What does IT cost?

One of the discussions I regularly get drawn in to is the “commercial software” versus open source debate. Because the Microsoft Software Donation programme is a large part of what I do, everyone assumes I’m on the side of big business and against the FOSS (free open source software) movement. I’ve always found this something of a false debate. Especially in the not-for-profit sector where so many companies will either donate or heavily discount their products. 

I spent many years doing ‘forensic’ analysis of organisations IT costs, looking at the full cost of IT ownership. The thing that always surprised me was that everyone focussed on the hardware and software costs. In a sense that’s not surprising, they are the big headline numbers and you inevitably have to find the cash to pay for them. Large organisations would invest considerable resources in managing their purchasing processes and getting the best deal for hardware and software.

While getting the best deal is no bad thing, many organisations miss the bigger picture. When you study as many organisations as I have, you realise that people costs contribute for at least half of the total cost of ownership of IT. And if an organisation does their own development work, that can go up to nearly 75%!

Now it’s easy to miss this, as a lot of the people cost in IT is hidden. But whether I use commercial software or free software, I still need the skills and the expertise to deploy it. That means either giving up the time of someone in the organisation who has the skills, or contracting expertise in from outside (by the way, this is where everyone who advocates open source software makes the money to pay the rent). Then once it is deployed, you inevitably have to find someone to support and maintain it. Again this is either an internal person cost or an external support organisation cost.

IT deteriorates over time – that PC that seemed to be the equivalent of an F1 car when it was new, now runs like rusty bicycle. That’s one area where support and maintenance is needed. The other problem is that what we need from IT changes over time. Either way, it needs support and maintenance which costs either in time or money.  

Whatever anyone says to you, IT support costs add up. And the more we get access to low cost software – open source or otherwise – the more these costs come to dominate our overall IT costs. Ignoring this simply leads to long term problems with our systems.

However, recognising this cost, factoring it in when we make choices about our technology, can significantly reduce total cost in the long term. In addition, the lost time among the rest of the people in the rest of the organisation because of poor or defective systems can be significantly reduced.

I’m an engineer by training and engineers always go back to first principles. The first principles of choosing what IT solutions we use are:

• Identify what the organisation needs IT to do (this trumps everything else, every time)
• Identify the alternative technologies which will meet those needs (in IT there’s always more than one solution whatever anybody tells you)
• Identify all the costs associated with the technology throughout its expected lifespan (nothing comes completely free forever, and everything, especially technology, has a limited lifespan)
• Decide what is the best solution for you (balancing lifetime costs and its ability to meet your needs)
• Budget for lifetime support costs as well as up front purchase & implementation costs
• Plan for its replacement

If you do this the answer to the question  commercial software or open source, drop out the bottom.