Managing the Total Cost of Ownership (TCO) of equipment in your IT assets

This indicator groups costs related to the acquisition and the use of a workstation during its lifespan.

The TCO model is useful to IT managers to control and manage costs charged to the budget (direct costs) and costs not charged to the budget (indirect costs) related to owning and using an IT asset during its lifespan.

Direct costs (charged to budget):

• Hardware and Software (routers, back-up devices)
• Management (forecast, acquisition, test, deployment, back-up maintenance)
• Support (help desk, training)
• Development
• Telecommunication fees (WAN expenses)

Indirect or Hidden Costs (i.e. not charged to budget):

• Costs related to the final user (resort to colleagues or solve problems without any help, auto-training, development of personal applications).
• Waste of time (waste of time expected or not, system and application failure, help desk department overload).
• Consequences of time waste (profit and productivity losses).

Please note that there are various TCO calculation methods (Gartner, Interpose…) and that, as the TCO is an average figure, it can be different for each company and significantly varies.

Despite the differences observed in the results, the TCO is clearly too high for most companies. These companies wish to implement sound methods to reduce the TCO and the acquisition of asset administration, asset management and help desk software lies at the core of this initiative.

However, we cannot limit the concept of the TCO to a mere cost factor. Indeed, it is important to take into consideration the cost of a PC in relation to the profit that a company can generate from it. A high TCO would be acceptable for a company that, for example, banks on its technological investments to gain market leadership.