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 Benchmarking Your Global IT Enterprise
By Mike Shott, Managing Consultant , Alsbridge, Inc.
Internal IT departments often have cost structures very dissimilar to current or typical market pricing packages. Outsourcing providers package services in infrastructure "towers" that are typically separated between mainframe services, server management, storage area network (SAN) support, network management (voice and data), help desk and applications development and labor categories*.
At one extreme, budgets for an IT enterprise may be no more than a single column of costs in support of all aspects of IT, applications and infrastructure services combined. Sometimes it is broken into two groups of cost: infrastructure services and applications, but rarely is it broken into the noted infrastructure "towers" that may be compared to outsourcing providers' services. It is integral to know where you are coming from to understand where you need to go. Cost segmentation is integral to the benchmarking process. DO NOT underestimate the comprehensive effort placing your existing costs into market comparable "buckets."
Taking the cost segmentation to the next level, be prepared to go to a low level of detail to separate some costs from an existing cost or price so that the cost elements of the services are packaged similarly to the current market price packaging. For example, mainframe, help desk and email services typically include all components of cost, labor, hardware, software, facilities, etc. which typically allows for a relatively straight forward comparison. Server and desktop support typically does not include hardware and software costs, making it necessary to understand the details of the hardware and software cost categories. The network tower is the most complicated when costs are broken into many different buckets of labor support, hardware, carrier costs, and dozens of market buckets.
This process can all be complicated even more when your IT enterprise spans the globe and is delivered, budgeted, or sourced differently across the overall support base. You may have to dig through IT support costs in IT budgets that may have completely different cost elements from a home office version. Sourcing agreements that make up some or all of your IT costs may also be packaged and priced differently. Additionally, as you move further away from large centralized IT groups, there may be costs that are buried in the "business" and not part of the IT budgets. This "shadow IT" cost often builds itself out of necessity for support because support is not available for one reason or another.
IT services and associated costs/prices are never the same, both in terms of packaging as well as per infrastructure tower. You should also ensure that the deliverables of the market analysis will provide you with the information you expect to gain from this exercise. Always make sure that what is included in the analysis output is clear. This should include the standard and any custom deliverables required for your analysis. Be clear what portions of the overall budget or price can be analyzed. Some of the typical discussions and expectations are around items such as hardware or transition costs. Questions like "why can't you benchmark my desktop hardware prices or is my transition charge a good price" are common. Server and desktop hardware and software can vary greatly from your IT requirements to those of another company. There can be different brands, types, sizes, configurations, Intel or UNIX, desktops or laptops, etc. Your hardware and software costs will be different for all of a mix of these reasons.
There will also be the issue of whether the hardware is new, fully depreciated, leased for different terms and a mix of all of the above. Software can be part of an IT enterprise agreement with major vendors like Microsoft that includes server, desktop and tools. Software requirements and costs will be different from client to client and may not be easily broken into the various towers of costs. Many IT service centers will retain these costs as there is often little value for the vendor to assume existing costs and then have to chargeback with a markup. If they are included in the overall costs, most outsourcing vendors will package support of these service towers separately from hardware/software.
It is very important to make sure you understand the current budget format and availability of information as you enter discussions on any market analysis. At many large companies with global IT support, often the budgets in the headquarters' locations are in order, but many field offices and remote locations will be at the other end of the spectrum. In many cases, it may require multiple months to build an internal cost or price model that is comparable to current market prices for a global organization. This ultimately affects not only the total cost to a client for a project like this, but will also affect the schedule of the market price analysis effort.
* Outsourcing Service Towers - Mainframe Services - Mainframe services include the hardware software and labor to provide computer processing, storage, and print services. Offshore labor may be used for Remote Infrastructure Management (RIM).
- Server Management - Server management services include the hosting facilities, operating system software, management tools, and labor to keep applications server running. Typically, the server hardware is retained by the customer organization. Offshore labor may be used for RIM.
- Desktop - Desktop services include hardware, printers, file and print servers, management tools, software, labor, local area network (LAN), and maintenance agreements in support of the desktop and laptop environment. Additionally, blackberries and other peripheral devices are supported under the desktop function. Offshore labor may be used for RIM.
- Storage Area Network - Storage Area Network (SAN) services provide the hardware, software management tools, facilities, and labor for storage shared by servers and mainframe computers over the network. Storage levels include RAID 1 and Raid 5 hardware. Offshore labor may be used for RIM.
- Network Management - Network management provides the hardware, facilities, software management tools, and labor to monitor routers and other network devices. Network management can be provided either onshore or offshore.
- Service Desk - Service desk services include the hardware, facilities, problem management software tools, and labor for providing end user problem management for IT services. Centralized service desk operations are provided in both onshore and offshore locations.
- Applications Development and Maintenance Labor Rates - Applications Development and Maintenance (ADM) labor rates include facilities, computing services and labor to write code for software applications and updates to software. ADM services are provided at onshore and offshore locations.
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