Manually Incorporating TCO into your App Rationalization Practice

mcastoe · ‎07-16-2024

With the February ’24 release of Enterprise Architecture Workspace (EAW), we now have Total Cost of Ownership (TCO) reporting and indicators for Application Rationalization.

The intention for this feature is that APM is now providing a single consistent framework for incorporating Application costs into your rationalization capabilities. We are not, at this point in time, generating those costs. You must have an external source for these costs. The purpose of this article is to help APM customers who are not yet ready for full on Financial Modeling capabilities but need to get something minimal in the system. A simple start if you will.

IT Financial Modeling is huge and complex and ServiceNow has three partners (there may be others I'm not aware of) that have robust solutions AND APM integrations designed to work our new TCO Reporting.

For the "real thing" you will want to work with one of these partners and that is of course our "best practice".

But... What if you need to get started and you don't have one of these fantastic solutions but you do have some data from here and there that is useable at least for a "order of magnitude" purpose so you have some sort of Cost metric in your rationalization capabilities. This article is for you.

Application TCO has several key concepts you will need to be familiar with.

TCO Source - these records represent your source for financial information. Having multiple sources is supported.
TCO Source Cost Type - these records are required for each source and allow you to specify the "type" of cost information as well as whether the cost is Capex or Opex. You must have at least one TCO Source Cost Type per Source.
TCO Cost Type - these recrod classificat the type or kind of cost including whether the cost is Capex or Opex. Each Application TCO record will have a cost type referenced.
Total Cost of Ownership - these records represent the costs by Business Application, cost type, fiscal period and source. Simply, these are the costs. The actual total cost for an Application will be the sum of these record for a given fiscal period (month or multi-week period, quarter, year). the attribute on a cost record are:
1. Business Application*
2. Fiscal period*
3. TCO Cost Type*
4. Cost* - this is a currency attribute so the Currency such sa USD must be provided.
5. Source* - the source of the cost data
6. Source Cost Type*
7. Billing Date
8. Short Description
9. Reference - a text field for a reference identifier
10. Vendor - allows you to optionally specify a vendor associated with the cost

APM Total Cost Data Model

Steps to configure and manually populate TCO

Install APM TCO
1. APM’s new Total Cost of Ownership is built to bring Cost reporting into your Rationalization and Application governance processes. It is installed with the Enterprise Architecture Workspace.
2. It is designed to work with integrations from several IT Financials Modeling sources including:
  1. Proven Optics
  2. Nicus
  3. Apptio
  4. Your own custom imports – this document will discuss using your own source in Excel format but the principals are similar with any of the full featured Finance Modeling system mentioned above. Of course you will want to follow their explicit instructions in integration.
Setup APM TCO
1. Create your TCO Data Sources
  1. open the TCO source table [sn_apm_tco_source] by typing sn_apm_tco_source.LIST in the Nav filter OR, simply go to the TCO Source table in EA Workspace.
  2. Create a new source. In our example here, we create on called Manual. If you expect multiple, you might call this one Manual (Excel). It’s up to your preference.
    On the (new) form, enter your desired name and then you will need to add/create one or more TCO Source Cost Types.
  3. Create one or more TCO Source Cost types. These are used in mapping the source to your APM TCO Cost types created next in setup. Ignore (don’t change) the Domain attribute unless you are actually running in a Domain separated system.
2. Create your TCO Cost Types
  1. Open the table sn_apm_tco_cost_type.LIST or better, go to EA Workspace, select TCO Cost Types.
  2. Add cost types as needed. As before, you can ignore (and don’t change) the Domain attribute. You must, however, specify either Opex or Capex for your cost types.
Load your Cost Data
1. Below we have supplied a simple example APM TCO excel spreadsheet for import, sn_apm_tco_import_example. It has 7 columns
  1. Business Application – the name for simple use cases but remember, names are not always good identifiers show you might use the Application Number, or even the sys_id. Your Import Set Transform will need to be adjusted to identify against he correct field.
  2. Cost type – the name of the particular cost type for the record (matching cost types created in previous steps)
  3. Expense Type – Capex, Opex as applicable based on the particular Cost type (must match!)
  4. Cost – this is a special Currency field in the table. For import to work, you must provide both the Currency (USD, EUR, CAD, GBP, etc. see your ServiceNow admin for instructions and the correct value for your currency ) and the amount. The format of the input is <CURRENCY>;AMOUNT. So in US Dollars ($) the input would USD;1000354.78 for $1,000,345.78 in USD. There are two approaches here. One, simply prepend the amount with your currency and a semicolon OR, modify the Import Set Transform to take you amount and prepend the currency. See Example below.
  5. Fiscal Period – this is the name of the fiscal period for the particular amount for the particular business application. See Defining fiscal calendars in ServiceNow docs.
  6. Source – the source as defined in steps above.
  7. Source cost type – the source cost type as defined in the steps above.
2. Build your Import Set. There are a number of examples and videos on YouTube and elsewhere that demonstrate the process.
  1. Important note: As noted above, the Cost is a Currency field in ServiceNow and requires a Currency to be specified.
    When we built our example, we chose to leave the Cost simply a number in Excel and use a transform field script to supply the correct value format. See the example image below
    
    the code from above:
    var cost = ‘USD;”+source.u_cost;
    return cost;
    
    An alternative as suggested above, simply provide both the currency and the amount in the form “CURRENCY CODE”;Amount such as “USD;123456987.99” for $123,456,987.99 is USD.
3. Run your Import and verify your results. Upon completion of the import, you will want to examine the import logs to ensure all records were processed successfully.
Generate your cost indicator values - in order to have cost considerations as a part of rationalization, you will need to generate the indicator values. Out of the box, there is a single cost indicator, Portfolio TCO. Indicator and overall Application Scores will need to be generated so it is probably best if you first manually generate the scores by opening the Default Application Profile OR, any other Score Profile you have created which contains the Portfolio TCO indicator and manually regenerate scores.
1. Navigate to All > Application Portfolio Management > Administration > Scoring Profiles and open the desired profile.
2. Click the Regenerate scores button and select the appropriate fiscal period.
  IMPORTANT NOTE: when selecting the fiscal period, you need to select the period which was used for your TCO import. If you created records for multiple fiscal periods, you can run each individually or, my preference is to just select the current FY Year such as FY24 and run it. it will in turn generate quarterly and monthly (fiscal period) entries as well.
3. If you have the Load Application Indicators and compute Application Scores job configured to run, it will eventually pick up your TCO entries as well. It is designed so it runs at fiscal period boundaries. For example last day of March 2024, the job will run fro fiscal period fy24: M03 as well as FY24: Q1.
4. You can always open the Indicator itself and Regenerate the scores but the Application overall score will not be updated.

That concludes our summary of the setup, configuration and indicator generation. Here are a few notes for consideration.

Download the attached sn_apm_tco_import-example.xlsx to use as an import template. It has some example data that should be removed before using.
If you wish to have cost type specific indicators such as Software Cost, Hardware Cost ect, simply create a new indicator based on the Portfolio TCO indicator (clone it and update).

danieltietze · ‎10-08-2024

Thank you for this article! One point I'm still fuzzy on is the conceptual distinction between "TCO Cost Type" and "TCO Source Cost Type." I understand that one is related to the source, and the other more generic. But apart from that, what is the rationale for having these two configurable cost types? There does not appear to be a mapping defined between the two cost types, so it seems that the cost records can include any arbitrary combination of cost types.

Can you provide examples explaining the distinction between TCO Cost Type and TCO Source Cost Type?

How is the "TCO Source Cost Type" used in the EA TCO Dashboards? Is it used at all? Would this e.g. be something that you would create additional indicators for, so you could use this in reporting?

Thanks.

MEBoatman

@mcastoe This is SUPER helpful. If we don't want to use an Import Set (e.g., for a limited POC), how do you recommend we enter the cost values?