Total Costs of Ownership (TCO) is the one financial metric that is sure to irritate somebody in IT.
Technologists (often justifiably) like to emphasize the transformative and innovative power IT can have on your business, and those can be hard to measure. And TCO considers business operations only on a direct cost/savings model.
Our Ann All had a great post about misgivings - and sometimes even outright contempt - some IT managers have for TCO. One source she spoke to went so far as to describe the metric as "worthless."
Clearly, TCO is not appropriate for some strategic IT projects, such as business intelligence. But the reality is that maintaining a computing resource for your data entry pool is not any different these days than maintaining desks, chairs and pencil sharpeners - it's a basic cost of business and TCO is the best metric for evaluating different models for delivering such backbone services.
Here in the IT Downloads library, IT Business Edge members can find numerous TCO calculators that have been pre-populated with categories and assumptions about specific technologies. Last week, we discussed a tool for costing out desktop virtualization, which is coming into its own as an alternative to supporting full desktop clients.
The True TCO Calculator from our partners at Uptime Institute, evaluates the costs of operating a high-density data center. The tool opens with a "simple" model tab, which includes more than 80 rows of factor evaluation. (There is nothing simple about running a data center, obviously).
The tool also includes some Department of Energy and price indices information that you may want to update (gathering such data should be part of the research behind any data center project).
If you are not ramping up to a huge project, but still would like to get an idea of the TCO on an initiative, you should check out the general TCO Calculator from our partners at Info~Tech Research Group.
The spreadsheet breaks out potential cost factors for projects in a fairly discrete and comprehensive model - odds are any category that impacts your project will be covered. The breakdown is as follows:
End User IS
The tool calculates TCO over a three-year window, but as with cost factors, you can easily modify it to meet your own needs.