Total Cost of Ownership - Integration

About MiBizData

Our team has been integrating business technology systems for over 20 years and have learnt the true costs associated with integration through experience.  We aim to put the customer back in control of their information, empowering them to realise value from their data assets by helping them establish their information at the heart of an integrated ecosystem affordably.

This article hopes to shed some light on how to go about calculating the total cost of ownership for integration in your organisation.

What is total cost of ownership

Total Cost of Ownership (TCO) is normally used for system or asset purchases.  TCO in the integration space includes all costs to establish and maintain an integration, for the life of the integration.

Most organisations include integration costs as part of broader projects, where integration is a deliverable.  These costs are generally the cost to implement, and possibly 12 months’ licensing.

Some integration costs are realised in business as usual.  This includes costs such as support, maintenance and ongoing licencing costs.

The things that we should consider as part of a TCO process include:

It is important to understand this when selecting a platform or solution to ensure all costs are budgeted for and identified for comparison. 

Integration cost of ownership iceberg

Why does integration exist?

The number of systems organisations use to run their business are on the increase.  Not only has the number increased, but different platforms have been introduced in the mix.  Now we have on-premises applications, cloud-hosted applications (AWS, Azure, Google etc) and SaaS products.  With more systems mixed with different platforms comes more complexity, in a number of areas:

Organisations are turning to integration to solve these problems, however it can be a costly exercise if done incorrectly.  Organisations should decide how to tackle the integration problem, should they:

Integration is a specialist skill set

Historically integration has been in the hands of developers and were predominantly point-to-point.  As integration evolved, new patterns emerged to cater for multi-system integrations.  Over time a number of patterns have emerged to solve technical problems, and how those patterns can work together requires understanding and experience.

Enterprise integration patterns have been around for a long time, and the number of technologies that support these patterns is increasing.  With integration, the more you build the more complex it becomes.

Integration is a specialist skill, which requires an understanding of the different enterprise integration patterns available and when to apply them, and not one that your standard application developer will fully appreciate.  Failure to apply the right pattern increases risk to the organisation if conflicting patterns are employed which can result in expensive rework at best, or data corruption or data loss at worst.

This is where good architecture comes into play, especially architecture with a good understanding of Enterprise Integration patterns.

Some vendors have seen the risks using non-specialist integration developers and have started advising customers to establish specialised teams, which of course requires training!

What is the typical cost of a small integration team?

Establishing an integration team can be expensive as most developers require additional training to get them up to speed with a new platform and to ensure they understand how to develop securely.  Many developers use security by obscurity when developing in-house applications and don’t consider the implications of cloud computing to applications, let alone integration.

I have spent up to $250k in a single year in training costs to get a very green team up to an acceptable level of knowledge.  Not all teams will require as much training, but some may require more.  Some teams may need to have a different mix of expertise to establish.  The table below is for a team that does not require a tech lead.  If those resources are needed, the costs would be higher.

1 Platforms provide other advantages which makes them more cost effective over in-house development.  Improved efficiency, better security handling are two that come to mind

2 Licences include IDE, Code Checking, CI/CD, Platform and Runtime to support the integration of 3 systems and 10 integrations.  Actual costs are estimates based on experience and covers production, test and development environments. 

1 This is an estimated number of integrations which doesn’t take into account any complexity of individual integrations or system complexities.  It is purely for demonstration purposes and is based on observations over a number of different systems.

2 Resources finished developing the required integrations and can move on to other things, however time is still required to support and maintain integrations.  Administration and vendor license costs included in full, excludes any project management costs when not developing integrations.  Support and maintenance cost calculated using three systems. 

Development capacity degradation due to supporting production integrations

Many development teams not only have to create the integrations, but also have to maintain them.  This has an ongoing drain in capacity as you introduce more integrations into the organisation.

1 Maintenance excludes system administration and vendor costs