Killian and Lynn Koller are associated with Brintech, www.brintech.com
bank devotes extensive resources to its computer network-both in human
wherewithal and hard cash. The upfront costs can be high, and veiled costs
compound the burden. Ultimately, an invisible price tag hangs from a computer
network. Total cost of ownership (TCO) is a model that helps systems managers
understand and handle the budgeted and unbudgeted costs of an IT component
throughout its lifecycle.
lifecycle of a network occurs in five stages:
The IT department evaluates needs, industry standards, and current technology.
This phase involves acquisition, configuration, and distribution services,
as well as asset management.
The system is installed, and the project continually managed. Training
and support plans are established.
Help desk services, maintenance support, and disaster recovery plans
At some point (often too soon), hardware and software becomes outdated,
and needs upgrades.
expenses of a network comprise only 19% of the total cost. The remaining
81% can sneak up on bank management, often unaware of some subtle TCO
Budgeted costs are usually two-fold. They primarily consist of expenditures
directly related to computing, like hardware and software. The second
component of direct costs is labor, including Help Desk and technical
management should budget for costs of all IS professionals directly managing
and supporting the network, in addition to outsourced management and maintenance
fees. On the support end, costs can be broken into Operations labor, Operations
fees, and Help Desk. Operations labor includes management and administrative
assistance needed for support. Casual learning and formal training of
technical staff are factors, in addition to end-user training performed
by the IS staff. There are also cost factors associated with travel and
create and require extensive communications capabilities. These include
remote access server fees, WAN costs allocated to the client/server systems,
communication lines and device fees, and Internet service provider charges.
All of these fees are included in budgeted costs.
The more elusive figures fall under the unbudgeted category. These include
non-productive end-user time, troubleshooting, other IT tasks, and system
downtime. Support and training make the system work for users, and the
price of those services must be factored into the TCO. Management must
calculate peer and self-support from the IS department. There are also
costs related to casual learning, CBT, manuals, and online help. End user
training can cause downtime and lost productivity.
expenses often add enormously to the TCO. And, without understanding precisely
what the costs arise from, bank management cannot control them. Fortunately,
there is a way for Management to keep expenses in check. Knowledge establishes
control. Awareness of the root causes for network expenditures gives Management
and IT personnel the power to evaluate unacceptable conditions and change
Ways to Control the TCO
1. Standardize hardware and software purchases. Fewer technology
platforms mean lower costs. Defining standards takes only upfront time,
with periodic evaluations. As components wear out and become outdated,
replace them uniformly across the organization. Upholding policies becomes
the test. In the end, the strongest policy will fail without actions to
enforce it. Defined standards will help the bank establish training requirements
and reduce the costs of hardware upgrades.
Inventory all hardware and software. The network administrator needs
to know the bank's computing environment for efficient decision-making.
The information should be readily available to key people, and easily
accessible in each department. The bank can improve its resource management
practices by keeping a current catalog of hardware and software.
Reduce opportunities for trouble. Implementing explicit policies and
profiles helps prevent users from delving into areas better left unexplored,
and protects the integrity of the system. High security levels can:
users from accidentally deleting critical files
users out of the Control Panel and the registry
virus protection software updated
users from installing unapproved software
an efficient Help Desk support system. Users will always need some
technical support. Insufficient support is a leading complaint among computer
users in banks and elsewhere. An efficient Help Desk will reduce the TCO
and frustration at the same time. Some ways to facilitate efficiency are
a single phone number for all end users.
lower-level technicians or a call coordinator answer the Help Desk calls.
Help Desk software. (The benefits of a well-run Help Desk will spread
throughout the operation.)
all calls and solutions using specialized software.
action on trouble PCs or end users. o Set minimum SLA levels for technicians.
system management technologies. Banks can use technology to help manage
technology. Implementing specialized products can help manage a network
structure, including remote troubleshooting, application software distribution,
and hardware and software inventories (asset management and software version
control). Protocol analyzers can be employed to find chatty NICs and busy
LAN segments. These watchdog products can isolate problems and inefficiencies
early-long before the situation becomes detectable to the bank. This can
save the bank enormous costs over the long term.
6. Minimize upgrades. Hardware and software upgrades are expensive.
The bank can more cheaply purchase the power it needs upfront. Surprisingly,
upgrading hardware and software often costs more than the initial purchase.
Another tactic for controlling costs is to maintain software version control,
and run only one version of software at a time.
Maintain a dependable infrastructure. A strong infrastructure is the
foundation for a successful network. A weak structure causes problems
that can affect large groups of people-not only individual users. The
system should maintain ample bandwidth to key resources for high availability.
Software is available to continually update network administrators of
strains on the system.
Achieve total management support. TCO affects the entire operation,
making bank management's support of network decisions critical. Departmental
managers need ownership of a piece of TCO. The bank benefits by everyone
feeling invested in the system, and taking responsibility for making it
work. Since users are an integral part of a network, their buy-in is crucial.
Users' enthusiasm about the benefits of network improvements can actually
lower the TCO, through less downtime, faster learning, and more peer support.
Spread knowledge. The efficiency of the system increases proportionately
with the training level of the staff. Users need education to learn how
to make the most of the hardware and software that forms the network.
Users should be encouraged to understand the network environment, directory
structures, printing options, etc. The bank can maintain books, CBTs,
and videos for reference and training.
Treat TCO as an ongoing issue. Reducing the TCO is not the goal in
itself, but rather a catalyst for environmental improvements. As technology
develops, the bank must adjust TCO methods to maximize cost reduction.
Management can delegate part of the job of continually addressing TCO
issues to someone in the bank with the knowledge and resources to curtail
problems before they cost the bank money.
Tools Can Help?
There are many tools that network managers can use to control and manage
the TCO. Some specific products are:
Microsoft Systems Management Server
Novell Managewise or Z.E.N. Works
NT Terminal Server/Citrix Metaframe
analyzers like Microsoft Network Monitor, Novell Lanalyzer, and Network
Associates Sniffer Pro (same product new name)
updated virus protection software
A Bank's Current TCO
Networks around the country run the gamut from virtually worthless to
very cost-efficient systems. IT components are continually being purchased
and replaced. There is no single panacea for developing a successful network.
A bank must evaluate its current standing before it can improve its TCO.
Measuring TCO is a critical step in understanding the business value of
IT projects. Bank management can ask some questions to help determine
the current TCO status.
purchasing new technology affect the TCO?
best practices will lower the TCO?
- Are there
hidden costs involved?
- Are staffing
- Is the
bank making the right investments?
Each bank will take a unique approach to improving its TCO. Management
can start by setting TCO target goals, and then determining the activities
that will produce the greatest results. A TCO project thrives best under
the leadership of someone with a technological background who is unafraid
of change and innovation. The bank's technology steering committee can
become involved, and assist in developing a strong project plan. The networking
environment is sure to change during such a project, and everyone in the
bank should be prepared for some level of evolution.
TCO to Industry Standards
Network managers should compare their situation to the best practice environment,
average costs, and industry standards. Assigned technical personnel can
work to evaluate whether new trends and products justify their costs in
managing the TCO. Finally, managers should compare:
TCO to a typical TCO
to previous actual TCO
TCO to target TCO
will paint a clearer picture of a bank's standing, and way to position
itself at the pinnacle of cost-efficiency.
In the case
of TCO, success is more like a long road than a destination. The project
plan helps charter the territory, and the project people need to repeatedly
review the map to insure that the bank stays on track. Technology provides
the fuel to propel the bank on a successful journey.
should measure the TCO about every six months or as necessary. Management
should compare these periodic TCO calculations to the bank's target goals
and historical data. The bank will clearly strive for continual improvement,
and the fast pace of technological developments means that ongoing improvement
is often possible.
Finally . . .
cost of network ownership eludes a boilerplate formula. Along with other
developments anchored in bits and bytes, computer networks offer something
almost ethereal to financial institutions. They provide a structure for
work processes and communication that can change in tandem with the growing
requirements of the organization. Of course the network should be cost-effective.
Knowledge will provide the control necessary to reduce hidden costs and
maximize the bank's investment in its network.
Brintech Director of Network Services, has designed, implemented, and
managed systems projects in national corporations. These projects included
network designs, network troubleshooting, groupware and e-mail migrations,
and help desk designs.
He has also
managed large-scale multivendor integration projects, involving data migration
from Netware to Windows NT, while maintaining UNIX and SNA connectivity.
Brian is experienced in facilitating the migration of large firms' outdated
software to Windows 95 and Windows NT Workstation. Using platforms including
Windows NT, Novell Netware, SUN Solaris, IBM AS/400 and IBM mainframes,
he provided onsite Level 3 support for national firms in multi-platform
environments. Brian has also conducted international training tours for
NEC's Server division. In these seminars, he trained systems engineers
in high-end server hardware, configuration, and troubleshooting.
is a Microsoft Certified Systems Engineer, Certified Netware Engineer,
Microsoft Certified Trainer, Cisco Certified Network Associate, and a
Citrix Certified Administrator.
is a writer for Brintech, a technology management firm based in New Smyrna
Beach, Florida. Brintech serves clients across the country, helping them
find ways to profit from their technology investments. Lynn reports on
general technology issues like Internet trends, e-commerce, and network
design for business publications. Before joining Brintech, she worked
in the legal field, and designed and taught computer classes at the college
level. Through Stetson University and a community college, she instructed
DOT and other government employees about the use of the Internet and various
a B.A. degree from the University of Central Florida in Orlando, Florida.
She is just inches away from her Master of Arts degree in writing.
more information on Brintech go to their website: www.brintech.com or