Abstract image with coloured lines wound around nails on a board.

True Value through True Costs

The importance of Total Cost of Ownership in Social Housing Technology

Over the years, my team and I have carried out many procurement and software selection exercises of very expensive housing systems for landlords. One thing we have seen is that very often you will come across terms and questions such as ‘We would expect to see true Value for Money from your software’. Or ‘You must demonstrate how we would see VFM or cost savings’. What we don’t hear very often is ‘What is our Total Cost of Ownership for this particular system?’

The big problem here is that what value means for the organisation is rarely qualified and quantified in the procurement itself, or even afterwards as those implementing seek to find out what the total cost is and what return they will get to justify their (over)spend.

For as long as I can professionally remember, I had it drummed into me that, as an IT leader, Total Cost of Ownership (TCO) is the most important thing you can get right in relation to cost and budget management. TCO is the total of ‘all’ costs related to and incurred through the use of software and is a critical part of ensuring you get Value for Money (VFM) and any reasonable Return on Investment (ROI). They are all kind of related.

But, and it’s a big but (and I cannot lie), the housing sector does not use TCO properly. In fact, I only see it used on very few occasions. This is a real shame, as technology costs a lot. The big question therefore is, if you want to consider the true potential value of a product, why does the sector not make more of an effort to work out he real costs?


How to start looking at your TCO in three simple steps

Step 1: Classify your software solutions

The first exercise you may consider is classification of your software solutions. At present, software you have will fall under one of three categories:

  1. Off-the-shelf software. Typically runs on-premises or a hosted data centre. Think of your current Housing Management System.
  2. Cloud, SaaS software you lease/subscribe to. Think 365, Salesforce or the likes.
  3. Bespoke/custom software developed by a third party, an internal team of developers or a partner organisation.

Step 2: Classify the types of costs associated with each of your software solutions

The second exercise is to consider the types of costs applied to the software types you have above.

Generally speaking, most people will break down these costs into three categories. These categories follow the life cycle of a system within the organisation:

  1. Commissioning costs
  2. Operational costs
  3. Retirement costs

Personally I would argue there is also a fourth, procurement, but I will leave that out of the overview right now, as otherwise I might as well write a book. As the plural of ‘costs’ probably gives away, each of these categories can also be broken down into various categories. This brings us to step 3.

Step 3: Classify and quantify the types of costs associated with each life cycle

The third and final step is to break down the activities and elements involved at any of these stages per sofware solution. This ranges from any hardware needed to run the solution to ongoing training needs for your staff and making sure your data are protected.

The list can be very long, and that might be scary. But, if you want to start to understand what value your systems are bringing to your organisation, you will also need to know what they are costing you; to the very last penny!


You can only see and talk about the value of things you are honest with yourself about Total Cost of Ownership

This has been one of those articles that was meant to be a quick overview of the importance of Total Cost of Ownership and the value of software. However, I got a bit carried away, and could have kept going.

It’s a subject DTL Creative know a lot about, and I feel it is one of those areas that, while it is  incredibly important, it is often underplayed in the sector.

Software is complicated in its entirety. It is complex in its architecture, maintenance and all the costs involved with that. However, it being complicated is not an excuse to glance over it or hold up a wet finger in the wind when setting budgets, writing procurement proposals and reporting on the value a system has brought to the organisation. Indeed, your IT set-up can and should be seen as one of the most important assets you have; so why would you not put in the effort and measure its total costs and the value it brings to not just you, but also your stakeholders.

In the end, IT is about serving customers. These customers are not always the systems users as some would expect. It is about the end customer and in the case of Social Housing, it’s the tenant that needs to see the benefit. It is the tenant that must benefit, to be safe, to be warm and to be confident that somewhere down the line the housing provider is using software to improve their lives.


Getting Started: Common costs you need to know to understand Total Cost of Ownership

The following sections discusses per category from step 2 the most common costs associated with each life-cycle. This list is, of course, not exhaustive. So, if you know there’s even more to it, add that to your spreadsheet as well!

Commissioning Costs

Costs in this category are all the costs incurred when implementing new software. These include initiation and start-up costs. I don’t like to teach folks to suck eggs, but it is worthwhile listing just some of the basics here.

Software.

Software such as housing management systems usually have an up-front software cost plus user licenses, based on assets, users, etcetera. But make sure you understand them fully.

Hardware.

As far as hardware is concerned,the cost of servers and applicable, dedicated, storage to run the software is obvious, but what about and other costs like backup and disaster recovery.

Integration.

These days, very few systems work in isolation. This means they require interfaces to other systems to reap the overall benefit. You will be very likely at some point have to pay to get one system to talk to another. This could be from a third party asking for development time or internal need to assign resource, contractor, or to buy some development tools. Everything is always possible here, but at a cost, and it’s not always straight-forward.

Training.

Sometimes forgotten, the cost of training users applies to all types of software, with varying degrees of need. The training may be internal costs if you haver built it yourself or external costs from suppliers.

Customisation.

Different landlords have specific ways of doing things, so account for this in any customisation you may need to off-the-shelf solutions. It may simply come down to a few small tweaks, but perhaps it is a larger more bespoke adaptation. Whatever it is, it should be calculated in the TCO.

Project & Implementation.

The cost of building and testing software is one thing, but remember the actual resource needs to be accounted for. You may backfill, employ specialist skills or consultancies. There are also costs of setting up things like backups, contingency plans, backups and so on.

Data migration.

Data is a big one. We know that a great deal of suppliers will only help you part of the way in data migration. The cost of moving data from the legacy system to the new system can soon add up and increase your Total Cost of Ownership.

Operational Costs.

Costs in this category are all the costs incurred in the day to day running, maintaining and using of any systems and applications you have, both hardware and software.

Software maintenance & support.

This obviously does not apply to cloud software. However, for software products you have bought off-the-shelf you will have signed up to support agreements that may or may not include patches, version releases and bug-fixes. The small print is the important aspect here. Know what you get and what you don’t get and cost accordingly in your TCO.

I won’t go into Escrow agreements here, but you should know if you have one or not. I’m personally not a fan in case you are remotely interested.

Licenses.

For off-the-shelf software, as the number of users grows in the company, new licenses must be purchased. If the number of users decreases, there are no refunds. For cloud software, licenses are typically priced per month, although they usually require an annual contract. Note that if the number of users increases, this cost increases. If the number of users decreases, this cost may decrease but often only when the contract is renewed.

Ongoing Support.

No matter how it is provided, helpdesks and administration is a must. You may have analysts and developers the system as well. One option here is to calculate costs based on user numbers, and factor in the costs of managing them either all-in or as department service costs.

Ongoing Training.

From time to time, you will have new users, new starts, or perhaps something bigger like a merger where hundreds of new users find themselves with new software at their fingertips. They will need trained, so where you can budget, where you can’t add it in during the years spend.

Adaptations and Enhancements.

Things change, it’s a matter of fact. Sometimes it can be regulatory things such as Decent Homes, it could be a new control such as GDPR or perhaps some company restructuring. Whatever it is, it will more than likely require some software changes.

Upgrades/Version releases.

Off-the-shelf software will have upgrades over its lifetime. They can be time-consuming, risky but also costly.

Disaster recovery & Business Continuity.

The provision and cost of a backup strategy is one thing but so are things like testing. Have you a strategy and cost plan in place?

Environment & Sustainability.

What about electricity/power, environment and sustainability? The costs of running the software in your server room like power, cooling and floor or rack space. You can add on security, alarms, suppression systems and so on here as well to calculate how the systems you use affect the environment.

Depreciation.

Your finance/accounting department will love that you do this. Writing off the capital cost of the software and the hardware it runs on is very important but often overlooked. You obviously can’t do this in cloud-based services.

Security.

The costs of keeping your systems secure is not just in the code and the permissions of users but also applies to how you manage cost apportionment to firewalls, anti-virus etc. What about penetration testing. Have you thought of that in your TCO model?

Retirement Costs.

From time to time, you will cease to use some software. A fancy word for this is retirement. There are costs incurred when retiring software that will add to the Total Cost of Ownership. However, as well as the costs in transitioning to a replacement, some companies do not take into consideration that retired systems can still incur ongoing costs.

Accessing and Storing Historical Data.

As mentioned, data is a specific area where you may find it expensive to migrate data out your old and into the new system. While you may have decided against migrating specific (often transactional data) directly into your new application to save costs, there are various reasons to keep those historical data available somewhere else, not in the least for legal and regulatory and compliance purposes, but also to ensure that any ongoing chased debts are not lost.

Whatever the reason, if you don’t migrate it, you may have to pay to access it. Like all the specific areas in this article, there are more details to consider, but as you will see it is a large and important area worth serious consideration. Because, well, let’s be honest, how often have you seen existing suppliers be helpful in such areas. You have just gone to their competitor, so why would they ensure the data from their old systems will remain available to you for free? So, decisions need to be made and some of these will cost money that should be included perhaps in the TCO model for the new software.

Parallel Running of Legacy System(s).

Another example is a situation where legacy software may have to run in parallel to the new system for a set period, which, while often forgotten about, must also be costed.


Industry 4.0: The fourth industrial revolution

You might think I’m just making things up; Industry 4.0?

The first industrial revolution was mechanization through water and steam power

The second industrial revolution was the one of mass production and assembly lines using electricity

The third industrial revolution saw the adoption of computers and automation.

We have for some years now seen an amazing transformation regarding the way we deliver services and produce products thanks to the digitization of such things as manufacturing, financial services, communications, and engineering and retail. It is so significant it has been termed Industry 4.0.

The fourth industrial revolution enhances the third with smart and autonomous systems fuelled by data and machine learning.

The four design principles of Industry 4.0

There are four recognised design principles integral to Industry 4.0

  • Interconnection — with devices, sensors, and people connecting with each other via the Internet of things (IoT).
  • Information transparency — the transparency afforded by Industry 4.0 technology provides operators with comprehensive information to make decisions. Inter-connectivity allows the collection of large amounts of data and information from many disparate sources, and therefore identify key areas that can be improved.
  • Technical assistance — the technological facility of systems to assist us lot (humans) in decision-making, but perhaps more importantly problem-solving.
  • Decentralized decisions — the ability of cyber physical systems to make decisions on their own and to perform their tasks as autonomously as possible. If you stop and think about this, you will find some examples all around you.

The key components of Industry 4.0

And it consists of many components which you will recognise.

  • Mobile devices
  • Internet of things (IoT) platforms
  • Location detection technologies
  • Advanced human-machine interfaces (screens you touch, things you wear)
  • Authentication and fraud detection
  • Smart sensors, property technology
  • Large scale analytics and advanced processes
  • Multilevel customer interaction and customer profiling (so important in social housing)
  • Augmented reality
  • And there are more…

Industry 4.0 in #ukhousing

So, now you know all about Industry 4.0, the fourth industrial revolution, let’s apply this to our world of social housing.

The social sector, or third sector as some still term it suffers from a lack of focus from governments, a lack of investment and a stigma sometimes that is not just wrong but unjust. The social housing component of the third sector in the UK (Mainly Housing Associations) contribute (the last time I checked) around 60% of the overall not for profit sector overall. Now that is significant!

So, when we talk about this kind of scale, and we look at the delivery of services from landlords and councils, we must admit that technology and Industry 4.0 is needed, not just for catching up with other sectors, but for the improvement of services that have a real impact on people’s lives.

  • Damp and Mould Sensors
  • Compliance Sensors for boilers, heating, gas and fire safety.
  • Machine Learning and AI to efficiently plan maintenance, schedule visits and even guide your staff through traffic.
  • Textual Analysis and Pattern recognition that can help you pinpoint ASB, detect suspected domestic abuse and help you with complaints management.

Slap, bang, in the middle

All the above, and more are driven by various technologies, associated data, communication, people, and insight. Now, go back to the bit about the components of Industry 4.0 and the new industrial revolution.

You can see we are right in the midst of it all. All these technologies can play a part. A big part!

And yes, I know it may look like a massive jigsaw puzzle, so I therefore want to ensure I (and my company DTL Creative) don’t slowdown in the mission to improve social housing through helping the sector and its continuing journey for excellence via the adoption of technology.

If you feel overwhelmed, have a problem needing solved, or just fancy a chat on technology and its application in social housing please get in touch.

Housing Management Systems: 5 lessons from experience

“Why did we ever buy this @^&@ system?”

You’ve bought a new, shiny, all encompassing, truly amazing best of all housing management systems. Or at least that is what the supplier said at the conference. It can do this and that, it can change your life forever, it can transform the way you do things for the better. However, can it?

First up, of course it can. The above is not necessarily a dig at the suppliers. We believe ‘most’ of the housing management systems out there are very good systems, and ‘can’ potentially deliver some improvements in your operations, improve your customer satisfaction, and give you more insight into your data, your performance, your service delivery. 

We say ‘can’. There is that word again. Can.

We are saying that it ‘can’ do a good job, but only if it is implemented well. And that is the hard part, implementing well.

I have been involved in many housing management systems implementations and I could write a book on the subject (now there’s an idea). We have been doing it for a while now, and although systems have evolved, and are technically more advanced, the same old issues of systems transformation rear their very ugly head again and again.

As a consultancy, we find ourselves in the main getting involved in two lines of work with housing systems.

1.     We get involved from the start.

2.     We are brought in to rescue a failing project.

The second is usually needed after some or all of the areas below have occurred.

5 Lessons to avoid classic procurement mistakes

So, we have, hoping some will take heed, set out five lessons in avoiding the classic mistake of ‘forgetting why you bought it in the first place’. 

1. The Need

There has to be a need. Someone somewhere in your organisation has stood up and said we ‘need’ a new system because of, well, something.

We don’t want to focus on specific needs, but what we do want to say is that it never surprises us that landlords seem to lose sight of these as the project goes on.

They should be omni-present, and they should be agreed, documented, reported on, all staff/users made aware of, communicated to the supplier, communicated to a consultancy, third parties and so on.

Develop a reporting mechanism in your project that says, ‘Hey, we are implementing this system because……and we are going to make sure we deliver to this’.

2. Training

Training is one area that surprises us. Why on earth do some of the suppliers carry out classroom training or train the trainer before the system is ready for it. They do it way too early in the project. It’s fine to train those involved as part of the project team, and its fine to give an initial system overview, but please do not attempt to carry out anything more than this until the very later stages of the project, and only do it on the actual final data set. It is then, and only then that it makes sense to the many who will use the system/s.

Finally, people forget. So, leave the training to as late as possible.

3. Teamwork and Roles

Our experience has shown us a few classic traits in systems projects relating to team working. They are:

·     Landlords under staff their projects. Too often, there is not enough involvement from a project management perspective. IT, operational departments, and yes, you! the senior folks, the sponsors. Resource your project responsibly with the due care and attention something of this scale requires.

·     Landlords lump it all on one person. Don’t fall under the trap of saying, “Pete, you can do it, right? You once used a ZX Spectrum, so you know about these things”.

·     There is no liaison. Make sure someone is available to be the main conduit to the supplier and that they talk to them. This should really be your PM. Make sure this person controls the communication and is the main conduit. Avoid multi-channel chat between the supplier and all your different staff as there needs to be control, otherwise it will all go haywire.

·     Understand the roles. Don’t just rely on the supplier to create the project governance. Write your own PID, and get the Roles and Responsibilities detailed out. It will make a big difference.

4. Architecture

Systems architecture is the key to making the system shine. Any housing management system out there really only comes to life when it works well with your other systems. You’ll hear about things such as the finance system integration/interface and so on. You will hear about magical technologies such as web services. You will hear about flat file methods of getting data across, or real time interfaces. 

Ignore all of that! Until it is time. Start off thinking about how you work, and what information you need to pass or be visible between different departments, then you can rely on the technical architects to make it happen.

Draw your intentions in a diagram and include it in the project documentation.  It will make a difference when consultants and staff want to understand what is in scope, what will work what, and what the intentions of particular interfaces are. As a minimum we would want to see a solution design document that encompasses the details. 

5. What did we buy again?

Some of you reading this will know what we are talking about here. 

You would think that between the supplier and the buyer it is known what was purchased. But we have seen countless times where it is not clear. 

Most systems out there are based around modules such as repairs, rents, ASB, CRM and so on. Make sure you have these referenced back to the contract/agreement you had following your tender.

The same goes for areas such as consultancy days, expenses, and so on. 

Simply put, the flow of Tender >  Contract > Delivery is critical, and someone needs to know and own the overall commercial and contractual delivery and how this relates to your project delivery. When you said you wanted ‘this and that’ in your tender and then supplier X won, based on those requirements, it ends up in a contract cementing these requirements. There is now a commitment to deliver. Then, comes the part of making it happen, and ensuring what you bought and what is being delivered is one and the same.

Project Control is Key

We have seen a real disconnect in some projects where the direction the project was taking was nothing like what was contracted to be delivered. This is where the project control is so important. And if you go back my first point about the ‘need’, it may just all start to make more sense. 

There is an old saying, “It does exactly what it says on the tin”. It’s also true in systems transformation projects.

If you need some help with getting it right, we have loads of experience with most housing management systems; get in touch!

Opportunities for applying VR and AR in social housing today!

Use of VR and AR in Housing

Recently, we’ve been speaking to several housing associations about the opportunities presented by augmented reality (AR) and virtual reality (VR).

From these discussions I have come to some conclusions about how ‘ready’ t#ukhousing is for VR and AR. I’ve also learned how strong, or otherwise, the current business case is for housing associations to take VR and AR seriously.

These conclusions are:

  • Wide adoption of VR and AR within the sector is still a long way off. We’re currently at the stage of piloting and testing on a smaller scale. A requirement at this stage is to find solutions that are relatively low cost. They should also have minimal barriers to entry. They also have to present a fairly low level of risk;
  • The business case needs to be rock solid. VR and AR are both technologies that are at risk of slipping into the ‘nice to have’ or ‘tech for tech sake’ category. This is leading to a perception of novelty over practical value; and
  • We need to think beyond current sector processes and norms when we consider how we might apply VR and AR.

This led me to develop the following list which sets out three applications that I would consider are immediate opportunities for those interested in experimenting with VR and AR within the social housing sector.

Augmented Reality for Remote Repairs Support

mage: www.kingdomhousing.org.uk

Recently, Kingdom Housing Association worked with XM Reality to deliver an AR solution. This solution allows a trades operative to be virtually present in a tenant’s home. They can then see the issue in real time using video technology on a mobile phone or tablet. This enables them to offer support and advice by having their hand superimposed on the scene in the tenant’s home.

More information about how this approach can deliver real business and customer benefits can be found at Kingdom Uses Augmented Reality Technology – Kingdom Housing | Kingdom HA, Fife

360 Property Tours with Matterport

For free (or for advanced features as little as £7.99 a month) with Matterport, you can capture a space in 3D with your smartphone and provide your staff and customers with 360 property tours. Imagine if senior stakeholders could review the condition of a void property virtually while in the office. Or, if you could conduct desktop tours of multiple properties with an applicant, before progressing to an in-person site visit.

Immersive Experiences

Image: www.carechoices.co.uk

Beyond the two more obvious applications above, there is now a wealth of VR content available for free online. You can buy a decent VR headset for around £50 and pair it with a smartphone. This could be used for a wide range of things, including to put staff in the shoes of someone with dementia, for engaging customers in education & learning, or as an immersive therapy option. Or, in housing, to do a virtual viewing!

There is more out there, go and see!

The list above is by no means exhaustive. But, part of our role is to prompt ideas and discover new ways of applying technology to deliver benefits together. I hope we can use it to generate more use cases to add weight to the VR and AR business case for social housing. If you need some help with that, we’re more than happy to have a chat and introduce you to our network!

The Data Chainsaw Massacre: Digital Skills Training

The Tree

I can hear you think, what does a chainsaw have to do with digital skills training?

Imagine I was moaning to someone about the massive tree in my back garden blocking out the summer sunshine from my home and garden. ‘Really need to do something about that….’ And I’ve been saying that for a few years now, while the tree gets bigger and bigger. We all know how things like that go…

The person I was moaning to has had enough of me moaning, and one day comes by with a surprise: A CHAINSAW!

“There you go”, they say, “problem solved! Use this chainsaw to cut down the tree or at least some of the big branches!”, and, muttered under their breath ‘and then please stop moaning…

I look at the chainsaw, then at the tree, and then back at the chainsaw, and think ‘oh dear…

The tree IS massive. And that chainsaw is quite heavy and scary. And, really, should I be using that? Or, well, technically what I meant was that I’d need to ring someone, like a professional. A tree surgeon for example, to come and solve my problem, as well, me using a chainsaw… Really? And adding to that, it’s raining a bit now, and my arm is still a bit sore from weights training, so I’ll put it in the shed for now…

A chainsaw is a tool, a heavy tool, not to be wielded lightly. It’s not a solution; giving me a chainsaw is not going to solve my problems for at least three reasons. First of all, I do not have the knowledge to use it. Second, and because of number one, I don’t have the confidence to use it. Third, even if I did have one and two, I do not have the other tools needed to use the chainsaw safely and effectively.

So… the chainsaw will sit there in the garage, (probably forever). My friend wasted their money, and the tree still blocks my sun. Still, I dare not moan about it anymore when meeting with that friend because they’d simply say ‘…well, I gave you a chainsaw…!’ On top of that I’d have to admit my lack of knowledge, confidence, the fact I’m not investing in other tools (decent ladder, any safety kit perhaps…). The only problem that got solved was me moaning about a tree, not the actual tree and the fact that it is blocking out the sun.

Digital Tools, not Solutions

I see the same happening with Digital Tools in housing associations (and it happens in other sectors as well, probably).

Digital Transformation is at the forefront of every single housing association I’m checking out/applying for/interviewing with at the moment. And rightfully so. Every day someone somewhere thinks of something new, starts developing a new application, device, website or data management system. Most of them will fail, some of them will change our lives forever.

If the Covid Pandemic has shown us anything, it is that we need to embrace these failures and successes in order to get better at working more agile, more digital, and more flexible with that. It has also, hopefully, taught us that just giving people a tablet or a phone or a laptop, or making a web-application ‘responsive’ isn’t a solution; it’s providing people with tools that need to be used correctly, with confidence and often in tandem with other tools in order to solve any (part of a) problem. You can achieve this by providing (ongoing) digital skills training.

But, you mentioned the Data Chainsaw Massacre!?

Whatever digital tools you use, whether it’s hardware or software, they are a way to input, manage, and manipulate the data you use to run your organisation financially, sustainably and socially. If there are members of staff that don’t feel comfortable with the ‘solution’ handed to them, it could be detrimental to your data integrity, and with that your services and entire business.

So, if you think you have handed them ‘the solution’, but the tablets and laptops stay in desk drawers because they are too bulky, too scary or too much hassle to use ‘out and about’, your data is at serious risk. They might feel daft asking for more training and practice, embarrassed because it ‘should be so easy’.

Equally, if people do try to use them but in the incorrect way, they risk losing valuable information themselves to be able to do their jobs correctly, which in turn has an effect on the tenant.

Tools have a tendency to not work in isolation. Whether that’s a chisel without a hammer, a hammer without a nail, or a chainsaw without the confidence and physical strength to wield it. The same is true for your organisation; whether it’s about hardware, software or the knowledge, mindset, and confidence to work with the previous two in the correct way.

Tools don’t make the professional

Sometimes it’s best to leave things to professionals. Even though you might have access to the same physical tools they have. I will not be cutting back or down that tree in my garden on my own. I will pay a professional to do it in my stead. Why? I know that if I would try it, there would be a significant risk I’d not only hurt myself. I might hurt other people and buildings as well; although I’d ask them to stay clear before I’d get chopping, obviously.

The difference between me and that professional are that they have had adequate training and hours and hours of practice in handling that chainsaw. They didn’t just receive a chainsaw from a friend (although, who knows, it might have started out like that!). Instead, they have all the other bits and bobs needed to make the cutting down or back of trees a success with minimal risk to others.

So, what do we do? Digital Skills Training!

If you decide to invest in providing people with digital tools to help your organisation provide better services, you have to make sure those tools aren’t just handed over with minimal instruction and an open invite to ‘come and find us if you have any questions’. You have to provide them with digital skills training. You have to make sure you choose and set them up in a way that also make your staff’s work easier and not more difficult. That will keep them from using it, meaning your investment is not just void, but even detrimental to your service. This is all part of your data strategy.

Make sure you have one correct way of doing things. Provide one clear expectation of entering and working with data. Provide not just one-off but continuous digital skills training to make sure that tools and skills align. This also makes sure that training is for everyone and nobody feels ‘less’ than someone else for asking for more help or explanation.

And, let’s not forget, people might think they know how to use it, but they might not realise they actually don’t. Providing training for everyone means you have more control over the impact you want your digital tools to have.

Provide the correct frameworks, training and support materials to help your staff understand what you expect of them. Show them that if they put in the effort of learning how to use it can make their lives easier. Otherwise, that tree might come crashing down on not just your own house, but also those of your tenants.