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Eating the Total Cost of Support Elephant – Part 1

by Rob Addy  |  April 6, 2012  |  5 Comments

I had a call last week with an organization that is spending 20 times as much as the support premium they are paying to their software provider for a full-time team of 18 sub-contractors to operate and manage the solution on a day to day basis. This 2000% cost uplift isn’t intended to cover incremental enhancements and customizations. They have a separate sub-contract team of 7 with a separate budget to cover this. Naturally, I was horrified. I know that I shouldn’t have been, but I was. Why? Because this wasn’t an ERP solution… Someone had applied a bloated ERP staffing plan to a relatively straightforward client server application with half a dozen or so integration points. Total and utter madness. A call to a friend and ex-colleague who acts as a the solution architect for this particular software platform within a well respected managed service provider reinforced my view when I found out that their set-up was of a comparable size (by the number application instances), serviced over 45 times as many end users and had over 20 times as many integration points. How many people are on his team? 6 (including him). Yes, just half a dozen system administrators / developers. And that team is required to perform all incremental enhancements and ongoing configuration too!

So this got me thinking. Did the software provider know that their customer was spending this amount to support their solution? Maybe. Maybe not. I’m guessing not. But you never can tell… But if they did know (and alas I cannot tell them due to client confidentiality), what would they do about it? Would they do anything at all?

Reducing the cost of IT Operations associated with running a technology product is a significant opportunity for support providers to demonstrate and deliver real and tangible business value.

I have been using the following graphic for the past 3 years within Gartner. It’s not great, but it’s ok. It shows many of the costs associated with product support usage and support failures. It was designed to get people thinking beyond the support premium and so in this regard I think it works. It needs a revamp. I’ll add it to my “To do” list.

Yes, it’s a visual cliche. But cliches exist because they work…

You can see that the “In-house Support Team” is on there. And so are a lot of other things too! Previously, I had worked on an assumption (which I now believe to be incorrect) that the Total Cost of Support would typically equate to no more than 4 or 5 times the annual support subscription (Note: I originally referenced this in the first version of the Maturity Scale – see “Market Insight: Introducing the Gartner Product Support Maturity Scale” for details). Naturally, I had always stated that there will be a significant range to account for different software solution types and the degree of configurability associated with them as well as variances within customer process and governance maturities . But it now seems that I may have been wildly underestimating these costs. And if I was, surely this represents an absolutely massive opportunity for the support industry to shine!

The Total Cost of Support (TCoS) has many components…

Say “Hello” to The Total Cost of Support Elephant… Let’s call him “Nigel”

As you can see there are plenty of opportunities to help customers to eat this particular elephant. Nigel has a weight problem. But don’t worry. We can put Nigel on a strict diet and exercise regime to help him lose a few hundred pounds (or maybe even a few hundred thousand dollars of operational costs per year). Here are a dozen questions to ask yourself about how you could materially affect your customer’s internal support cost model to get the ball rolling:

  • Do you assess the level of IT process maturity of your customers so that you can understand their operational risk profile and the likely inbound transactional volume you can expect from them? If not, why not?
  • Have you developed educational road maps for your customer’s so that they can plan the career development of their staff that support your solution? If not, why not?
  • Do you work closely with your customers to develop customized individual development and training plans for their key staff? If not, why not?
  • Do you give your customers guidance on the optimal internal support team (in terms of sizing and team structure / skills) needed to support your solution? If not, why not?
  • Have you defined job description templates that describe the roles and associated responsibilities to maintain and enhance your solution set? If not, why not?
  • Do you evaluate the competence of your customer’s internal delivery teams and provide them with recommendations on who to promote / fire / educate? If not, why not?
  • Do you participate within succession planning processes with your customers? If not, why not?
  • Do you help your customers to recruit personnel to support and maintain your solutions e.g. example interiew questions, skills and experience profile pre-requisites, interview panel participation etc? If not, why not?
  • Do you monitor the activities of your customers internal operations functions to see how well they are maintaining your solution? If not, why not?
  • Have you defined the routine operational tasks that should be completed (along with the associated frequencies and detailed descriptions of the activities that need to be undertaken) to maintain your product correctly? If not, why not?
  • Do you reach out to customers who are not performing the housekeeping activities necessary to assure system performance and availability and let them know of the potential risks they are exposing themselves to? If not, why not?
  • Are you actively investing in automated tools or product enhancements to remove the need for you customers to do as much routine housekeeping and maintenance activity themselves? If not, why not?

Internal operations “bloat” is inevitable if you, as the support provider, fail to give your customer a framework of realism to work within. Something will always fill the information vacuum. And it will probably be based on out-dated conventional wisdom that promotes over specialization, functional siloes and staff intensive control models. Internal tribal politics and historical project precedents will almost always act to increase the size of an internal support team. But that trend can (and probably should) be reversed. By helping your customers to help Nigel to lose weight you will demonstrate your commitment to their business success as well as showing them that you understand the business context within which you  and they operate. But more than that, you will have earned the right to suggest that they perhaps offset some of their savings against higher value support offerings or additional product. Who knows, maybe you can even demonstrate how upgrading their support level they can save them even more…

And remember. We’re not talking peanuts; we’re talking cold hard cash!


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Category: support-strategy  support-value  

Tags: processes-and-methodologies  support-value-chain  tcos  total-cost-of-support  trkfam  value-proposition  

Rob Addy
Research Vice President
5 years at Gartner
More years than I care to remember in the IT industry

Welcome to my blog! I post about all things services related from the provider perspective. End-users are welcome to read but please be aware that you may sometimes find its content unsettling. I will endeavour to post frequently (as it's a lot cheaper than a therapist) but please forgive me if other more mundane activities occasionally get in the way...Read my official Gartner bio here

Thoughts on Eating the Total Cost of Support Elephant – Part 1

  1. David Whelan says:

    This is really useful. I inherited a project and team that had been similarly over-architected, creating a complicated set of servers that took advantage of the software’s known tendency to break. The software provider wrote a textbook describing far simpler methods of implementing their system – which we’re moving towards – but their professional services team chose the most complicated. The provider may have been hamstrung – or took at face value – the IT team’s requirements, where a bit more inquiry would have created a more realistic picture, or enabled them to use their expertise more effectively.

    As a customer, I would appreciate the pro-active approach (housekeeping, operational support, letting us know what we could be doing better) rather than the sales pitch approach that tends to ignore the service issues we’re experiencing. Thanks for the great list of questions, which our team can ask ourselves when our software providers don’t ask them for us!

  2. Pearl Zhu says:

    Hi, Rob, comprehensive thought provoke list, I would say, beyond reviewing the components of IT operations/service as each piece of elephant you put there, we may also see effectiveness/efficiency from EA/EITA angle, as to cut elephant in half will not make two live elephant, holistically IT need be more agile/elastic, thanks

  3. Rob Addy says:

    @David – Glad that you found the posting useful 🙂 I think that the implementation consulting divisions of some software providers (along with some of their Systems Integrator partners) cannot always resist their inherent urge to use faux complexity to help sell copiuous numbers of mandays ahead of satisfying their customer’s real requirements for simplicity and ease of ongoing maintenance. It is therefore essential that all organizations do the due diligence necessary to know what they want and how to scope their deployment project appropriately.

    @Pearl – Many thanks for your comments. I agree that there are many options for improving the current situation. Something tells me that isn’t the last time that we will see Nigel. He has the potential to loose a few hundred kilos at the very least. And if he does manage to slim down, he will be able to be far more nimble than he could ever be now. I also agree that sacrificing Nigel in the name of science would be morally wrong. In light of this, I fully expect us to take some time to metaphorically dissect him piece by piece over the coming weeks and months…

    Many thanks to you both. Rob

  4. MR says:

    When is Part 2 coming out?

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