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Today the concept of Total Cost of Ownership (TCO) is on every one’s mind. Costs must be reduced and the complete costs associated with a project or solution over a given period of time must be carefully analyzed. If the software solution has a license cost of $250,000, but the implementation and support services for the first year is $1.2 million, then the TCO is $1.45 million. What about the second and third year? How do upgrades of other connected software components impact the TCO?

There is depth of thought in this statement from Gartner – Systems that are “built to change” are more valuable than systems that are “built to last.” What does Gartner mean by this? Here are my interpretations:

  1. Design and develop IT models and systems that allow for reuse, like you would find in a services oriented architecture model. Services can be added, published queried upon and consumed without the complete rewriting of your IT systems. Services can be reused by others and costs and time can be saved.
  2. Design and publish end-to-end workflows and automated business processes. Make this information available to a wider audience so reuse and so full knowledge of the processes can be shared, debated and improved.
  3. Replace hard coded and undocumented customized code (coded but not documented by someone who left in the late 70s). Standardize on exposed and documented services that can be improved, reused and understood by all in IT and at the helpdesk. It makes revisions and improvements fast, inexpensive and possible.
  4. Simplify and standardize on business processes and a service oriented architecture that allows manageable improvements to separate components without impacting the entire IT infrastructure. Standardization of processes can simplify the entire system and reduce maintenance and support costs (TCO).
  5. Consider the TCO – total cost of ownership. Yes, one programming guru may be able to code a custom solution in three weeks and save some time on this one project, but the total cost of ownership may be enormous over time to support this undocumented and custom code. Standardized and simplified environments have lower TCOs and allow for rapid improvements.
  6. Consolidate systems and simplify – a well designed relational database model, optimizes the speed and performance of a database application – it is a beautiful piece of art. IT systems should practice the same art. Reduce the number of databases, redundant applications and multiple instances of the sames application. Simplify, simplify, simplify.

I have seen companies that have had eight different EDI systems, staff, integration technologies and EDI tool sets within the organization. The costs associated with these redundant systems was huge!

I was an EDI Manager of a large electronics company in the past. In meeting after meeting I would hear reasons systems could not be changed or improved because to change one part, would destroy the integrity of the entire mess. The result was often to employ more people and more manual processes in order to avoid touching the “mess.” This increased costs, errors, time delays and prevented improvements. The opportunity costs of not touching the mess increased every month and every quarter.

The “mess” can destroy the entire company. The “mess” prevents improvements and new business models. The “mess” can become such a barrier that the entire company can be pulled down by it.

EDI and B2B systems are no different. I have seen many SAP environments where the large number of customized IDocs and custom integration scripts became the “mess.” The many different database applications that needed to be integrated with the EDI system created a complex series of interwoven custom maps, scripts, APIs, databases and triggers.

I have heard of entire SAP upgrades being postponed or delayed because the upgrade would break the EDI “mess.” The “mess” began to dictate to the business how things would be done. Improvements, cost savings and efficiencies began to suffer.

There are many more stories we can all tell. The vision of SOA, SAP’s Netweaver PI and the vision of SAP’s Business Network Transformation for EDI and B2B is intended to address many of these pains. We just need to figure out how to rid ourselves of all of the old baggage before it destroys us.

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