Fooled again

You must, at some stage, have nodded your head in agreement at something which seemed so obviously right, only to find out much later that some of the assumptions were slightly buggered? I know I have, especially with the confusion which is IT investment cost-benefits analysis.

You know, we're told it's simply a matter of applying economic value-added analysis (EVA) (or some such) to software and hardware investment and hey presto, out pops a neat net benefits dollar figure which accounts for the cost of capital. Tell that to Alex Alexander, the Melbourne-based contractor and project manager who laments the advent of Bean Counter Fever in his column on page 18. On this page last week, Bob Lewis took a swipe at Gartner's total cost of ownership calculations (TCO), showing how you could use the method to figure the ludicrous TCO amount of $US5000 per year or $US25,420 over five years for a ‘run-of the mill' day planner.

This week I stumbled across InfoWorld Test Centre analyst Jeff Angus arguing that deploying packaged enterprise software applications instead of building your own may not be such an obvious must-do investment after all. Angus reckons the hidden costs of such packaged apps are "coming back to haunt many companies that implemented them too hastily".

He unveils his OUCH (Overwhelming Unforeseen Cost Headaches) five-layer model of potential hidden costs to your packaged software deployment project. Layers include upgrades to hardware and operating systems to handle the new program code, ongoing training and technical support, and culminate in ‘Layer V: the death spiral' where the ‘festering', agenda-filled reality of internal politics can derail major enterprise app rollouts.

I'm hardly suggesting that IT spend should sidestep economic scrutiny, but why do all the previously right answers often seem wrong? Clear as mud. I'd love to hear your reckoning on the IT spend.

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