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Cost of E-business Systems

Determining the cost of building an e-business system can be a complex task.

Many companies are still in the position of having little or no technical architecture to support e-business systems, and hence need to take into account the costs of building a technical architecture in such estimates. These costs can be considerable, especially when being done for the first time within a company.

It is important that these costs are anticipated as an overall business overhead expense, and are not attributed solely to the first e-business project that is constructed—otherwise, the first e-business project will never get authorized because the costs are too high.

A great deal of expertise is required to ensure that the e-business technical architecture chosen will coexist with existing systems and networks while maintaining required levels of security and access.

Often e-business systems are the first internal systems that a company has allowed access to from outside of the company, and issues with firewall, router, and operating system configuration may arise for the first time.

Allowing authorized people to access the information they require while preventing those who are not authorized from accessing that information or from causing damage requires careful balancing of conflicting needs, and requires detailed understanding of all the layers of technology involved—from hardware up to application-level technology.

If the network infrastructure is already in place, it is still important to remember that the cost of an e-business system will include the cost of buying a Web server computer on which the system will reside. Again, this cost can be split among a number of projects if each system is small and the systems can coexist on the same server (although there can be significant security risks when doing this).

Those inexperienced in creating e-business systems often forget to estimate time for analysis, design, system testing, and acceptance testing and implementation. Instead, they provide only estimates of how much it will cost to actually write the code! It is vital not to forget the analysis and design stage because in my personal experience, systems can cost twice as much if these stages are not carried out or are carried out badly.

It is important to educate the business decision-makers about why e-business systems cost so much more than static (or limited-functionality) Web sites. It is important that they are aware of the need to ensure that the technical infrastructure provides security, failover, resilience, availability, etc. They should also be aware of the higher cost of the expertise of those who are sufficiently aware of these issues, and of the higher cost of skilled developers with experience in the programming languages concerned—good, experienced Java and ASP developers are rarely available on the market, and are therefore charged at a premium.

The business must be aware that the initial costs of the e-business system are only part of the story. Ongoing support and hosting costs should be built into the budget. These costs can often be provided on different levels according to the extent of the service that the business requires. For example, Platinum level might include 24x7 support with 99.9% availability guaranteed (monetary compensation if this target is not met), and might cost a lot of money and be suitable for critical systems. Bronze level, however, might guarantee availability only between the hours of 9 a.m.–5 p.m.

Although many e-business systems are hosted and built internally, some are hosted by specialist ISPs, and the business should be advised to obtain quotes from a number of potential ISPs and software houses so that they can be used for comparison in order to obtain the system required at lowest cost.

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