Explaining the total cost of ownership of IT services to the CIO has never been easy.
Apart from the obvious line items such as OPEX and CAPEX costs the three major sources of hidden costs can be:
Non Standard Change Request Changes: Your service provider may include some standard changes and provide some standard pricing for others, however the ones that can sneak up from behind are the "special changes". Service Providers usually charge time and material (T&M) rates for such changes. These "uncontrolled costs" can add up to significant amounts.
Billing Errors: This might not be intentional, but Service Providers can and will make mistakes in their billing. Most of the time these can be rectified but someone has to take the time and effort to reconcile accounts against agreed upon tariffs.
Internal Service Provider Support Costs: You may think outsourcing cost equates to what your Service Provider charges you. The reality could be that you are not taking into account how much time your own personnel are spending in hand holding, monitoring and chasing your service provider. We have known situations where an enterprise department has 3 workers for every 10 service provider workers.
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