Companies' TCO Hinges On App Use

Total cost of ownership measurement aims to reveal the true cost of operating software and hardware during their life cycles. Like any metric, its value is dependent upon the quality, as well as the scope, of the data being captured. One way large companies might realize significant reductions in desktop application costs is by incorporating application utilization rates into a TCO calculation.

While TCO has evolved into a comprehensive metric that can include application procurement, training, maintenance and support, companies might have been hard-pressed to determine which users were using what application what percentage of the time. In the past, there was no scalable, automated way to track utilization. An IT manager could have hired someone to do nothing but survey employees about which applications they use and how often, but that's impractical.

Now several vendors, including Scalable Software in Houston, offer applications that track usage of desktop applications. Scalable's app can generate reports that break out for any given time frame which applications an employee uses most. Armed with such data, decision makers can reallocate existing licenses and, the company says, hold down TCO.

Say the need to deploy applications on desktops where they might not be installed arises out of internal job shifts or new hires coming into the company. The customary response is to buy new licenses from the vendor, driving up TCO. But seat licenses for the required application may exist on systems whose users have never opened the application. Since software licensing is tied to PCs, not people, an IT manager can simply move the application from the nonuser's system and reinstall it where needed.

Think of TCO reductions in terms of application supply and demand. In not accurately measuring demand, companies often oversupply software, inflating both up-front capital costs and service contracts where the cost of those contracts is volume-dependent. Reducing software ownership reduces TCO. Despite this clear cause and effect, Gartner Group estimates that less than 10 percent of its clients pursue TCO improvements through utilization tracking.

Measuring utilization might drive TCO reductions in another way. DaWane Wanek, director of North American sales at Scalable Software, recalls a visit with the technology chief of a Wall Street firm with more than 390,000 Microsoft Office Professional licenses. He says the CTO knew intuitively that at least 80 percent of his employees never used Access. The prospect hadn't even deployed Scalable's product yet, but by virtue of the sales pitch, the CTO called Microsoft and negotiated a substantial discount to reflect the unused copies of Access. Scalable is now in beta with the prospect, who is surely excited by the idea of leveraging the company's enormous buying power with other vendors now that the company is in possession of precise software utilization data.

Tracking TCO can have a wonderful impact on IT investment decisions, as long as the metric includes data about which applications are really used and which are collecting digital dust.

John Berry is an IT management consultant and writer based in Bend, Ore. He can be reached at jb@empnet.com