Compugen Services Ltd. says the timing is right to introduce a total cost of ownership (TCO) practice which will move the box pusher into a more services-oriented line of business.
Maarten Verhaar, director of the company’s TCO practice,
said TCO is a loosely-used term these days. “”Most vendors have some type of TCO messaging and it can get confusing for the consumer to cut through the marketing rhetoric and figure out what the TCO messages really are and which ones are legitimate,”” said Verhaar.
That sometimes makes sifting through all the solution possibilities somewhat daunting, he added. “”Customers are lost when they go to these independent vendors and say, ‘Why are you better than your competitor?’ You have to take their message with a grain of salt. [A vendor’s] marketing message hits on all the weaknesses of the other tools and disguises the weaknesses of their tool.””
Compugen started a TCO practice because it wants to start providing IT solutions, not just boxes. “”Our history has always been that of a reseller for the last 20 years, but that business is changing. You need to start demonstrating some value-add to your customers, what you bring to the table. And clearly that’s what TCO can do for Compugen. It’s a great differentiator for us and it’s a great tool that helps our clients.””
If companies focus on just the initial procurement side of things, they’re paying attention to 20 per cent of lifecycle cost, or the tip of the iceberg, according to Verhaar. The other 80 per cent includes managing PCs, break fixing, help desk, IS support staff and administration staff.
Last year Compugen joined Gartner Group’s TCO Alliance, which requires members to train some of its staff on Gartner’s TCO Manager software before using it to measure a client’s TCO. Compugen already has 20 Gartner Certified TCO Experts across Canada, including Verhaar.
Compugen bases its TCO offering on Gartner’s list of 21 best practices for distributed computing, which provides “”a great framework with which to say, ‘I’ve covered all my bases, I know what the current state of my IT infrastructure is, and I know what a realistic target state is,’”” said Verhaar. Another common task is figuring out how projects should be prioritized when there’s only enough money to complete a few at a time, he added.
Compugen offers three TCO services: Snapshot, Baseline and Benchmark.
Snapshot involves a TCO simulation which analyzes a company’s high-level demographics to “”provide a simulation of what your total cost of ownership and costs are by finding a peer within the (software’s) database that most closely matches your profile.”” There are about 40,000 companies within the database. Accuracy is within 10 to 20 per cent of the client’s actual figures.
For some companies the Snapshot service is accurate enough, but other clients might want to measure actual TCO through Baseline, which involves ROI analysis on particular IT initiatives, said Verhaar. Baseline can help answer questions like whether an investment in systems management would make more sense than asset management, and how to prioritize or justify one project over another.
The top-tier service is Benchmark, which measures actual costs based on an organization’s existing IT environment. It also creates multiple “”what-if”” scenarios, said Verhaar. “”It’s much more of a consultative engagement, where we spend a lot more time with the client, analyzing their unique environment and figuring out which initiatives make the most sense for them.””
Compugen then identifies a client’s top 10 best practices, explains what it means to be good at them, how other companies are succeeding at them, what the client’s current state is and what its target state should be.
TCO is not a magic bullet — it has to be considered from an organizational perspective, said Verhaar. “”When you’re thinking of reducing your overall cost, it really depends on what your current state is and what your target state is. If you’re a loosely managed environment with outdated applications . . . you’ve got a huge TCO potential. But if you’re a well-managed, locked-down NT environment…your TCO savings potential isn’t as great because your technology has already matured to a certain point.””