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Key to cost-effective IT operation – measurement and evaluation

Method of pricing services based on their time consumption and labour costs. Practical recommendations for determination of realistic estimates of time consumption of services and labour costs.

Since its publication at the end of the 1980s, the methodology Total cost of ownership (TCO) has become a highly popular tool for those who want to discover their true costs. In the field of IT, the term TCO is understood as determining the costs for procurement and operation of IT services or solutions. The costs of procurement are usually the simpler part of the decision-making process, while operating costs are a different story, as they tend to conceal many more unknowns.

In recent years we have been witness to dynamic growth in the cost of labour in the IT sector. On one hand people working in IT can be satisfied with the special remuneration they get compared to other sectors, but on the other hand the costs for their work account for a pretty big slice of the operating costs “cake”. If for reasons of savings a part of the money in the operating costs cake stagnates, or if the costs are cut right out of the cake, the IT department is forced to look for reserves. Under the assumption that it has operating costs under control in an amalgamated way, defending the budget or decisions about possible outsourcing becomes much simpler.

Unlike distinct payments for the lease of licences, payments for software and hardware maintenance, extended warranties or for the rental of data centres, costs linked to labour represent a much tougher nut to crack. Here in this article we will not offer the path of least resistance, meaning personnel costs plus overheads of the company and their subsequent spread over IT systems. We offer a more complex, but also more responsible path. This makes distinguishing costs for individual services transparent.

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Michal BróskaMichal Bróska Director of Product management michal.broska@posam.sk

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