconnected service organisation, not willing to include service in the license fee pricing.
  4. Customer base and loyalty: it is not about how many customers a vendor already has, it is more important to see how much of these customers are already using their platform for our three years (and / or more than one contract period and version). Since every vendor will succeed to get enough customers in a certain market, though to create a loyal customer base that doesn’t switch is more important. Loyalty is only created by making sure enough value is being delivered over time. Also let vendors share their churn rate (preferably including customer names), since that is showing where things are going wrong
    Reasons not to go forward with the vendor: no reference and no previous track record, high churn, no loyal customers, customers are loyal because they cannot get out.
  5. Adoption: as said in the beginning some platforms are notorious to score pretty well on the first three points and sometimes even on the fourth point, even though that is then more based on lock-in than on value delivered. However what is the track record on the adoption timelines, what is the average adoption rate, what are people doing when with the platform, what value is delivered and what are proven methods with this platform to increase adoption. This is a crucial part, since this is about getting value about the platform.
    Reasons not to go forward with the vendor: no structured approach, not willing to commit to certain adoption levels, no clear view on how value is delivered and when it is delivered, no experience beyond just installing the platform.

Number 1 to 4 are hygiene factors. In standard situation every vendor, system integrator or boutique can provide you with a solid answer on this. Even if one of these items is a bit questionable it shouldn’t lead to an instant disqualification (unless it is about a high churn rate of their current customer base). Number 5 is important: if there is no way that such a party is able to prove the value and to commit to deliver value within a certain time period then you should pass. Since 1 to 4 is about the investment, which is often a one time write off / budget round, number 5 is about delivering value. Value should be delivered every day and the value determines your return.

If you need any help on selecting the right platform for you. Feel free to contact me.