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Required Slide. SESSION CODE: ARC307. Top 10 Hidden IT Costs and How to Avoid Them. Name Karen Forster Title Vice President Platform Vision TOP 10 HIDDEN IT COSTS. And How to Avoid Them. IT Decisions Have Consequences. Unintended Consequences.

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top 10 hidden it costs and how to avoid them
Required Slide


Top 10 Hidden IT Costs and How to Avoid Them

Name Karen Forster

Title Vice President

Platform Vision

top 10 hidden it costs


And How to Avoid Them

how to avoid unintended consequences
How to Avoid Unintended Consequences?

An ArchitecturalPlatform Approach

make the most of what you have
Make the Most of What You Have

“In the absence of a formal technology life cycle, adoption of new technology creates overly heterogeneous computing environments. Over the past four decades, companies have accumulated heterogeneous environments from several technology genres. Today’s application portfolios are a mashup of technology genres . . . that require different tools, skills, and staff to maintain.”

--Application Modernization And Migration Trends In 2009/2010: Are You Leveraging, Or Missing, An Opportunity? by Forrester Consulting (November 2, 2009)

top 10 hidden costs
Top 10 Hidden Costs


hidden cost 1
Hidden Cost # 1

If you build/buy it, they will come.

how to avoid the deployment vs adoption cost
How to Avoid the Deployment vs. Adoption Cost
  • Integrate business need with value to users
  • Leverage existing solutions
  • Before building or buying, evaluate the costs of the solution throughout the IT stack. If a solution is deployed but not adopted, costs include:
    • Purchasing the solution itself
    • Continued loss of user productivity that the solution was meant to address
    • Wasted IT time in integrating and deploying the unadopted solution
    • Continued unmet business need that the solution is meant to fill
    • Wasted development time
    • Potential purchase of new hardware for the solution
    • New processes to support the solution
    • Security and compliance measures
hidden cost 3
Hidden Cost # 3

Does Your Network See Dead People?

Photo from
how to avoid hidden costs of directory management
How to Avoid Hidden Costs of Directory Management
    • Adhere to object lifecycle policies to separate the living from the dead
      • Creating user accounts and groups is easy
      • Enforce processes to get rid of them
      • Regularly verify that the rights are still in effect
        • Who should be in a group? Who owns each group? When is the group reprovisioned. Implement a business process: Thou shalt consolidate
    • Consolidate directories
      • Organizations have an average of 30+ user directories (including SAP, LDAP, Domino, AD)
      • It is easier to consolidate than implement a meta directory
    • Set up trusts: Thou shalt use the account directory
    • A large financial services company estimated that an entire administrator FTE could be redeployed within corporate IT by reducing the directory integration headaches and manual processes currently employed for Lotus Notes/Domino (Use one user account)
    • Use a third-party tool as a service on UNIX/Linux that lets you authenticate against AD
    • Meta directory services
      • Forefront Identity Manager (FIM) connectors that connect its meta directory to other directories.
  • Federation
  • Developers want to use AD but want to do schema changes; global infrastructure can be affected
    • ADLDS (renamed ADAM) lets you create an LDAP style directory that you can populate with AD and change any way you want. App model overlaid on AD that you can write to.
    • Use ADLDS/ADAM and pull a feed of just the attributes you need.
    • Cost = delay in implementation of app because you have to go through a lot of process to prevent problems. Next-gen AD goes one step further.
hidden cost 4
Hidden Cost # 4

The Cost of Spaghetti Code Is Nothing . . . Compared to a Spaghetti Platform

redundant infrastructure
Redundant Infrastructure



ramifications of redundancy
Ramifications of Redundancy

“Our portfolios are bloated with redundant technology. Redundancy keeps resurfacing in survey responses as an opportunity to exploit: 70% cited the need to eliminate obsolete languages, databases, and platforms.

Source: Application Modernization And Migration Trends In 2009/2010: Are You Leveraging, Or Missing, An Opportunity? by Forrester Consulting (November 2, 2009)

By making purchases independently of the IT organization, business units risk creating silos of applications and information, which will limit cross-function analysis, add complexity, and delay to corporate planning and execution of changes. Thus resulting in much higher costs and lesser returns

Source: Gartner

cost of redundancy
Cost of Redundancy
  • Unified Communications
    • A large enterprise will have 10 applications, representing an investment of $500,000 and requiring at least one full-time staff position to support those
    • Staff savings from consolidation can be $75,000 per year
    • Licensing avoidance will approximate $100,000 per year over 5 years.
    • (Source: “Achieving Cost and Resource Savings with Unified Communications,” by Marter Parker, Don Van Doren, March 2009)
  • Audio conferencing charges
    • Companies pay a service provider anywhere from $.02 - $.10 per minute for audio conferencing
    • On-premise, users can leverage VoIP and native bridging capabilities of OCS leaving only toll-free number access for external participants (internal participants and federated business do not even result in this charge) as remaining cost which is typically $.01 - $.03 per minute. 
    • 70% audio conferencing cost reduction is possible
how to avoid the hidden cost of redundant or isolated solutions
How to Avoid the Hidden Cost of Redundant or Isolated Solutions
  • Understand the cost of multiple solutions to the same problem
  • Before developing or buying new software
    • Perform an organization-wide inventory of standalone and third-party software and identify areas to consolidate
    • Find out if business units are trying to solve problems that are already addressed by existing software (e.g., BI) that they’re unaware of
hidden cost 6
Hidden Cost # 6

“I’ve looked at clouds from both sides now…”

–Joni Mitchell

i really don t know clouds at all joni mitchell
“I Really Don’t Know Clouds at All” – Joni Mitchell

cost of cloud repercussions
Cost of Cloud Repercussions
  • “How do you maintain that intellectual capital that enables the effective utilization of information technology, especially if you outsource IT and treat it like the electric bill?” –”A Hidden cost to cloud services; maintaining your IT edge,” by David Chernicoff(
  • We aren’t doing enough innovative work for the business. Wasted resources have an even darker side in the form of their opportunity cost; The opportunities were not pursued, because the resources needed were wasted on non-productive/less important work. Innovation suffers, and 76% of respondents want to reduce the time/effort/cost to add new functionality.Source: Application Modernization And Migration Trends In 2009/2010: Are You Leveraging, Or Missing, An Opportunity? by Forrester Consulting (November 2, 2009)
  • “Imagine the cost of a service outage from your cloud provider that takes an hour to fix. Imagine the cost if it's a day to fix,” (Reader comment at;brand-bridge On Chris Murphy’s article at
    • Northwestern Mutual Life estimates “that causing problems in the underwriting process costs $11,000 an hour in ost productivity, and problems that keep the field force from using their client management tools costs $25,00 an hour.”
how to avoid hidden costs of cloud solutions
How to Avoid Hidden Costs of Cloud Solutions
  • Assess the effort and time required to make your on-premise and cloud solutions coexist efficiently
    • For example: What will it take to integrate your on-premise and cloud directories?
    • Inventory third-party add-ons for desktop users and determine the cost of managing desktop integration
  • Determine whether you will need dedicated data storage to meet compliance requirements
  • Determine the cost of a retreat strategy in case the cloud solution doesn’t work out
  • Determine how much an outage would cost you
hidden cost 7
Hidden Cost # 7

The other side of the coin

how to avoid hidden costs of on premise vs cloud
How to Avoid Hidden Costs of On-Premise vs. Cloud
  • Consider hardware lifecycle costs
  • Gauge the impact of application lifecycle costs
  • Determine how much additional staffing on-premise IT requires
  • Datacenter heating, cooling, and power
  • Assess the agility and opportunity costs of on-premise IT
    • How fast can you ramp up your infrastructure to gain new business?
  • Look at your business’s seasonality and activity bursts
    • Does your solution remain idle except during peak periods?
hidden cost 9
Hidden Cost # 9

Are You Leveraging Your Enterprise Agreement (EA) Benefits?

hidden costs of not leveraging eas
Hidden Costs of Not Leveraging EAs
  • One company was wasting a huge amount of time rebuilding desktops.
    • The company's EA included free consulting time and imaging
  • Another company bought MS software piecemeal
    • The company’s EA would have provided a considerable discount for the purchases.
  • Microsoft often doesn’t clearly express the financial value of the EA in terms of cost and investment, so
    • Many companies don't consider:
      • In the first 3-year cycle of your EA, you’re paying for the license plus Service Agreement (SA)
      • In the second 3-year cycle, you’re paying just for the SA cost (maintenance)
      • Result: Companies don't amortize their EA over 6 years
hidden cost 10
Hidden Cost #10

Are You REALLY Reading Your EULAs?

hidden cost 933
Hidden Cost # 9

Skill Drain

failing to plan for future skills needs
Failing to Plan for Future Skills Needs

Between. . . 59% and 65% of respondents highlight fears about the current and future availability of skilled personnel. One respondent noted the difficulties in motivating new-development staff to do maintenance work. Other respondents noted that hiring industry-specific skills in combination with legacy skills was particularly troublesome. Whatever the current level of skills-supply in your region, retiring Baby Boomers will exacerbate skills shortages. Retirees who walk out the door with legacy application knowledge will create turmoil in the staffing marketplace. Practicing good workforce planning today may mitigate some of the adverse impact of skills shortages.

Source: Application Modernization And Migration Trends In 2009/2010: Are You Leveraging, Or Missing, An Opportunity? by Forrester Consulting (November 2, 2009)

how to avoid the hidden costs of skills drain
How to Avoid the Hidden Costs of Skills Drain
  • Application Modernization can eliminate dependency on obsolescent skills
  • Plan for technology additions that do not rely on rare or faddish skills and that integrate with existing skillsets
  • Cross train new and long-time employees
  • Document everything!
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