Many, especially in large companies, are wondering: “how much is spent on this or that IT system?”. The question is quite interesting, and the answer to it is not always simple. Difficulties are caused both by the uneasy cost structure and the maintenance of complex changes affecting many IT systems.

We also set out to calculate exactly how much money for which IT system goes.

Formulation of the problem

Our main task was to determine how much money a company spends on each IT system. In other words, we tried to calculate TCO (total cost of ownership) by correlating all IT costs of a company with IT systems (what we mean by IT systems can be found in this article ). Only the expenses of the Information Technology Department participated in the calculations, while the costs of AHD, rent and payroll expenses were not taken into account in the calculations (there is a desire to include them, but next time).
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Analysis of the current state

The first stage is the analysis of the current state: how the IT costs are paid, what conclusions we can draw from this and how to use them in the future.

The analysis showed that the payment documents do not contain accurate data on the system used for payment. By some indirect indications, individual payments could be matched with a specific system, but a single approach could not be built. To correlate payments with business tasks was not at all possible. In most cases, the payment was made for the work of the team over a period of time. As an example, in many systems that use release delivery, the final payment documents are set for the entire release, rather than for each release task.

The second, no less important question: is it possible to build statistics on the life cycles of a task or project? Unfortunately, the adopted budgeting system did not imply accurate management of life cycle costs. Those. this idea was also abandoned at the first stage.

All of the above concerns consulting expenses. And the bulk of the costs associated with the infrastructure, it was not possible to spread across IT systems. The fact is that the majority of activities related to the purchase of equipment and work in the data center, conducted a single total amount. Those. colleagues from the Department of Infrastructure Operations collected all the needs into one more activity and spent their expenses within the framework of infrastructure activities.

Company's budgeting system

Now we need to tell a little about the structure of the company's budget.

The company's budget is divided into the following categories:

1. Directorate to which the budget belongs.
2. The line of activity to which the costs relate is financial position (for example, project consulting, telephone subscription fees, lease of main communication channels, etc.).
3. A project is a combination of costs into some big activity.

Budget cuts

In the sections described above, the initial budget is distributed, which is given to the Directorate. Then documents with payments to contractors begin to be carried out - they list the materials supplied and services rendered, contract numbers and counterparty numbers.

In general, we have a planned budget in the context of: management, financial position and project. The actual budget in the context of: management, financial position, project, supplier, contract and material.

Forming an approach to the allocation of costs to IT systems

To solve all the problems described above, we have developed a system for assigning payments to IT systems. It is based on the methodology described below.

At the first stage, we decided to divide the allocation of costs to IT systems in accordance with the direction of activity. For this, all directions were divided into groups:

1. Consulting costs for IT systems: costs associated with supporting or making changes to IT systems.
2. Infrastructure costs.
3. Other expenses.

IT consulting costs

Here we have adopted this approach:

1. For the old consumption, i.e. expense for the last year, we analyzed each payment separately and determined the percentage of how it relates to a particular IT system of the company. The work was not so big, it was necessary to see only a few hundred payments, it took several weeks.
2. For new expenses, we have obliged every manager to indicate the IT system to which the payment relates when paying. If the payment relates to several systems, then it is necessary either to divide the amount by these systems, or indicate the proportion of each IT system in the total amount of payment.

Infrastructure costs

Since, in most cases, infrastructure costs are taken into account in the framework of large activities, we did not try to relate each payment to the IT system. Instead, all infrastructure costs were attributed to infrastructure services (we have 26 of them). Next, we came up with a methodology for assigning the collected costs to IT systems in accordance with some metrics. For example, we attribute server costs according to the cores used by IT systems. Those. we calculate the total number of cores currently used by all IT systems, then we calculate how much we spent each year purchasing all the servers, and calculate the cost of one core. Next, we distribute all these costs for IT systems.

Approximately the same method was introduced for all other infrastructure services.
I agree the model is very rough, but taking into account the use of virtualization and frequent changes in the infrastructure, it is very difficult to come up with something more accurate and not requiring a large amount of forces to be taken into account.

The model is implemented as an Excel file, it records all parameters and distributes the costs related to infrastructure services across IT systems. In the vastness of Habr, I was surprised to find an article from a contractor who helped us with this methodology, which describes their view of our task.

other expenses

In the cost structure of the IT department, there were costs that were not directly related to IT systems, for example, team building activities. After some deliberation, these costs were excluded from the analysis. And the amounts there are small.

Automation

It takes a lot of time and effort to manually correlate expenses and reformat reports. Since our company has a budget reporting system, we have implemented the rules of distribution in it. And as soon as the ERP in the reporting system comes data on the payment, its data is automatically distributed to IT systems in accordance with the prescribed rules.

Some results. After implementing all of the above, we were able to distribute 94% of payments across IT systems and infrastructure services for 2018, and about 90% of payments for 2017.

Since the cost structure is more or less constant, it is not often necessary to start new rules, and it takes little to maintain the system. But we received not only the expected statistics, on which systems how much money we spend, which contractors on which systems work and which systems were affected in different projects. There were interesting "discoveries".

Results

After the implementation of the described methodology, we were able to distribute 94% of payments for 2018 and about 90% of payments for 2017 across IT systems and infrastructure services.

Since the cost structure is more or less constant, it is not often necessary to start new rules, and it takes little to maintain the system.

A reasonable question arises, why do we need this data? Thanks to them, we started the following activities:

1. Started working on category strategies for each IT system and vendor. That is, by finding out the cost structure, we can more accurately understand the distribution of costs for each supplier. This, in turn, allowed us to single out the total amount of work of each supplier in each system, and to start negotiations with suppliers on planned volumes for a year in order to get more favorable conditions. Since previously the total historical volume was not always clear, we held separate negotiations on each system, and each project could have its own conditions.
2. Having data on the costs of the systems, we began to introduce the life cycles of the systems and develop strategies for maintaining these cycles. For example, some of the systems in our IT landscape are already considered obsolete and are planned for decommissioning. But the model shows that we still spend quite a lot of money on them. On some systems, this was recognized as unwise and redistributed to other projects, and in some cases we decided to speed up migration projects.
   
3. A separate issue is the cost of support. Based on the model data, we found out the total cost of supporting systems: license fees and the cost of non-vendor support. Now we are developing strategies to optimize the cost of supporting part of the systems.
   

Another, albeit indirect, but still very interesting result was the creation of a budget report with a plan-fact analysis. Before the creation of the model, such reports existed, but they were scattered, and the set of analytics in them was very small. In automating the model in the reporting system, we created a report for the plan-fact analysis, which included the maximum set of analytics. Now managers can build the reports they need in a more convenient tool (this could have been done before, but the task was postponed each time as not a priority).

Development

At the moment we have two areas of development:

1. Creating a driver budget model for IT .
   
   In this area, we are creating a budget model DIT, which will allow you to receive a planned annual budget based on the input of IT drivers. We will also be able to protect and adjust the budget on the basis of changes and viewing of drivers, and not only on the basis of expenses. The project is now in the active stage, according to its results I also plan to write an article.
2. Creating a unified methodology for the management of IT assets .
   
   One of the main problems of correlating the cost of IT infrastructure with IT systems in our company is the lack of a unified database of IT assets and a complete map of IT assets and IT systems (besides, there are methodological differences of what IT means) . Now we are planning to start a large project, within the framework of which we will conduct a complete inventory of the infrastructure, as well as work out methodological issues of maintaining and accounting IT assets. I would like to tell about this project, but there are doubts that this will be interesting to many, because the topic is very highly specialized.