Your Investment in BSM - Guidelines to CIOs

| No Comments | No TrackBacks

The overall investment associated with implementing and maintaining BSM can be significant. A 1:4 ratio between product investment and the corresponding investment in related services is not uncommon. In other words, an initial $2M in licensing BSM products might easily baloon to $10M in lifecycle costs.

I offer the following rule-of-a-thumb guidelines to assessing whether the price quoted by a vendor for a BSM initiative is right:

  1. Standard maintenance costs: Insist on a 1:1 ratio between license and standard maintenance over a 5 year period. If standard maintenance costs over this period exceed the corresponding license costs, chances are the vendor's software accrued a non-negligible amount of technical debt. Ask the vendor to quantify the technical debt in monetary terms. Click here for an example how to conduct such quantification.

  2. Premium customer support costs: Certain premium customer support services could be quite appropriate for your business parameters. However, various "premium services" could actually address deficits or defects in the BSM products you license. If the technical debt figure is high, the vendor your are considering might not be able to afford the software he is developing. Under such circumstances, "premium services" could simply be a vehicle the vendor uses to amortize software development costs.

  3. Professional services costs: Something is wrong if the costs of professional services exceed licensing cost. Either the BSM product suite you are considering is not a good fit for your business circumstance or your BSM initiative is overly ambitious.

To summarize, the grand total of license fees, customer support fees and professional services fees over a 5 year period should not be higher than 3X license fees. Something is out of balance if you are staring at  a 4:1 or 5:1 ratio for your BSM initiative.

One final point: please do not forget End-of-Llife costs. Successful BSM initiatives can be very sticky.

No TrackBacks

TrackBack URL: http://www.bsmreview.com/cgi-bin/mt/mt-t.cgi/6

Leave a comment

   

Type the characters you see in the picture above.

About this Entry

This page contains a single entry by Israel Gat published on October 18, 2009 10:53 AM.

Richard Ptak on the impact of Business Service Management on Data Center Performance was the previous entry in this blog.

Tom Bishop: How to Spell BSM is the next entry in this blog.

Find recent content on the main index or look in the archives to find all content.

Pages