Control your IT Cost & identify Improvement Opportunities with TCO Benchmarking

Are your IT cost too high? As CIO, what do you reply if your CFO says: “…IT Spend per Revenue is behind competition…” or “…Total Cost of Ownership (TCO) must be reduced…”? – You better be prepared!

IT efficiency and cost management remain top CIO priorities. The Challenge to manage IT cost & value contribution at the same time is difficult. CIOs need to free up funds & resources for innovation. TCO benchmarking is a powerful instrument to evaluate the status-quo and to identify opportunities to reduce TCO.

My advice:

• Benchmark KPIs and best practice adoption against peer groups!
• Take part in the new SAP Total Cost of Ownership (TCO) benchmarking survey!
• Start now, free of charge – learn more at valuemanagement.sap.com!

The SAP Total Cost of Ownership (TCO) benchmarking survey is unique and has been developed together with CIOs. The survey will help you assess your company’s ongoing SAP operations performance, based on key performance indicators and best practices vis-a-vis your peers. The assessment covers core processes including Business-IT Alignment, Value Management, IT Complexity Management, IT Operations Excellence, IT Service Management Processes Excellence, Technology Adoption Excellence, IT Organization Excellence and IT Sourcing.

SAP TCO Survey – Scope & Structure:

SAP TCO Survey – Selected KPIs (12 Examples):

• IT Spend as % of Revenue
• IT Spend as % of Total Expense (…in order to expand a pure IT cost view to a holistic enterprise cost perspective)
• SAP Support Cost per Active User
• Support Equival. FTEs per 100 Active Users
• # Applications per Billion in Revenue
• # Y/Z Programs
• Actual Unplanned Downtime (Hrs; Annual)
• SAP Incidents per 100 Active Users (Annual)
• % of IT Incidents Resolved by Help Desk
• Total Number of IT Vendors
• External IT Spend as % of Total IT Spend
• Number of IT Projects with Business Case as % of Total number of IT Projects

After all, how do you interpret the benchmaking results? Here is my advice about what you should consider:

• Leverage benchmarking as a tool to identify improvement opportunities rather than to justify the status-quo
• Find a fitting peer group (similar companies, industry, # revenue, # employees, # active user) based on available data – it does not need to be a perfect match
• Consider differences of your company to the characteristics of the peer group
• For the analysis of KPIs consider the overall business context of your company (i.e. revenue change, competitive position, business strategy, key projects, IT strategy)
• The overall result is more important than individual KPIs – analyze KPIs in context with the other KPIs
• Validate and analyze in more detail when you find irritating or unexpected results
• Build a benchmarking history in order to make trends visible (your company is your best peer group)
• Derive key questions and identify fields for improvement

More Information: Learn more about the TCO Benchmarking Survey at  valuemanagement.sap.com. Participation is free of charge.

Check my Blog series about “What matters to CIOs? – DSAG IT Economics Survey 2012“: Read Part 1 on CIO priorities for 2012 and 2013. Follow me on Twitter @SAPSpotlight or connect to LinkedIn.

Your View matters: What is your experience and perspective on TCO benchmarking? I would like to know what are your thoughts.