Total Cost of Frustration
Love them or loathe them, Gartner Group (Stamford, Conn.) is the most respected name in information technology research and analysis. And if there is one Gartner "creation" that caused the greatest emotional rift, it would have to be the concept of total cost of ownership (TCO). The chief financial officer loved them for it. The chief information officer had other sentiments.
Initial Gartner PC TCO estimates of $6,000 per year were revised several times to account for additional "hidden" costs of PC ownership that Gartner kept turning up. Today that figure stands at about $10,000 per PC per year. That’s right. Those 1,000 PCs you’re supporting cost the company $10 million this year, or five times what it cost to buy the hardware.
While Gartner’s pioneering work in PC TCO was important all by itself, it paled in comparison to the tremendous increase in attention that entire companies began paying to TCO in general. It’s not that costs weren’t factors before. But Gartner’s work showed that the real costs have very little to do with the costs of hardware and software, not only for PCs but for all IT gear. Rather, the primary cost engine is human. You know, things such as support, training, retraining, and so forth.
For all the great work by Gartner and others in the TCO area, there exists today more myths and plain untruths about TCO than actual reality. Take, for example, the notion that you can actually measure TCO. You can, of course, use Gartner estimates, or Gartner will come onsite and do it for you. Gartner even has a product line called TCO Manager. For the do-it-yourselfers out there, which includes most of you, the simple TCO formula dictates that you add up the value of all the resources associated with IT resources, such as the number of PCs in operation and their costs for upgrades, networking, training, and so forth, and then divide by the number of resources. Try it. You'll find it is incredibly difficult to do.
What about what I call the "gray area" IT resources? These are the growing number of office machines that used to be part of the office manager’s budget, such as printers, fax machines and copiers. But today, these devices are arriving network-ready, and that means the IT people have some purview over them. Are they part of the overall IT infrastructure and, therefore, should become part of the TCO calculations?
These aren’t just idle discussions. The CFOs around corporate America are absolutely convinced that accurate TCO calculations can be made. After all, Gartner told them so.
If you believe me, that TCO measurements by mere mortals is difficult at best, futile at worst, should you just resign yourself to the chorus of CFO laments that sing, "Our TCO is too high"?
No, not at all. I believe that time and history provide some good guidance to lowering anyone’s TCO, regardless of where you are starting from.
Endeavor to create a more standard environment. The hybrid or heterogeneous computing environment is the standard today, in part because of the merger craze of the 1990s and in part because of a belief that best-of-breed computing is best. I don’t know if it is best, but it is the most expensive. Most IT sites can lower TCO by taking steps to move from whatever level of hybridization they are at now to a more standard environment. If more standards means more IT centralization of decision-making, then so be it. You’ll have no trouble getting the CFO on board with this argument for more central control.
Whatever you are outsourcing, you can probably outsource even more. It started in a big way with mainframe outsourcing, and the sky didn’t fall. Today just about anything can be outsourced, except perhaps application development. Helpdesk, the WAN, routine maintenance, resource deployment. Outsourcers generally can do the grunt work more cheaply than in-house staff.
Use thin clients as often as you can. Note that I didn’t say network computers, because they still involve a great deal of expensive network overhead. But thin client PC computing makes sense. Most end users utilize about as much of their PC resources as a normal person makes use of his or her brain. Only your brain is free. Not so for the PC resources.
Rigorously assess training outlays. I believe that a lot of training is a conspiracy between HR departments that believe all training is wonderful and the training companies themselves. Have any of you ever assessed ex post facto the tangible value of training courses routinely taken? If you do, I’ll bet half your training budget could be axed to no one’s detriment, except the HR department and the trainers, of course! --Bill Laberis is president of Bill Laberis Associates Inc. (Holliston, Mass.) and former editor-in-chief of Computerworld. Contact him at email@example.com.