# **Box 4: Cost considerations**

The cost of a DMS cannot be reduced to just acquiring the hardware and software package. The charge consists of i) software development or purchase, ii) software customization if purchased, iii) software installation, iv) software maintenance, v) connections with other systems, vi) software upgrades according to the evolving needs of the DMO, and vii) continuous training.

Since this is probably the most costly and complex decision facing debt managers, the cost considerations should encompass not only the development and installation cost but also the total cost of ownership consisting of long-term maintenance and upgrade costs. Customization of the system to fit the needs of the DMO might require changes to core functionality. These may not be supported under standard maintenance agreements. Additionally, not testing fully the impact of changes on core functionality, might lead to problems down the road. Cost of customization of the commercial systems can be very expensive. Such action might also lead to over customization which is a significant technology risk.

The cost drivers for an IT system are the following:

|`o` Staffing, with IT professionals with the proper programming skills and DMO/Treasury<br>officials with extensive knowledge and experience|
|---|
|`o` Infrastructure with hardware capable to host the software but also with the potential for<br>expansion|
|`o` Software – development|
|`o` Software – licenses, for example when using a database management system such as|
|Oracle, connections with market data providers such as Reuters|
|`o` Quality Assurance, not only during the development of the system but continuously|
|`o` Business Analysis|
|`o` Information Security|
|`o` Business Continuity|

Being the leading solutions purely developed for governments, the public DMS are usually the first products considered by governments seeking a DMS. These softwares, being tailored to the needs of sovereigns, can meet most of the requirements of governments. The public DMS provide countries with the benefits of shared ownership of the software and a strong voice in decisions on the improvements that will be made. Moreover, the improvements are shared equally among countries. Commonwealth Secretariat and UNCTAD see themselves as custodians of the software as a public good and are committed to ongoing development of their respective systems, maintenance and training. Both organizations have a strong focus on capacity-building, offering a range of training and development services on the software and related areas of debt management.

However, they are less efficient and flexible at expanding according to the evolving needs of the governments (e.g., indexed debt, liability management operations) and connecting them to external systems might require extensive work. The revised versions of public DMS bring in the most debt related information and operations but not in the most user-friendly way and through work arounds.

In addition to the public DMS, several other commercial solutions (e.g., Wall Street systems, Quantum, Calypso, Murex, Star treasury system), although mainly targeting the private sector, are also available. These systems are typically used by the treasuries of corporations and financial 19