Managing Application and Application System Costs
The aim of modeling costs with HOPEX IT Portfolio Management is to be able to compare the cost of different components and to compare the different evolution scenarios on identical financial criteria.
To be able to take account of the time (past and future), the cost of a component is represented by a fixed part and a periodic part.
For example, a purchase price is specified in a fixed part, and annual maintenance in a periodic part.
Finally, costs are characterized by different criteria that enable more detailed comparison. Criteria are:
• the type to distinguish investment costs.
• the nature to isolate costs of infrastructure, license, service or manpower.
• life cycle of the component concerned.
Cost Calculation Principles
Each fixed expense is associated with an amount and a date.
Each periodic expense is associated with an initial amount, a start date, and the amount and periodicity of timespots.
For more details on modeling of costs, see Creating a fixed expense and Modifying a periodic expense.The cost of an application can be calculated in the absolute, or in the context of a portfolio. In the case of a portfolio, sums are calculated between begin date and end date of the portfolio.
We assume for example that retirement of an application starts in July with a decreasing periodic cost. The periodic cost is 500€ and the decreasing cost -100€.
|
Begin Date
|
End date
|
Period cost
|
Total cost obtained
|
|---|---|---|---|
|
7/1/2012
|
7/30/2012
|
500
|
500
|
|
7/1/2012
|
8/1/2012
|
400
|
900
|
|
7/1/2012
|
9/1/2012
|
300
|
1200
|
|
7/1/2012
|
10/1/2012
|
200
|
1400
|
|
7/1/2012
|
11/1/2012
|
100
|
1500
|
|
7/1/2012
|
12/1/2012
|
0
|
1500
|
The cost calculation formula proposed as standard in HOPEX is based on fixed and variable cost characteristics.
Specifying Application Costs
In HOPEX IT Portfolio Management costs on an application can be specified by:
• a user with “Financial Controller” role, who has been declared responsible for the application in question;
• the portfolio manager.
To define those responsible for an application, see Application Characteristics.One or several cost lines can be associated with an application.
A cost line enables identification of cost kind and type.A cost line is characterized by:
• a type: operating or capital.
• a nature: infrastructure (for a deployment), license (for an application), service, manpower.
• a state of the life cycle of the component concerned, such as specification or development phases.
Associated with a cost line can be:
• a periodic expense
• one or several fixed expenses
Creating a cost line
To associate costs with an application, you must begin by creating a cost line.
You can create cost lines singly, or automatically create three cost lines corresponding to the three cost natures possible for an application: license, service, manpower.
To create a cost line for an application:
1. Open the application Properties.
2. Click Costs.
The page can be hidden by default. To display it: to the right of the properties pages, click the Show/Hide > Cost button.3. In the Cost line section, click New.
The Creation of a cost line box opens.
4. Specify the Name of the cost line.
5. Select the Cost Type.
6. Select the Cost Nature.
7. Select the State of the application life cycle.
The states proposed in the drop-down list are the states of the life cycle associated with the object life.8. Click Next.
The periodic expenses creation dialog box opens.
Fixed expenses, which can be multiple, are defined separately. For more details on fixed expense creation, see Creating a fixed expense.9. Define the periodic cost and click Next.
For more details on fixed expense creation, see Modifying a periodic expense.10. Click OK.
The new cost line appears in the Cost Line.
Creating a fixed expense
Fixed expenses associated with a component are accessible from the component properties pages, in the Costs tab.
To create a new fixed expense on an application from a cost line:
1. Open the application Properties.
2. Click Costs.
3. In the Cost Line section, select the cost line that interests you.
4. In the Fixed Expenses section, the list of fixed expenses associated with the cost line appears. In this section, click the New button.
The Creation of Expense dialog box opens.
5. Specify:
• the Name of the expense
• the Date of the expense,
• the Amount of the expense.
6. Click OK.
The new expense appears in the Fixed Expenses section.
Modifying a periodic expense
To modify characteristics of a periodic expense associated with an application:
1. Open the application Properties.
2. Click Costs.
3. In the Cost Line section, select the cost line that interests you.
4. Columns specific to the periodic expense are associated with the cost line:
• Periodic cost
• Periodicity
• Up/Down Amount
5. Click the column to be modified and enter the new value.
If you indicate a negative amount, at each time period the amount will be deducted from the periodic cost until this reaches zero.
Application System Costs
The cost of an application system can be calculated from its different components or globally:
• When an application used by the application system is specified "Application", the cost of this application is not charged to the application system, in other words the cost relates only to the application.
• When an application used is specified "Component", the cost of this application is charged to the application system and is no longer listed on the application.
To indicate that an application is used by the system as a component:
1. Open the properties of the application system.
2. Click Characteristics.
3. In the Component section, select Application Component to display applications making up the application system.
4. Select the required application , and in the Aggregation Type column, select "Component".
Specifying a Currency
At the level of each HOPEX environment, the currency used can be specified. The monetary numeric format adapts as a result.
To modify currency:
1. In the HOPEX installation folder, double-click the "Administration.exe" file.
2. Access your work environment.
3. Right-click the desired environment and select Options > Modify.
The options window appears.
4. In the navigator on the left, expand the Installation folder and select Currency.
5. On the right indicate the currency.
6. Click OK.
The format of costs is modified depending on the specified currency. Note also that the format of figures depends on the interface language.
Analyzing Application Costs
In HOPEX IT Portfolio Management, a report summarizes the costs of an application and its deployments. The results are derived from values that you specified in the cost page of the application and its deployments.
The report is also available on an application system.To view the report on costs of an application:
1. Open the properties of the application concerned.
2. Click the Reporting page.
3. In the Reports lits, select IT Portfolio Management > Application Standard Cost.