How Much Does A PPM Tool Cost?

If you are a Project Management Leader, you have probably got a mess to clean up. Maybe things keep going off track, maybe you have no easy way to measure what’s going on, or maybe you are just tired of struggling through portfolio reports at midnight when you yell, “There has to be a better way!” The good news is, there is a wide variety of Project and Portfolio Management (PPM) solutions that can help you more effectively manage your project delivery. Better yet, these PPM solutions have become very accessible, are easy to use, and powerful. But of course, as soon as we start considering tools, the first question that comes up is: What is this PPM tool going to cost me?

Your ultimate bill for a PPM can be surprisingly low – or surprisingly high. Unfortunately, it can be difficult to get a clear bottom-line answer for the total cost of a solution – and even then, the costs you are probably thinking of are only part of the picture.

So, how much will a PPM cost me?

At Kolme Group, our team has built, run and helped to improve project management organizations around the world. In doing so, we have facilitated the selection and implementation of various PPM tools, we are well acquainted with the process of getting to the costs involved.

Like you, we have faced the challenge of trying to understand the true costs of implementing a PPM solution. That is why in this article, we are giving a straight and simple answer as best we can on this complex topic.

Keep in mind, there are many components that will impact your costs. So, we will walk you through the most impactful factors and a few examples. We will also share tips for managing your implementation costs and getting the most value from your PPM investment.

The simple (and incomplete) answer

PPM software and basic onboarding costs are a starting point but not the entire picture. Below, we’ve chosen two starting point examples, for each of the three tiers, but read on to discover the “true costs” you’ll be looking at.

Full-featured tools like these will likely cost $60-$100 per full-function user, per month for licensing. In addition, you should plan for a one-time services cost for basic configuration and onboarding assistance. This could range from $30,000 – $100,000 or more, depending on your organization’s complexity.

 

Tool such as these are used mostly to organize task activities with no integrations or customized reports. They will cost $16 – $25 per user, per month for licensing. These typically do not involve or even have options for external services for configuration or implementation. You should, however, factor in your own time to learn the tool and the resource time needed to train your team on how to use it.

 

These fit somewhere in between the two types previously mentioned. These systems will run you around $25 per user, per month, though implementation costs can be highly variable in this tier. If you have the time and the experience, you can decide to implement it yourself, or engage an implementation partner and pay $10,000 – $50,000 for professional onboarding support.

Software cost estimates, above, reflect typical “list prices” which can often be negotiated down especially if you have larger volumes, have a pre-existing relationship with that particular software vendor, or commit to a longer contract (1-3 years).

The Basic Onboarding costs we have described so far are for relatively straightforward deployment of the solution and getting the team onboard. Costs in these ranges would not typically yield a fully customized solution for your organization (integrations, configurations for your specific business processes, etc.).

Basic Onboarding typically includes:

Please Note! You can spend 10% or 10x this amount depending on your needs. As you will see below, there are a few key areas that can really increase or decrease inflate your costs.

But… I can get “free” or cheap bundled licenses!

Yes licensing costs, especially for the more full-featured PPM tools, can be highly negotiable depending on volume. This can be an important factor for tool selection and consideration, but be cautious! Unless you are a small shop using a freemium service, ‘on the house’ licenses are never really going to be “free”.

Many product companies use a bundling tactic to expand their software footprint. Software companies often bundle PPM software with other products or services to give you the impression you’re getting it for free, or at least at a steep discount. In these cases, a sweetheart license price structure can seem like a great deal…at first. In the long run, though, you may find you are better off paying more for a system that actually meets your needs rather than struggling with the wrong tool just because you got a “good” deal.

The lesson here, is that while license cost is an important consideration, there are other costs to consider, both hard and soft. More importantly, if the tool does not meet your needs, you’ll never gain the value from it to justify those discounted licenses.

What really impacts your PPM Tool costs?

There are a few key areas that have the greatest impact on your overall PPM tool costs. Understanding these areas can help you identify which items on your PPM wish-list are going to cost you the most so you can start to understand your must-haves versus your nice-to haves from a cost perspective.

Key cost areas:

Licensing

PPM licenses are typically broken out into different types/tiers depending on the user role in the system. These types will vary by PPM, but typically include:

Pricing can be dramatically different between the license types and this can have a huge impact on your costs. For example, Requestor or Team Member licenses can cost a fraction compared to those of the Planner tiers.

Understanding each persona needed in your organization will help guide the conversation with prospective PPM suppliers and ensure the right license level for each of your personas. You will want to avoid moving through the sales cycle only to find out that you purchased the wrong license types.

Below is a simplified version of a how you might map out a persona matrix to help quantify your license needs:

 

Integrations

Integrations with external systems is another possible large impact to your PPM cost. Projects don’t live in isolation inside your organization and consequently neither does your project data. You can increase value when adding automation and centralized reporting by integrating your PPM with other systems, but it can get really expensive.

Typical integration points include:

Integrations also vary highly in costs depending on the method used to build the connection. The right method for you depends on your budget but you’ll also want to assess the volume, frequency and uniqueness of your integration requirements.

Typical integration methods, from least to most costly, are:

Regardless of your approach, be sure you have a clear understanding of what you want from each integration, including what data flows, which direction, and how often. This will help ensure you get what you need and helps your provider give the most accurate cost based on those requirements.

Customization & Automation

Full-featured PPM tools offer amazing levels of customization and automation to increase your organizations efficiency. In fact, the more important question is not can the tool automate this process, but should it automate this process.

Our advice: Start with the minimum amount of customization and automation – focus on critical simple processes and fundamental adoption of the tool. As your users become more comfortable with the system, you can add additional functionality and automation. This makes onboarding easier and increases your short + long-term adoption.

When considering your PPM needs, be aware – the more customization and automation you add, the higher the implementation cost.

You may also want to research how easy the tool is to learn from a configuration standpoint. This way, you can understand the administrative overhead required to enhance those configurations later on, whether it be the supplier, partner or even your own team.

Unique Use Cases

Another possible significant impact on implementation costs are the number of unique use cases, or unique team processes, that are joining the tool.

For example, the configuration and onboarding effort may not be appreciably different if you have one common way of working for 100 people or 1,000 people. But, if you have five departments that each have their own unique project lifecycle, financial or resource management processes, that can be 5x more work to implement because it acts as if you’re really onboarding five different organizations.

This is why, implementing a PPM tool is a great excuse to apply some standardization across the organization. Even streamlining simple things like common project KPI tracking, status reporting templates or reporting can not only reduce the cost of your implementation but also provide value to the organization through standardization.

Support approach and involvement

Ongoing support and enhancements can be a likely impact to your implementation cost as you decide how involved you want your team to be. Most PPM tools provide various training mediums for project team members to learn system administration and configuration. This will allow you to successfully own the system and configuration after implementation. Some providers will even encourage an “enablement” approach during onboarding, allowing your team members to be hands-on during implementation, potentially reducing some of costs by taking on the less technical aspects of onboarding. This includes UI clean-up and user permissions.

Of course, the more resources you dedicate to system implementation plus ongoing support, the lower your supplier implementation cost. However, this can impact your timeline. Keeping the pros and cons in mind, understand that it will be a better long-term investment but you have to have the resources available on your team to focus on learning these skills and be ready to invest in them.

The hidden PPM tool costs that will get you

Although the costs described above can have the biggest impact on your overall PPM implementation budget, there are areas that can take a surprising amount of effort by your supplier or your team and cost you more than planned.

Data Migration

Migrating mass amounts of data for historical or in-flight work can be surprisingly challenging and time consuming. Even if the data is quality (which usually isn’t the case) you’ll need to transform and import it, in order to make that legacy data coexist with new data. That’s a lot of work!

If possible, use your transition to a new PPM tool as an opportunity to start clean with new project templates, fresh budgets and data.

Process Development

Attempt to document your processes (project lifecycle, budgeting, etc.) in advance. If you need help developing or improving your processes, your PPM implementation partner should be able to provide assistance on best practices. Keep in mind, this type of consulting can add up quickly and deduct from your planned implementation budget. Be prepared with your processes, documented and ready to go, or with the expectation that you will need to invest in expert assistance improving your ways of working at the same time you implement your toolset.

Operational Costs

Likely, you will need to dedicate an amount of resources to administration, training, and maintenance of your new system. We typically advise to invest some amount of resource time to learn the configuration side. This way you can make configuration changes, develop reports, etc., rather than always relying on an outside partner. This is promising, but you will need to allocate ongoing resource time for these activities.

Support Costs

Be aware – different PPM providers approach and price support in different ways. Key areas to watch for are:

Training Costs

Another cost that can be surprising is end-user training cost –  both in the time needed to train and producing the supporting documents. Because PPM tools are often configured to support your specific project delivery processes, you will need to develop end-user training specific to each persona in your organization.

Your PPM supplier may have a standard deck to get you started but you will also want to highlight areas the tool has been configured beyond out-of-the-box and tailored for that persona’s specific business processes.

This cost may or may not be included in the PPM implementation costs and when it is, it can be significant. To save cost, you can:

• • Go with a ‘train-the-trainer’ approach, where the suppler trains your power users or trainers, who then go on to train all your end-users.
  • Develop the training in-house. This can save a lot but requires you have involved team members in the implementation – enough so they can develop the material.
  • Lastly , you can record the trainings and making it part of the onboarding for new hires or for those that desire an On Demand option.

How do I keep PPM tool costs down and maximize return?

Kolme has implemented PPM tools for many clients and based on our experience, we wanted to share the following tips with you, as you prepare get to start, or re-engage, your PPM journey:

Is a PPM worth it?

A PPM tool can undeniably be a worthy investment. Even with costs involved, and some not insignificant, we still advise on having one.

As a former PMO lead for a professional services organization, I implemented a PPM tool and that Organization’s billable utilization improved by more than 20%! The next time I implemented a PPM tool for an organization, we identified and corrected erroneous CAPEX allocation of labor cost which was amounted to 30-40% of all project labor. With another client, we found that 75% of their projects did not align to their strategic objectives. And with another, we managed to save nearly a million dollars’ worth of resource effort through automation and streamlining of processes.

So, based on our personal experience implementing these tools for ourselves – and for our clients – it is definitely worth it.

 

What’s next?

If you are ready to go shopping for PPM tools, or revisit your existing implementation, here are a few next steps: