Considering the Cost

December 4, 2010 at 9:19 pm 3 comments


When gathering requirements for a software project, you hear a lot of wishes and dreams.  In IT, you need it, we build it.  But here’s the thing that I hope everyone is considering – Total Cost of Ownership (TCO).

Total Cost of Ownership is the analysis and resulting calculation of the total costs involved in acquiring and maintaining something.  For purposes of this post, I’m talking about IT systems but this process really applies to everything.

It’s like a car.  (yes, I use a LOT of analogies – bear with me).

It feels good to drive off the lot in that shiny new red minivan (hey, I’m a mom).  And it costs money every year to maintain that shiny new red minivan.  Oil changes, car wax, windshield wipers, fluid flush, and more.

Building an IT system is the same.  3rd party software upgrades, data archiving, user profile maintenance, hardware maintenance, increased user or transaction volumes, etc.  You get the idea.  The more complex the system, the more maintenance.  It is also true that the poorer the design, the higher the maintenance.

So what can you do?  As a Business Analyst, it is important to talk to your project sponsor and requirement owners (IT & Business) about the recurring costs.  Now I would hope that the Application Development Owner would be asking these questions but there’s no guarantee.  A strong BA should make sure that these cost are considered before finalizing the requirements.  Not that the BA is accountable for the answers – but they are in a key position to make sure everyone involved is considering these expenses.

As part of the process to determine project feasibility based off of requirements and estimates, TCO should also be considered.  As your business project sponsor is developing their business case, costs associated to recurring expenses for the IT system functionality being delivered should be included.

In a mature organization, it would be ideal to track the cost of IT project implementations and the associated maintenance required for the years following the deployment.  It would be fascinating to track this trend and utilize the data for fiscal budget and resource management.  If you work in an organization that operates at this level – let me know as I would love to hear about your experiences.

If this sparked your interest, here are a few articles that I found that give some additional insights. Read up and apply this to your list of topics when gathering requirements on your next project.

Total Cost of Ownership: The Driver for IT Infrastructure Management by Michael W. Hawkins

Driving Down the Total Cost of Ownership in CRM Systems by Sam Barclay

In a future post, I’ll talk a little bit about processes you can use or systems that you can purchase to track these expenses for your organization.  This is a little outside the requirements processes that I usually post about yet it is important information for a well-rounded IT leader.

 

 

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Entry filed under: babok, Business Analysis, Business Governance, IIBA, IT, Management, PMO, project management, Requirements Management, Technology. Tags: , , , , .

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3 Comments Add your own

  • 1. Anthony Draffin  |  December 4, 2010 at 11:21 pm

    Hi Jenni,

    This is a really insightful post. It’s given me much to think about. I’ll have a read of the additional articles you linked to too. I’ve been giving a lot of thought to increasing my BA practice maturity and moving from just documenting requirements to providing more strategic services such as benefits realisation and considering aspects like total cost of ownership.

    Anthonyh

    Reply
  • […] This post was mentioned on Twitter by David, Jenni Doyle. Jenni Doyle said: How much are your IT requirements really costing you? Consider TCO. http://wp.me/pxCow-3x #baot #pmo […]

    Reply
  • 3. Consider the Return « Jenni Doyle's Blog  |  March 3, 2011 at 5:34 pm

    […] Consider the Cost, I talked about the need to consider the Total Cost of Ownership (TCO) when making decisions about […]

    Reply

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