Friday, July 28, 2006

TCO: A Case Study

Some time ago, a fortune 500 company acquired another fortune 500 company. At the time, the acquiring company was a PeopleSoft shop for payroll and HRIS. The acquired company had been outsourcing payroll and accessed a hosted HRIS system for their HR needs. Both companies were roughly the same size and a decision needed to be made: how should the combined company process payroll and what should be the combined company’s HRIS?

Tuesday, July 18, 2006

An Introduction to TCO

Earlier this week, Elaine commented on my article from last week How Much Can Outsourcing Really Save. Elaine writes:

“Frankly, there are so many articles published stating different outcome of offshoring and outsourcing ventures. More often than not, people are confused on which side to believe in and which is telling the truth or lying.”

Elaine is, of course, correct in the sense that the savings that can be derived from outsourcing will be debated forever. Although, I would maintain that no one is actually lying. It all depends on how you count the beans.

It is for this reason that I believe that the Total Cost of Ownership (TCO) model is the most effective at determining the cost impact of changing any administrative environment. Today, I’d like to introduce the concepts around TCO.

Tuesday, July 11, 2006

How Much Can Outsourcing Really Save?

I set this article aside some time ago with the intention of commenting on it at some point. Now is as good a time as any.

The story, “Survey: Outsourcing saves less than claimed” is based on a survey conducted by TPI. The gist of the story is summed up in the lead:

“Outsourcing of information technology and business services delivers average cost savings of 15 percent, a survey found on Thursday, disproving market claims that outsourcing can reduce costs by more than 60 percent.”