I went to the Marriott at The World Financial Center on Thursday for a seminar on TCO hosted by Price Systems of MT Laurel, NJ. They had as a guest speaker, David A. Cass, Vice President, GTI Risk & Resiliency, JP Morgan Chase & Co., which is one of the reasons I attended.
I am pretty familiar with TCO as we had an entire practice devoted to it when I worked at GE. While it is interesting, I was mostly interested in how that practice has evolved over the last five years. I was even most interested in two other factors that are near and dear to all IT people these days, those being Compliance and Risk Management.
I wasn’t disappointed at all. Not only did David provide great insights into JP Morgan Chase and how they’re dealing with Compliance, but he also presented views of some of the challenges and tradeoffs that they’re managing. It is very interesting to consider the costs associated with standardization, control, and compliance and where you draw lines so you can have acceptable compliance to standards, reporting, and regulation while still having control over your cost structure. This can get quite expensive as most of the cost structure comes in the form of people costs and can scale rapidly.
Behind that, Price Systems had several speakers present how they manage risk from a project and TCO perspective for their clients. This was quite interesting and I really appreciated the examples they presented using various forms of quantitative analysis techniques. While these techniques can get complex quickly, they can be learned by most business types if they don’t know them all ready and can yield some pretty dramatic results. The benchmark Price Systems uses is that companies should employ one TCO person for every $10-$15MM of IT budget. Their claim is the savings can be dramatic.
I would agree. Not only can the cost savings from existing projects be significant, but making the right choices at budget time for what projects to undertake based on associated risk, rewards, and cost structure could be strategically important. Given the costs for software projects alone, with an industry failure rate exceeding 60%, not doing this type analysis up front is just plain irresponsible.
You can count on me applying these techniques at future engagements and I will bring in help if the task size warrants it.