Compugen launches cost-cutting practice

Systems integrator Compugen Services Ltd. is banking on a tough ecomomy and increasing complexity to convince companies to give one of the oldest concepts in IT management a second look.

Richmond Hill, Ont.-based Compugen launched its new total cost of ownwership (TCO) practice on Tuesday, designed to give cash-strapped Canadian enterprises a better handle on their IT lifecycle costs.

In fact, the company says it’s confident it can shave 10 per cent off a company’s total IT TCO.

Coined by Stamford, Conn.-based research firm Gartner Inc. in the 80s, TCO is a methodology designed to help businesses track the total cost their various IT assets accrue from the time of purchase to their retirement dates. According to Gartner research, only 20 per cent of the cost of IT hardware comprises the actual up-front purchase price – the remainder is spent dealing with a variety of user and application issues, and downtime.

“The idea is to help give them a framework to help measure that 80 per cent,” said Maarten Verharr, director of Compugen’s TCO practice.

As a member of the Gartner Group TCO Alliance Program with more than 20 certified TCO experts, Compugen says it is now able to help clients reduce the cost of their IT systems. “It’s not a magic bullet – it entails looking at the technology, people and processes.” Verharr said. “Because IT is so complex, (it helps) you prioritize whre you spend your dollars.”

Analysts say large companies can reduce their annual cost of ownership by hundreds of dollars per machine, or by as much as 25 per cent during a machine’s lifetime, through a rigorous TCO management program.

“TCO is hard to measure, but there are savings possible,” said Roger Kay, an analyst at IDC in Framingham, Mass. “If the number of client machines gets big in the thousands then it is valuable for enterprises to look at TCO.”

But teaching corporations to look beyond the initial purchase price and consider other TCO factors is arduous, said Mark Margevicius, an analyst at Gartner Inc. in Stamford, Conn. “Reducing TCO is like getting religion,” he said.

Verharr admitted some managers can be “skeptical” when it comes to the notion of attacking the soft costs of IT by refining policies and procedures. “Understanding IT complexity and how the costs are inter-related, that’s a big thing to get your head around.”

But he added that several early Compugen customers that have already undergone the TCO process have been pleased with the results.

Compugen’s TCO practice consists of three separate services ranging in complexity – Snapshot, Basline and Benchmark.

(With files from IDG News Service)

Compugen Services Ltd. in Richmond Hill, Ont., is at

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