TSA Renegotiation
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Any useful TSA IT cost benchmark starts from one fact: IT is almost always the largest function in a transition service agreement, often around half of the total bill or more. It costs the most because the divested business ran on the parent technology estate, and unwinding shared infrastructure, applications, and end user services is the slowest and most expensive part of any separation. Controlling IT cost is therefore the heart of effective TSA cost reduction.
IT dominates the TSA because it is where the divested business was most deeply entangled with its parent. Few businesses run their own independent technology estate inside a larger company; instead they share data centers, networks, application instances, security tooling, and end user services. Separating all of that is the largest single task in most carve-outs.
That entanglement makes IT both expensive and slow. A finance process can be rebuilt relatively quickly, but migrating off a shared ERP, separating a network, or standing up independent infrastructure takes months and sometimes longer. Because IT services stay on the TSA the longest, they accumulate the most cost over the transition.
The benchmark figures here are indicative ranges seen across carve-outs, not fixed prices. The consistent finding is the concentration: IT routinely accounts for around half of total TSA cost and frequently more. A buyer that understands and manages IT has addressed the majority of the transition cost problem.
Infrastructure and hosting, the data centers, servers, cloud tenancy, and the platforms applications run on, are usually the heaviest single item within IT. The business depends on continuous access to these platforms, and replacing them means building or migrating to independent infrastructure, which is neither fast nor cheap.
Hosting cost on a TSA often reflects not just the underlying compute but the seller overhead of keeping a carved out business on shared platforms it would otherwise decommission. Buyers should ask for the cost basis here, because hosting is a place where allocated cost and mark-up can inflate charges beyond the true cost of provision.
The exit from hosting is typically a migration program in its own right, and its timing gates much of the rest of the IT exit. Because it is both expensive and foundational, infrastructure deserves early planning and the most rigorous benchmarking of any IT line in the catalog.
Application services, especially access to the parent ERP, are among the hardest IT dependencies to unwind and a major component of TSA cost. The business runs its core processes on these systems, and standing up independent applications, migrating data, and cutting over without disrupting operations is a substantial program.
ERP separation in particular tends to define the critical path of the whole carve-out. Finance, procurement, and operational processes often depend on it, so until the ERP is separated, a cluster of related services cannot exit. That makes ERP both a large cost in itself and a gating dependency for cost elsewhere.
Buyers should treat application and ERP exit as the longest pole in the tent and plan accordingly. The cost is significant, the timeline is long, and slippage here cascades into extension fees across every dependent service. Early, realistic planning of the application exit is among the highest value moves in controlling IT TSA cost.
End user services, email, identity, devices, and the service desk, form another meaningful IT cost pool. They are visible to every employee, so continuity matters, and they often involve migrating email domains, rebuilding directory services, and reissuing devices across the whole workforce.
Security services add cost that buyers sometimes underestimate. The business needs network security, identity and access management, monitoring, and endpoint protection from Day One, and these cannot lapse during the transition. Separating security tooling and standing up independent capability is both a cost and a risk that deserves explicit planning.
These services tend to be broad rather than deep, touching many users with relatively standardized work. That makes them more predictable to benchmark than infrastructure or ERP, but also a place where a large headcount multiplies even modest per user charges into a substantial line. Scoping them tightly and exiting promptly keeps the cumulative cost in check.
Because IT dominates the bill, controlling it is the single highest leverage move in TSA cost reduction. The starting point is an early, realistic migration plan: knowing what must be built or migrated, in what sequence, and how long it will take, so that IT services exit on a schedule the buyer controls rather than drifting into extensions.
Benchmark and challenge the major IT lines individually. Infrastructure, applications, end user services, and security each deserve scrutiny against typical ranges and against the seller actual cost to provide. The largest charges are where padding and inflated allocation do the most damage, so they warrant the hardest questions.
Sequence the IT exit around its dependencies. Infrastructure and ERP gate much of the rest, so planning their exit first unlocks the ability to exit dependent services and remove their cost. Managed this way, the IT workstream goes from the biggest source of overrun to the biggest source of savings, which is exactly where the buyer wants its attention.
Because the divested business was most deeply entangled with its parent in technology, sharing infrastructure, applications, networks, and end user services. Unwinding that is the slowest and most expensive part of separation, so IT services stay on the TSA longest and accumulate the most cost, often around half the total or more.
Infrastructure and hosting are usually the heaviest single item, followed by application services and ERP access, which are also the hardest to unwind. End user services and security form meaningful additional pools, broad across the workforce and ongoing through the transition.
ERP separation often defines the critical path of the whole carve-out. Finance, procurement, and operational processes depend on it, so until it is separated a cluster of related services cannot exit. That makes ERP both a large cost and a gating dependency for cost elsewhere.
Build an early, realistic migration plan so IT exits on the buyer schedule; benchmark and challenge each major IT line against typical ranges and the seller actual cost; and sequence the exit around dependencies, since infrastructure and ERP gate much of the rest.
How transition cost splits across IT, finance, HR, and operations.
Read the article →How to plan and sequence the IT separation that drives TSA cost.
Read the article →How transition cost scales, and why smaller deals weigh heavier.
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