Governance (Process - IAM)

IAM TCO

IAM Total Cost of Ownership

1.2

To improve their competitiveness, organizations must simultaneously minimize their costs and maximize their added value. Hence, the cost of IAM considered as an overall service to the organization is a fundamental component of IAM performance measurement. TCO (Total Cost of Ownership) is a measurement of the overall cost of an item or service, from conception to acquisition to operations and maintenance (cf. Total Cost of Ownership (Dictionary Entry)). In consequence, the TCO of IAM is a natural measurement of IAM overall cost.

Organizations use centralization, standardization and automation to reduce TCO (David et al., 2002). The evolution of this indicator over time should reflect the performance of these efforts (see § Benchmarking for limitations). While complex, TCO is further known to outweigh its difficulty to implement disadvantage by providing benefits associated to performance measurement, decision making, communication, understanding and continuous improvement.

Since TCO is thought to be directly proportional to service levels, it is critical to interpret this indicator in conjunction with the indicators that reflect the service levels delivered by the IAM processes (see § Negative Effects).

Because IAM is composed of process clusters, it is interesting to allocate costs at both the global and cluster levels (providing that the organization does manage these clusters). The IAM TCO indicator is composed of the following series:

• IAM TCO = The TCO of overall IAM.

• Core IAM TCO = The TCO of core IAM.

• PAM TCO = The TCO of PAM.

• Federation IAM TCO = The TCO of Federation IAM.

• CIAM TCO = The TCO of CIAM.

See Measuring the cost of IAM - Methodology for a discussion on how to measure IAM TCO.

Currency This indicator is expressed in the organization’s reference currency.

This indicator is not comparable between organizations. See Core Identity Average TCO (Indicator - IAM) for a distinct flavor of this indicator that is adequate for benchmarking purposes.

This indicator may not be comparable over a long period of time, because the organization evolves and the volumes of identities it manages change. See Core Identity Average TCO (Indicator - IAM) for a distinct flavor of this indicator that is more adequate for historical comparisons.

If the TCO consolidates costs in multiple currencies, the effect of foreign exchange rates may be significant. Depending on the indicator’s usage (e.g. measuring global versus regional performance in large organizations), this effect need to be specifically accounted for (i.e. historical forex rates vs current forex rates).

• CISO (Stakeholder - IAM)

• IAM Management (Stakeholder)

• Top Management (Stakeholder)

In large organizations where IAM is organized in regions or otherwise, the indicator may be measured at both global and regional levels.

• TCO is understood as difficult to implement but outweighing the disadvantages of its barriers to implementation (Ellram, 1993).

• TCO is thought as being directly proportional to service levels, hence organizations should strive to simultaneously reduce their TCO while maintaining or improving their service levels. This indicator may induce a focus on costs to the detriment of service levels. For instance, centralization, standardization and automation strategies are not enough to reduce costs without impacting service levels - careful examination of service levels, careful planning and how well these strategies are implemented are key factors. (David et al., 2002)

• Cost analysis is not a straightforward task, it is complex and there are different ways to do it. Thus, comparing costs may be prone to errors. (KPMG and Everett, 2009, p. 3, Hurkens et al., 2006)

• Even if cost analysis is exempt of mistake, a sound cost analysis may be subject to misinterpretations or misuse to support political agendas. (Foussier, 2006, chapter 2, Cost Measurement)

See Measuring the cost of IAM - Methodology for a discussion on how to measure IAM TCO.

Yearly.

• Measuring the cost of IAM - Methodology

• Measuring the cost of IAM - Activities & Costs

• Total Cost of Ownership (Dictionary Entry)

• David et al., 2002

• Ellram, 1993

• Foussier, 2006

• Hurkens et al., 2006

• KPMG and Everett, 2009