Coles Group calculates a TCO for its enterprise applications

Coles Group is working to build a more fine-grained picture of what it costs to run its business applications, incorporating a share of personnel, support and infrastructure costs in addition to licensing.

Head of architecture Daniel Nicholson told a webinar by information management and enterprise architecture services firm Kapish that the retailer wanted to better understand the total cost of ownership associated with its key applications.

The retailer has been using Apptio tooling to keep its Azure costs in check since 2021. An undated case study published by Apptio signalled an intent by Coles to use more of the Apptio suite to understand more than just its cloud costs. IBM bought Apptio in mid-2023.

“While we had really detailed spend analysis through [Apptio’s] Cloudability, it was really hard attaching that [cloud spend] to an application to see what our total cost of ownership was,” Nicholson told the webinar.

He said the chief financial officer together with the IT Finance function wanted to know “what it actually costs to run an application”.

Previously, cost apportionment could be done but only as a rough estimate.

"We'd look at the contracts, but we didn't have people [costs], support [costs] or [the application’s use of] part of a shared platform tied to that,” Nicholson said.

The retailer is now able to cost the “business-as-usual support" or personnel costs associated with an application.

It is similarly apportioning a share of the cost of platform or outsourced support arrangements that the application leans on - for example, database and cloud services, and “other kinds of support licences” or arrangements procured via the likes of Accenture and IBM.

“So, now we can say, ‘This one application uses a shared database platform, has some components in the cloud, and has a support team, and we can actually see what it costs roughly to support that application,” he said.

With that understanding, Coles is able to maintain a “12-month trailing total cost of ownership” for applications that is stored within its enterprise architecture system of record, which runs on LeanIX.

It is also able to have better discussions with the business about the cost of keeping a particular application running. This is helping it to broach conversations about application consolidation and the decommissioning of lesser-used applications.

Nicholson added that the fine-grained understanding of total cost of ownership for applications meant that the business could also better understand how technology costs were incurred and what internal capabilities these costs supported.