The TCO/ROI Scoping SweetSpot

If your IT costs are rising constantly on a wave of apparently critical legacy systems that you don’t know how to get rid of and nobody knows how to support, chances are you are missing the TCO/ROI sweetspot when scoping your business cases and projects.

Estimating how many users, servers, licenses, and features you need for the new shiny system you want to implement is relatively easy: just list all the things you need to get that up and running and stop there – but give me a few beers and I can rant for hours on why that is so horribly-not-at-all-and-under-any-circumstances true.

Just looking at your project may tell you something about what it will cost to get your system to work, but that is like figuring out what it costs to build a house without taking down the old one or moving the furniture. To make a proper business case, you need to look at the BIG picture and answer some of the hard questions like:

  • What can you retire when the new system is up?
  • How many years before the next major upgrade is due?
  • Is it realistic to expect everyone to be expert users from day one? Day 500?
  • Are you sure you have EVERYTHING in the project that’s needed to realize all the benefits you listed in your business case?

So to get a proper evaluation, you need to scope at least two aspects of your calculation and your project very carefully:


If you look at too few systems, it is easy to overlook dependencies and feature overlaps. You can make everything dandy within the project, but once you’re live all your benefits get hollowed out by a flotilla of annoying factors like:

  • Users having to use the old systems for single tasks so you can’t retire them
  • Data retention legislation so you can’t get rid of servers
  • Legacy license agreements that means you have to pay for the same feature twice even though you don’t use it anymore, and so on.

On the other hand, if you look at too many systems - as you’ll sometimes see when overzealous guys in my position want to get ALL it costs for all systems on day one – you’ll just drown in data, and you wont be able to deliver any meaningful answer to anything.

In my experience, your best bet here is to cluster systems into domains like HR, Finance, Productivity, and so on, with as clear a boundary as you can manage, so you have a fairly good overview without being hampered down by too much detail.

This is not easily done – and particularly not within a single project where most of the stakeholders on projects have vested interest in the outcome – so you’ll probably need some permanent non-project roles to define the domains and take the long-term TCO responsibility for this to work properly.


The main thing to remember here, is that you can’t disconnect the project timeline from the TCO timeline: If you listed a benefit in your business case, it has to be realized before you end your TCO timeline.

Getting that timeline just right though can be a bit of a problem. Andy Kyte mentions nine years as the average time to fully replace a core IT system, and that’s probably spot on in most cases, but I usually take a less scientific approach and look at the software lifecycle of the product instead.

If you implement an IT system, chances are it will need a major overhaul in 4-5 years, and you want at least one or two of those overhauls to make sure you have a good idea about what’s going to happen. On the other hand, if you look much beyond that, the risk of the software being completely replaced by something else becomes so high that it undermines the validity of the TCO.

In my experience, the scoping sweetspot for the TCO timeline is somewhere between 5-10 years depending on the system you are looking at.


Working with TCO and ROI is not an easy task. As I’ve mentioned before it’s sometimes more art than science, and it can be tempting to give it up altogether and just look at each project individually, because after all, if we get the project approved, who cares about all the old stuff or the future. That will just take care of itself wont it?

Wrong. Of course. If you’re serious about making IT that is a competitive advantage for your business, you need to be not only good at scoping, you need to be better at it than everybody else, because in the end correctly scoping changes is what differentiates the good projects from the bad and the winning business from the ones muddling along.

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Social Media Introduction

For some reason I often find myself explaining basic Web 2.0 and Social Media Marketing concepts to people who have neither the time nor the interest to move much beyond the “hey is this a Tweet?!” stage.

So, although I’m totally aware that some of these concepts are still apexing the hype-cycle and have pundits all giddy with excitement over discussing definition minutiae I “dared an eye” – as we say in Danish – and made this presentation anyways.

To me, the main challenge is to get stakeholders to understand the basics, so if you can use it, feel free to download a copy (after reading my terms of usage), and if you have suggestions for improvements I’d love to hear them.

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Her Scattered Gold – part 2

So finally we managed to get all of us in one room to finish what we started. Maya and Matilde did everything in one-takes as usual and recorded some beautiful songs, while I produced (which with this Lion upgrade mainly consisted of getting the sound to work).

As soon as we’ve made the final tweaks it will be made available for download in stores, but until then listen and enjoy:

01 On the Border
02 He Took the Stars
03 For the Life
04 Last Glade of the Forest
05 Towards the Moon
06 Born With Eyes Wide Open
07 Where the Pathways End
08 I am Weak
09 Flashlights
10 White
11 Smooth
12 Bleed for Me
13 Do you feel the fire
14 I Need Only One
15 Journey of the Stars
16 With Only Skin
17 Sweet Rain

Template for Enterprise ROI and TCO Calculations

This template for improving consistency in ROI and TCO calculations is one I build for my company. Feel free to download, use it, and share your experience.


One of the most critical, and yet annoyingly abstract excercises in IT, is to make consistent and mutually acceptable evaluations of costs and benefits.

There are so many factors and assumptions involved that it can become almost impossible to get a mutual understanding, and you’ll find yourself stuck in Sisyphusian meeting-cycles with overly technical terms and disbelieving eye-rolls fighting for airspace while business value is quietly climbing out the window.

The overall problem is that in most cases nobody really knows for sure, and if you’re not careful you end up with strong-arming as general design principle, where business will quote gazillion Euro potential benefits in additional sales and IT will refer to obscure security policies to force their will instead of identifying the simple solutions that could really steal away some market-shares from the competition.

This is why a common approach to creating business cases is critical to competitive IT, and why I’m sharing my template to get your input on how it works for you and hopefully some good suggestions on how I could improve it.


But before you get too excited, let me just give a few words of warning:

  • High complexity: Even if you had a perfect template to work from, this is one of the most complex areas of IT, and one that depend on evaluating validity of input from pretty much all IT and business disciplines, so if you don’t have a solid understanding across fields, you’d probably be better off with guesstimating.
  • Overlapping terminology: This template is for practical work. I am not a financial theorist and I know that there are a number of others ways to approach this, but in my experience consistency in communication is far more critical than what theory you adhere to, so feel free to replace my terms with whatever rocks your boat.
  • Basic understanding required: This template will not teach you how to do TCO or ROI. It is a practical tool for those of you already working in this area and wanting more consistency in your approach.

In summary, I don’t take responsibility for anything you do with this tool or any outcomes you get from it. There is no golden goose or perfect tool that will do this for you. You have to rely on your own skill and experience to give you the answers you are looking for, and you have to establish your own good working relationship between IT and business to really get the benefits of all the amazing technology out there.

I’ll be sharing much more on this subject, so hopefully some of this be explained along the way, but for now download, play around with the template, and let me know how it works for you:

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Her Scattered Gold

I had the distinct pleasure of helping two incredibly talented young ladies record a few of their beautiful songs today. Lucky for me, they allowed me to publish the result, but you’ll need to talk to them about how to get a copy. Until you do, listen and enjoy.
Born With Eyes Wide Open
Everything Passes
I Need Only One
Where the Pathways End
With Only Skin

Pagan Son

If I sing, I sing too loud
If I try, I’m much too proud
But I just can’t be still
I won’t back down
You’re preaching with a gun
And I’ll just have to be
Your pagan son

If I smile, I smile too much
When I talk, I’m out of touch
But I just can’t sit still
I won’t back down
You’re preaching with a gun
And I’ll just have to be
Your pagan son

You just wear that crown
And live with your frown
You can’t keep me down
So watch me turn around
Make your awful sound

Too Late

Too Late
I sit in my bedroom in the night
I sleep in the bathroom in the day
I’m trying my best just to keep it together
Cause I still need you
And I shouldn’t leave you
But I just can’t stay
I burned my heart out in the rain
Now whoever I love will just share the stain
I’m leaving tonight
I’m dreaming tonight
But I found it in your eyes
Too late

I wake in the morning out of breath
With forgotten moments in my head
And though I know it’s way too late
I still need you
And I already miss you
But I just can’t stay
I burned my heart out in the rain
Now whoever I love will just share the stain
I’m leaving tonight
I’m dreaming tonight
But I found it in your eyes
Too late

You make me feel so alive
But inside I know I’m already dead
Some spend their lives looking for you
But I’m leaving tonight
I’m dreaming tonight
‘Cause I found it in your eyes
I found it in your eyes


Vi er de ikke nede
Vi er de ikke fede
Vi bli’ vist væk og så vi komme igen
Generne kiksed’
ADD ikke fikset
Men vi skal fan’me aldrig hjem
Aldrig hjem
Aldrig hjem
Vi er de elitær’
Vi er the please la vær’
Vi komme først og du må ik’ komme med
Aldrig hjem
Aldrig hjem
Jeg husker ik’ dit navn
Men du sover I min favn
I København
I København

Vi er de ikke glade
Og vi gir altid flade
Vi er de stodder’ som du ikke kan tæm’
Vi hør’ for meget Niarn
Vi laver altid larm
Men vi skal fanme aldrig hjem
Aldrig hjem
Aldrig igen
For vi er dem vi er
Vi kan sgu ik’ la’ vær’
Vi møve frem og så vi møve igen
Aldrig hjem
Aldrig hjem

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