eTera consulting

As discussed in a previous post In-House Electronic Discovery Teams Expanding EDRM Capabilities, in-house electronic discovery organizations are expanding the spectrum of their services across the EDRM reference model. While it can be exciting for legal technology professionals to explore the variety of potential products that can be implemented, acquiring technology is simply the beginning of the process. The overall plan must consider how staffing, maintenance, peak volume periods and other operational requirements will be managed and what those associated costs will be. An accurate Return on Investment (ROI) model cannot be completed until a Total Cost of Ownership (TCO) analysis has been prepared.

Those who purchase or manage computing systems have had a high interest in TCO since the Gartner Group popularized the concept in the 1980s. TCO enables managers to understand the potentially large difference between IT cost and IT purchase price. A good TCO analysis includes the non-obvious ownership costs that might otherwise be overlooked in making purchase decisions or planning budgets. The TCO analysis begins with the design of a simple yet comprehensive cost model. Below is an example of a TCO summary table. 

In order to understand the costs for each of these nine (9) categories, a detailed list of potential expenses and their associated costs need to be prepared. For example:

Once the detailed costs are identified and estimated, the TCO model will provide clarity to the fully burdened cost.

In future posts, we will discuss how to use the TCO results to prepare a simple ROI analysis, how to perform risk analysis of in-house electronic discovery investments, and how to apply alternative strategies to explore how to maximize ROI.

Posted by Alan Brooks, Vice President, Marketing