May 14, 2012 By Wayne Hanson
How much does a “free” dog cost, and what does that have to do with information technology?
Well, as it turns out, Harris County, Texas, has a template for total cost of IT ownership that is now used by Boy Scouts to earn merit badges for personal management. The scouts use it to figure out how much a car or a pet will cost. As the scouts soon discover, a free dog isn’t free when, food, vet bills and more are figured in. They might still want to get the dog, but now they have an accurate idea of the actual cost.
That’s the point in Harris County’s total cost of ownership (TCO) program, implemented about 18 months ago and used for all enterprise IT projects. “It was designed to make people more aware of what they are stepping off into,” said Harris County CIO Bruce High. “You get a full picture of what it’s going to cost and maintain.”
Before obtaining and implementing a new system, TCO fleshes out the actual costs. “Is it a separate system that won’t fit in the virtual environment, so you have to buy a separate server,” said High, “and what does it do to personnel on the business and systems side? It looks at network bandwidth necessities and things like that. It gives you a total cost of ownership to purchase it, implement it and then sustain it. When you’re purchasing a system you need to consider the longevity of it, and there’s even a spot you can put — at the end of the time you think you will be using it — what it will cost to assess whether you replace, buy or build.”
Harris County has even turned down some available grants once the specifics were run through the TCO process. “It wasn’t worth it,” said High, "because the hit of 10 to 12 percent maintenance fees that will be coming out of your operational budget is not going to be sustained by grants … so it’s not worth it. It gives the decision-makers good information to make sound decisions.”
High said that rather than slowing down the procurement process, TCO actually expedites it. The process is fairly simple, he said, and there have been few complaints from users. Users appreciate getting some real data on actual costs, and all the questions are asked upfront, so they don’t have to go back to the vendor for more information midway through the process. The county provides a template that has some premade formulas for the calculation. And on items that aren’t covered by an algorithm, IT staff will help out as needed.
High said a number of local governments have looked at Harris County’s TCO templates, and some county agencies have modified the template to make decisions on nontechnical purchases, such as vehicles. “Instead of asking how many kilowatts something will use,” said High, “how many gallons [of gasoline] do you expect to use?
“It’s really just an Excel spreadsheet with a lot of tabs,” High said. “We have an Excel guru who makes it in a template format. It’s simple; it asks the questions they wouldn’t have thought of when talking to the vendor, such as: ‘Do I need somebody to support this thing? Do I need 18 servers, and does that mean 18 licenses? Do they sell you production and backup servers?’”
High’s advice is to try to think of everything before you commit. Like those maintenance fees and support agreements. “You may not be thinking,‘OK, that’s 15 percent of $2 million, so I have $300,000 next year that’s going to come out of the operational budget. Well, forget it. I’m not going to lay off three people to do this.”
So how much does a free dog cost? High says it might cost thousands of dollars. It’s been demonstrated that a five-year TCO for a Labrador retriever runs nearly $12,000. High said that an employee in the County Attorney’s Office is also a scoutmaster. The scouts use the TCO format to evaluate a car or pet purchase to see what it costs to maintain. “It helps with those decisions,” he said.
At Issue: Is TCO an effective way to evaluate a dog or an IT system?
Below: Total cost of software, hardware and infrastructure ownership:
Below: total cost of dog ownership:
This Digital Communities white paper highlights discussions with IT officials in four counties that have adopted shared services models. Our aim was to learn about the obstacles these governments have faced when it comes to shared services and what it takes to overcome those roadblocks. We also spoke with several members of the IT industry who have thought long and hard about these issues. The paper offers some best practices for shared government-to-government services, but also points out challenges that government and industry still must overcome before this model gains widespread adoption.