According to a reasonably recent Computerworld article HCF gets a helping hand from predictive analytics the cost of deploying an in-house, Clementine based, fraudulent claim detection system was around $500,000

The initial deployment of Clementine cost HCF about $400,000. The required ongoing support, training and licensing costs amount to $100,000 a year, Shearman said.

That seems like a large amount for the software alone, particularly considering R and Weka are free. So, what is it that is special about Clementine?

And what SHOULD a company budget for their “predictive analytics”?

Well, that is not entirely a stupid question even taking into account the huge variability in requirements, data availability and quality and yada yada yada…

Maybe we can establish some credible lower bounds on “what data analytics cost”?

This reminds me of an article I read on clickz.com How Much Does a Web Page Cost? in which the figure for a “simple” page works out at around $3,000.

Now, granted it looks like he has padded it a bit here and there (but to my mind he did not allow enough programmer time), but the assumptions and process don’t look grossly wrong.

Granted too that top down estimation of the (means of) the cost components followed by simple summation is naive and probably likely to result in an upward bias of the total.. still, he has a point when he says..

The next time you encounter someone with sticker shock when handing him an estimate, don’t dismiss him. Walk him through what needs to be done and see if he still thinks that page can be whipped out in a couple of hours. It’s an educational opportunity that shouldn’t be missed.

I’d really like some input on this, but I’ll stick my neck out and say that I think it is VERY unlikely that anything worthwhile in analytics could be done for under about $25,000 in consulting fees (exclusive of software costs, if any). A more likely range for an “average” project would be $50,000 to $75,000.

Anyone?