Datawarehousing costs are out of control
20.05.2002 - CCL press release

Datawarehousing and business intelligence are two areas of IT investment that are attracting increased interest from the business community. A survey carried out by PMP Research at the beginning of this year showed that the majority of respondents had only recently implemented projects, with over a quarter running programmes for less than a year. PMP's survey also demonstrated that many businesses are finding it hard to predict and control how much their datawarehouse will cost to develop and support. 20% of respondents had so far spent over £250 000 on projects, with one respondent having spent £5 million.

It is challenging for solutions providers to put final costs to projects - for build and support - when the solution is still evolving, and there are no clear precedents. Furthermore, whilst this type of solution is in the first stages of adoption, business decision makers are likely to be more tolerant regarding investment and return. However, datawarehousing solutions providers need to be aware that the bubble could soon burst if the business case is not tightened.

CCL has long argued that most businesses find it easier to pay for IT solutions as a monthly cost, rather than a one-off capital investment. They can compare it against a salary, which is a meaningful benchmark. They can absorb increases in cost, without the need to take cash out of the business. And they can set off the expenditure against tax. What's more, datawarehousing is not a one-off solution, it requires ongoing services. Paying for these may come to seem like a bitter pill to swallow after a £500 000 implementation bill.

The positive side to the PMP survey is that respondents overwhelmingly showed strong commitment to the concept of datawarehousing. It is crucial therefore, that solutions providers in this area address the payment issue now, before spiralling costs cause bad press, strangling investment in this potentially lucrative area of business IT.