All Posts in Technology

|In: Industry Commentary|Last Updated:

Gartner has achieved fame and fortune through the publicity it generates from regular publication of outrageous “total cost of ownership” (TCO) calculations. It’s time for Gartner to share the fame, if not the fortune.

IS Survivor Don Deck, in response to my recent critique of Gartner’s $3,000 annualized TCO for a personal digital assistant, proposed two other useful measures: TCOL vs TCOD (Total Cost of Living vs Total Cost of Dying) and TCOI vs TCOE (Total Cost of Ignorance vs Total Cost of Education). Don’s conclusion: “I suspect that this would “prove” that it would be most cost effective if we all died young and ignorant.”

Such are the hazards of calculating cost without value, as I suggested less eloquently when I debated Gartner on the subject of TCO back in 1993.

Gartner needed less than a decade to develop a value-based measure — TVO, or Total Value of Ownership. I’m confident the difference between this and the already-well-established “Return On Investment” surely is more than just Gartner’s need to coin its own term, just as I’m confident the reason they gave me no credit for anticipating them by nearly ten years was mere oversight.

Also a mere oversight: Has anyone actually seen a Gartner TVO?

The problem with calculating the value of information technology is that it’s an enabler of value, not a provider of value. That is, the value comes from the improvement in business processes made possible through the use of information technology, not the technology itself.

If you’re planning to drop a bundle of cash on a cost/benefit analysis of information technology in your company, let me help you save your budget for more important matters. Here’s a straightforward methodology you can use without ever engaging an outside consultant or pundit.

The cost of IT is equal to the IT budget. That’s the easy part, but then, measuring cost is always the easy part. For the benefit:

1. Calculate the total cost of every business process (TCBP) IT supports.

2. Design the best possible alternative processes (BPAP) that use no technology more complicated than a hand calculator.

3. BPAP – TCBP is the value provided by IT. (BPAP – TCBP)/TCBP is the return on IT investment — astronomical in nearly every case, I suspect; even more astronomical than the consulting fee you’d pay for a TVO study.

This is the only realistic way to assess the value of any enabler — compare what you’re doing to the best you could do without it. The process is tedious, but not particularly complicated.

I’d offer to perform the analysis for you, except for one thing.

It’s too tedious.

Comments

|In: Industry Commentary|Last Updated:

“We can’t just let users install anything they want!” This, the mission statement of the Value Prevention Society (VPS), has, in a decade, evolved from controversial policy to unquestioned postulate.

The history of the personal computer belies it. PCs succeeded because they freed end-users from the constraints imposed by centralized IT, letting them select, install, and make innovative use of whatever capabilities they could program themselves or acquire through the purchase of inexpensive shrink-wrapped software.

“Nice theory, but,” I can hear VPS members respond, “supporting uncontrolled desktops would blow our IT budget.”

This strawman argument misses the point perfectly. VPS members live in a binary world — the only alternatives they recognize are complete lockdown and total free-for-all. The real world is more interesting. So in the interest of offering solutions instead of criticism, here are some elements of a more balanced desktop support policy:

  • Establish multiple levels of supported software. The stuff you install, support, and pay for out of the IT budget right now is one level — fully supported. Next comes software IT has tested and found reliable, but doesn’t pay for or install. Call it endorsed. Third is software IT hasn’t tested, but is well-known, comes from a reliable vendor, or otherwise is deserving of some trust. Call it acceptable. And finally, there’s that other stuff. Call it disallowed.
  • Establish multiple levels of support. Problems with fully supported software are first in queue. Next come problems with endorsed software. Problems with software rated acceptable rate the lowest priority, with no guarantees beyond restoration to a standard image.
  • Require management approval. As Ronald Reagan was fond of saying, “Trust but verify.” Trusting employees doesn’t mean trusting them blindly, so if an employee wants to install (for example) a personal information manager (PIM) other than the company standard, his/her manager must approve the purchase … and, of course, the PIM must rate “acceptable” or above.
  • When integration is vital, company standards rule. If you have no CRM software in place, for example, sales representatives should be able to buy and install whatever contact manager they want. If you have implemented a serious CRM suite that includes sales force automation, the standard overrides personal preferences.

What’s that you say? It’s easier to just lock ’em down?

Of course it’s easier. That’s often the nature of a bad decision.

Comments