#Executive summary

Enterprise leaders, particularly CIOs, CTOs, and CFOs, are in a constant tug of war as they try to optimize and reduce how much they spend on software and IT requirements while attempting to provide more value to the organization and increase revenue.

According to Gartner, worldwide software spending is forecast to reach $1 trillion by 2024, up from $891 billion in 2023. Given the amounts that leading organizations are expected to spend, many companies will also want to consider how much their current technology stack costs them as they seek ways to cut expenses.  

After implementation, many software solutions will incur ongoing maintenance costs. These costs are estimated to be between 15% and 25% of yearly licensing fees. The older and more outdated the technology being used, the greater these costs can be expected to be, as by year four or five of the implementation, they can equal or even exceed the initial investment. 

Moreover, rising maintenance and security costs might only scratch the surface of how much your current CMS and technology stack architecture is costing you. Other factors, such as hosting costs, training and onboarding, content and API-related expenses, and more, can significantly impact the total cost of ownership (TCO). 

For enterprise leaders seeking an alternative, adopting composable architecture can help reduce your total cost of ownership, providing you with more resources to drive revenue. Not only by reducing total software spending but also by helping to provide a better return on investment; the more TCO is reduced, the better ROI can be expected. 

In this eBook, we will dive into the factors that impact TCO, why TCO continues to rise with legacy or monolithic software, and how composable architecture can answer TCO challenges for modern enterprises.

#Calculating your current TCO impact

Many companies consider a software solution’s initial licensing or subscription price and rely on that number to determine what it will cost them. While many businesses see this as a way to shortlist different systems and get an estimate when selecting a CMS, it doesn’t even paint the full picture of the total costs of owning any software in the technology stack. 

TCO has been defined by Gartner as “a comprehensive assessment of information technology (IT) or other costs across enterprise boundaries over time. For IT, TCO includes hardware and software acquisition, management and support, communications, end-user expenses and the opportunity cost of downtime, training and other productivity losses.”

In essence, TCO analyzes every cost expenditure associated with owning and operating a CMS. This tells business leaders not only how much the software costs but whether or not it will be able to meet the requirements and fall within the proposed budget.  

Some of the costs that might go into a standard TCO calculation might include:

• Licensing & subscription costs: Software licensing costs vary from vendor to vendor and can include one-time licensing fees or annual subscription fees. Prices can also vary based on how many users or seats and the types of features selected. 

• API costs: The number of API calls per month and the number of locales served, such as regions or countries, can also impact CMS costs.  

• Content costs: CMS vendors can charge different fees based on the number of content entries and content models used per month. 

• Hosting & infrastructure costs: The type of hosting and infrastructure required will also impact the TCO. For example, companies that opt for a public or private cloud-based hosting solution, where the SaaS vendor handles everything, will differ from those businesses that choose to host their infrastructure on-premises and need to incur additional dedicated server costs. 

• Installation & implementation: The installation and implementation choices can also tremendously impact the total cost of ownership. Companies with a large in-house team of developers, IT staff, and CMS experts will incur different fees than those who opt for third-party system integration to help them with the implantation process. Additionally, the cost and resources involved in orchestrating integrations with other tools in the technology stack must be taken into account. 

• Training & onboarding: Current employees need to learn how to use any new software solution, so the costs of training teams must be considered. Depending on the team’s previous experience and how intuitive the new solution is, these costs can be relatively high or low. 

• Maintenance & Support: Organizations also need to consider maintenance and support costs associated with their new CMS. This includes security audits, server maintenance, general updates, and other considerations that sometimes fall under the radar but all impact TCO.

#Company K: 3-year TCO estimate

In this section, we’ll provide an example of what a TCO calculation could look like for a B2B information service provider Company K. 

Company K has 500 employees divided across Sales & Marketing, IT, Operations and Engineering, Finance, and Human Resources, and they’re migrating to a new CMS to power their website, intranet, and external customer portal. Here’s what their new CMS costs them over a 3-year period. 

• Licensing & subscription costs: $15,000 per year for the 75 users needing to use the CMS.

• API costs: $2,000 per year for the 2 million API calls per month.

• Content costs: $5,000 per year for the 100,000 content entries and 100 content models used each month. 

• Hosting & infrastructure costs: $30,000 per year for Company K’s additional dedicated servers required for its hybrid infrastructure. 

• Installation & implementation: $50,000 for the one-time cost of implementing and configuring the CMS using a third-party system integrator. 

• Training & onboarding: $5,000 one-time cost of training the employees on how to use the CMS and creating appropriate guides and materials for future employees.

• Maintenance & support: $3,000 per year, or 20% of the annual licensing costs, to cover CMS updates, bug fixes, and technical support. 

So the TCO for Company K over three years:

Year 1

• Licensing & subscription costs: $15,000
• API costs: $2,000
• Content costs: $5,000
• Hosting & infrastructure costs: $30,000
• Installation & implementation: $50,000
• Training & onboarding: $5,000
• Maintenance & support: $3,000
• Total year 1 cost: $ 83,000

Year 2

• Licensing & subscription costs: $15,000
• API costs: $2,000
• Content costs: $5,000
• Hosting & infrastructure costs: $15,000 -
• Decreased due to Company K moving more assets to the cloud
• Maintenance & support: $3,000
• Total year 2 cost: $ 40,000

Year 3

• Licensing & subscription costs: $15,000
• API costs: $3,000 - Increased due to Company K scaling
• Content costs: $7,000 - Increased due to Company K scaling
• Hosting & infrastructure Costs: $15,000
• Maintenance & support: $3,000
• Total year 3 cost: $43,000
• Total TCO over three years: $83,000 (Year 1) + $40,000 (Year 2) + $43,000 (Year 3) = $166,000

#The reasons your TCO continues to rise

In this section, we’ll outline why enterprises that rely on monolithic or legacy CMS platforms will likely see their total cost of ownership rise year after year, in some cases exponentially, without a sound return on investment. 

Maintenance costs

With monolithic and legacy systems, in particular, frequent maintenance in the form of bug fixes, patches, and software updates is required. As time passes, these requirements continue, leading to an ever-increasing cost from year to year. When these maintenance updates aren’t performed, it leads to additional challenges, including reduced performance, more support requests, and more time and resources spent on troubleshooting and resolving issues.

Security vulnerabilities

Legacy systems are often fraught with security threats due to outdated technologies. Unlike cloud-based systems that often receive frequent patches and updates, with legacy or custom systems, security updates might happen too infrequently. Without the required maintenance updates, businesses are susceptible to numerous cybersecurity threats, including data breaches, excessive downtime, and the consequences that come with them. 

We previously only used the CMS function of Sitecore while paying for the whole suite. In addition, our license was about to expire. It was always a lot of work to change something, and it was also quite costly.

Lack of scalability

CMSs that can’t adequately cope with a growing business will increase the TCO. The need for scalability comes as the enterprise needs to handle more traffic, support greater content volumes, new channels, or increase the number of users. Unfortunately, if the architecture isn’t built to adapt to these changes, it will cause more custom development costs, the need for more hardware resources or CMS licenses, and other ongoing expenses. 

Vendor lock-in

Organizations that suffer from vendor lock-in will see their TCO rise exponentially. This comes when they’re locked into a longer-term contract with a specific vendor. Not only are they unable to switch vendors due to the length of time remaining, but they may also be unable to easily integrate alternative solutions that can help them capitalize on future opportunities. 

Multiple CMSs

Licensing, implementation, training, maintenance, and support costs are doubled or tripled when enterprises need to manage multiple CMSs. Plus, organizations that have to cope with multiple CMSs can also struggle with inconsistencies in workflows, operational inefficiencies, and higher support costs due to the need for expertise in multiple platforms. 

Redundant tools

Along with multiple CMSs, some organizations may have to cope with redundant tools. For example, businesses with a monolithic suite that includes personalization features may find the capabilities insufficient for their requirements. As a result, they choose to implement a modern personalization engine that solves their current challenges but end up paying for the extra tools in the suite they are no longer using. 

Missed opportunities

Another challenge that causes an increase in the total cost of ownership comes from the lost return on investment. When businesses underutilize features or struggle with inefficiencies, they can struggle with a slower time-to-market and increased technical debt. A slow time to market comes due to decreased productivity, which can negatively affect customer satisfaction, and revenue generation, thus contributing to higher TCO over time.

Technical debt

Enterprises can incur increased technical debt the longer any issues that increase TCO go on. That’s because engineering and marketing teams are forced to take shortcuts to avoid these problems affecting them. 

For example, the lack of a security patch or maintenance update might mean that new engineering team members take longer to be onboarded because they have to be taught the lengthy workaround to update the main website. For marketers, it comes in the form of using third-party content creation software to make changes and upload content to the CMS since the legacy system lacks the no-code editing feature they need. The knock-on effect of content silos and increased resource consumption are added to the total cost of ownership. 

Hygraph’s out-of-box support for GraphQL allows our frontend developers to concentrate on building features without involving backend developers for API adjustments. They can swiftly build and test queries inside [the] Hygraph intuitive UI, which allows us to flexibly shape the content models and test the outcome almost immediately in the front end.

#How composable architecture lays a better foundation for modern businesses

In this section, we explain how choosing a CMS that leverages composable architecture can reduce the total cost of ownership for modern enterprises and provide the foundation to increase their ROI instead.

What is composable architecture?

Composable architecture refers to a software design approach that enables businesses to build applications of reusable and swappable components. By leveraging a composable approach, organizations can build applications faster and adapt to different conditions more easily. 

Adopting composability means upgrades across the board

While composability is often associated with software design and architectural patterns, adopting a composable approach doesn’t just mean leveraging composable architecture. As such, composability is part of a wider mindset shift, similar to and often including digital transformation, which requires enterprises to upgrade how they strategically approach problems and go about internal processes. When organizations adopt composable thinking, they learn to be flexible and adaptable to adequately respond to changing customer needs, market, and economic conditions. 

This means that instead of even diving into and adopting composable software solutions or technology because of the numerous benefits, they assess their current conditions to determine if and when making the switch would be most beneficial. 

Frictionless collaboration supports business vision

Leveraging composable architecture can lead to numerous benefits, such as improving how teams collaborate.

Mobile device and consumer electronics provider Samsung needed to upgrade the CMS for the member’s platform to provide loyal customers with a better digital experience. The previous template-based enterprise CMS didn’t offer the components allowing the local content team to handle updates to the member platform. Instead, they were forced to rely on agency developers to handle all the changes, build local solutions statically, then package and upload them. 

Samsung needed to adopt an API-first headless CMS to supply the local components faster, overcome the global governance barrier, reduce architecture complexity, and deliver more quickly on local requirements. With the help of Hygraph’s modular and composable components, the content and development teams could work independently and enable a faster time to market. Instead of attempting to mold inflexible technologies, they were able to work with tools and microservices to build a composable Members platform.

From the developer point of view, we required a scalable on demand solution that was able to cover our technical requirements without the need for further infrastructure. So that we can reduce the cost of ownership for the system setup and additional Ops resources.

Future-proof tooling aids in long-term strategy

Adopting a composable approach allows companies to choose technologies that align with the vision of the organization and their long-term strategy.  

European-based consumer healthcare company Vision Healthcare wanted to migrate the entire company’s business logic into a new application landscape. They needed a new solution to host their content and build their entire system stack on top of it. Their previous CMS performed poorly, particularly with GraphQL queries and caching.

However, with a headless setup for their CMS, they could quickly adapt technology. If any of the components were outdated or a better component was available, they could replace just that part instead of redoing the entire platform. Vision Healthcare had no more performance issues when they migrated to Hygraph. They could build the website based on GraphQL as they have envisioned and compose the stack with other microservices.

I like how Hygraph made everything simple and clear. Hygraph bases everything around GraphQL and works well with GraphQL queries. The model creation is also very simple and straightforward. It has eased our workload with simplicity.

Increased flexibility leads to new opportunities

Composable architecture gives enterprises the tools to improve adaptability and flexibility that can catapult their business in the future.

For instance, the Oetker Group wanted to increase its digital platform offerings to end consumers and modernize operations. This meant upgrading web apps, websites, and portals for all brands under the Dr. Oetker portfolio. As part of the upgrade, Dr.O needed to break down the previous legacy monolithic tech stacks and switch to a microservice-first, performance-focused stack.

They wanted to increase brand consistency, remove data silos and enhance the customer experience. An API-based headless approach would be crucial to centralizing the stack, streamlining business processes, and ensuring compliance while managing multiple web instances simultaneously. Dr.O moved faster after switching their CMS to Hygraph due to using reusable content when launching in new markets. 

Going for a sustainable, state-of-the-art headless content platform was very important to us. With Hygraph, we are able to centralize the tech stack allowing us to easily launch into new markets just by replicating the environments and migrating the content.

Enables modern approaches to stack building

The composable architecture enables enterprises to use modern approaches like MACH for building technology stacks. This means that rather than be forced into on-premises solutions, they can take advantage of the cloud and the opportunities it provides to lower the total cost of ownership, such as frequent maintenance and SaaS upgrades, managed security, and more.

#Getting over the year 1 hurdle

Implementing new software systems requires potentially high up-front costs. This section’ll outline how companies can get over the year 1 hurdle and why the initial cost will be worth it. 

Step-by-step approach

While a typical CMS migration might have required organizations to completely rip and replace their existing monolithic CMS with a composable approach, that doesn’t necessarily have to be the case. Implementing composable architecture means adding a new piece of software and migrating content and data assets. While this means higher upfront costs within the first year, it can lead to a better investment over time.

Composability means everything doesn’t need to be all at once, but instead, companies can take a piecemeal approach to modernizing their entire technology stack. They can begin with one or two critical pieces of software and then slowly migrate the rest. For instance, suppose an enterprise wants to turn its entire technology stack into one built using composable architecture over the next three years. They currently have a custom-built CMS, using Salesforce as their CRM and SAP as their eCommerce solution. They are considering several MACH-based systems to replace and expand to help them scale into new markets. 

They could replace the CMS in Year 1 with a modern headless CMS, select a new e-commerce platform after 22 months, and then replace their CRM before the 3-year period is up. 

Composability benefits for content management

There are a number of reasons why the content management system should be the starting point of a future composable stack, especially if reducing TCO is the primary concern. Starting with the headless CMS can offer more flexibility, particularly if the correct system is selected.

Hygraph is headless CMS built for the era of composable architectures. First, its headless architecture enables content to be delivered to multiple channels, thus eliminating the need for multiple CMSs. Content creators are given the tools to create these digital experiences, leverage custom content views, granular permissions, and content stages and collaborate with their teams. 

Additionally, Hygraph offers personalization, localization, and translation features and a multitenant architecture that allows organizations to share resources, storage, and bandwidth. 

Increased opportunities

Despite the initial costs of implementing composable architecture over a 3-4 year window, organizations can take advantage of new opportunities in the future instead of sustaining the cost of maintaining their current legacy or monolithic architecture. Companies can operate more efficiently, increase productivity and lower their total cost of ownership with the help of composability, allowing them to move into new regional markets, target new industries, and more.

#Building your future-proof composable stack with Hygraph

When creating a composable stack that makes your business future-proof, then, Hygraph makes an ideal option for any enterprise business. 

Security and Compliance

Frequent security and compliance updates are essential to maintain a low total cost of ownership. As an enterprise-grade headless CMS, Hygraph is SOC2 and GDPR compliant with an ISO27001-certified infrastructure. This robust infrastructure ensures that all security measures are up to date and includes governance and backup features to ensure the privacy and longevity of assets. 

Scalability

Hygraph’s architecture supports unexpected fluctuations in requests and traffic during peak business times. Performance doesn’t need to be interrupted, and businesses can easily add more products to their portfolio as the need arises.

Built on composable architecture

Hygraph leverages the MACH approach, which enables companies to integrate best-of-breed services and choose the ideal solution for their business needs. By embracing modular and composable components,Hygraph can help you define your business model on your terms. Companies can federate their stacks into a single API and reduce architecture complexity. Businesses can also leverage microservices instead of inflexible suite solutions and avoid vendor lock-in.

If you are interested in a next-generation CMS that yields a positive economic impact, look no further than Hygraph. Contact us today for more information on how a headless CMS and federated content platform like Hygraph can reduce TCO.

#About Hygraph

Hygraph is the first GraphQL-native Headless Content Platform, enabling teams across the world to rapidly build and deliver tomorrow’s multi-channel digital experiences at scale.

It was designed for removing traditional content management pain points by using the power of GraphQL, and take the idea of a Headless CMS to the next level. Hygraph integrates with any frontend technology, such as React, Vue and Svelte.

Get started with Hygraph by creating a free account, learn how our customers are solving real-world problems, gather information about next-generation CMS from our resources or academy, or learn more about the applications of Hygraph.

To discuss how Hygraph can help you transform your digital projects, reach out to us.