click image to see a list of other articles related to cost analysisBy Dennis D. McDonald

The recent Forrester report predicting a significant drop in the price for enterprise social software has been getting a lot of attention. But as pointed out in There’s Nothing Wrong with the Social Networking Industry that Some Honest (Cost) Information Won’t Fix, price and cost are not the same thing. Failure to distinguish between the two can generate surprises if those responsible for the success of a social software implementation project haven’t budgeted and communicated with management correctly.

The price you pay a vendor for a software application is only a subset of the actual cost you pay over time to install, train, and integrate a social software application with other systems and processes. It is likely that the direct cost of acquiring the software itself is a small portion of the total implementation and support costs and that people time will be the dominating factor in understanding what the actual implementation cost will be. This has somewhat dampened my enthusiasm about predicted drops in software prices.

Avoiding problems associated with confusing cost and price is one of the reasons to have the I.T. department involved in planning a social software implementation, especially one that requires integration with other systems for its success.