When considering your software alternatives, Total Cost of Ownership (TCO) and the price of software itself, whether it is a SaaS (Software as a Service) or of the client-server flavor, is just a portion of what needs to be taken into account.

To start with, let's define Total Cost of Ownership (TCO). TCO was originally developed in the late 1980s by the technology research firm Gartner to determine the cost of owning and deploying personal computers. Although a new concept at the time, over the years, it has been examined and refined to the point that it is now one of the more relied-upon methodologies to evaluate the true cost of deploying computer systems. 

Basically, TCO consists of the direct and indirect costs incurred throughout the lifecycle of a computer system, including deployment, ongoing operations, maintenance and support, as well as the user costs associated with the business operation.

Direct costs are usually visible and sometimes are even budget line items to themselves. They include hardware and systems software, acquisition and ongoing maintenance; operations, which includes technical operations, help desk support, network costs, computer room space, and utilities such as electricity and cooling; and administration costs associated with the above like technical and database personnel.

Indirect costs are always not so visible and may be dispersed across the church's entire staff and congregation, including how its congregation interacts with the church for "church business and congregation administration." Typically, the magnitudes of these costs dwarf the direct costs because it is spread over so many different areas of the church. 

So, to accurately measure TCO, the analysis must include all "end user" operations, including contribution reporting, event registration, children's check-in, small group administration, volunteer recruitment and management, etc.

Another indirect factor that affects operations is system availability. Not having the ability to process and get to information when needed is a real, although many times hidden, cost. If the system is down for maintenance, it is not available for users to conduct their work; the more users who are affected, the larger the financial impact.

With SaaS, most of the direct costs associated with the functionality of the application are rolled into the monthly or annual access fee paid to the solution provider. So, when comparing ongoing monthly costs, churches need to consider how much they spend to keep their member database operational. Many churches hire outside consultants to help write reports, defragment the database, and install software upgrades across all the PCs at the church for the typical client-server system.

In our experience, many churches maintain multiple databases in their various ministries because their primary congregational database is not complete, not easy-to-use, and/or is missing needed functionality.  One of our recent customers was maintaining seven different databases that were never synchronized in trying to support its ministries. After converting, they were able to shut down the conflicting information stores and move to a single consolidated system.

Another hidden but huge cost to consider is the operational costs associated with bad processes or bad information. I have been dismayed at how poor the data management practices of churches really are.

And, churches seem to simply accept the concept of bad data – aren't they aware of the "garbage in, garbage out" adage?

A friend of mine who heads up IT for a large church that has one of the leading client-server church management systems recently commented that frankly he did not know how much the old system was really "costing" his church, but he knows it is significant and a lot more than what they just pay to the vendor.

Finally, value is something to think about—as long as the out-of-pocket costs are affordable, isn't it the value of the things that can be done with the information more important than the costs themselves? If the value far surpasses the cost, then are the costs justified?

Jeff Hook is the chief executive officer of Fellowship Technologies, www.fellowshiptech.com.