The total cost of ownership (TCO) is an accounting methodology that is proving to be crucial in making sound IT decisions in today’s marketplace. The TCO of a computing system is made up of more than just the cost of acquiring and activating a system. The TCO also includes the costs of keeping that system running.
Unfortunately, many IT professionals conveniently factor in only the costs of purchasing hardware and software when doing TCO analysis. This is not surprising because, when pressed for time, most IT pros will only take into account what is easy to find out. In the relatively easy-to-manage world of mainframes and big centralized computing systems, hardware and software accounted for much of the cost factors. Now, however, in the era of e-business, client-server, and peer-to-peer systems, the costs of managing and maintaining computer systems are often much higher, and these indirect costs cannot be ignored.
To help you see what exactly goes into the computation of a system’s TCO, you can download our systematic TCO approach now. According to this download, costs can be grouped in two ways: direct (costs that pertain to the acquisition expenses or, in other words, the cost of buying the system) and indirect (costs of maintaining availability of the system to the end users or, in other words, the costs of keeping the system running). These groups are then broken down into individual factors that you can consider and use in your own calculations. The download also covers industry estimates for TCO, discusses what TCO studies reveal, and gives some underlying reasons for high TCO.
It’s important to understand TCO in order to effectively evaluate all of your deployment alternatives. Studies on TCO have shown that the TCO of interconnected servers, workstations, and intelligent access devices is higher now than when compared to the centralized mainframe and dumb terminals of yesteryear. The key reason is the lack of attention to post-deployment system requirements, most especially the availability requirement.
This download shows you how to pay special attention to organization, people, process, and technology issues in your organization in order to keep the total cost of ownership from spiraling out of control.
Toni Bowers is Managing Editor of TechRepublic and is the award-winning blogger of the Career Management blog. She has edited newsletters, books, and web sites pertaining to software, IT career, and IT management issues.