I hear this retort about "I already have an IT Department" several times a weeks and in several different types of conversations, like "Sure, we can add another system, I already have an IT Department." It's a funny thing about IT departments. Even though they drain the budget, companies and their management seem almost proud of these cost centers. It's a symbol of the company's aggressiveness, its collective 'can-do' attitude and its willingness to modernize. We may slit steel for a living, but we've got a brand new server in the back with a crew to run it! Yet when the subject of Software as a Service, or SaaS comes up - I know lousy acronym, but I'm living with it so let's move on - the same folks who sign payroll checks every other week have a hard time getting over the idea of paying an annual subscription for the software. The fact of the matter is that a system's real cost is the skill set that a business needs to maintain it and keep it running along smoothly. Add a few more systems and now there are both systems and interfaces to manage. It's a life's work! A system for web presence or e-commerce, a system for customer relationship management, CRM, another for accounting, inventory and manufacturing, ERP. A team just to keep it all up and communicating, or for when it inevitably goes down and you have to put out the fires. Total Cost of Ownership, TCO, is the attempt to understand and manage IT Costs. The fundamental idea is clear: Cost and Price are two different things, altogether. We have all made the mistake of treating an important purchase like a commodity, we fixate on price only to get burned later on cost. TCO asks what are the total cost of these systems and how do they impact the firm's ability to survive and succeed. TCO covers many areas including business continuity, software as a service, software security, software risk, software skill set, software integration. Too many small and medium businesses, the SMBs, are ready to make all of the same mistakes that large companies are just now starting to rectify. Like running disparate systems and letting the IT budget explode. We need to be lean and mean if we are going to compete globally and the last thing we need is 1 out of 15 employees engaged in IT. We will cover a lot of these areas in this site and we welcome your input. |
