Total Cost of Ownership (TCO)

Jim Zimmerman

We are pleased to be partnering with Analyst Perspectives and offering an excerpt of their high valued content. Click here to download the full report.

Based on analyst opinions reviewed in this report, we believe that implementing a TCO process is essential for businesses because it aids in recognizing and/or minimizing costs over an IT asset's lifecycle and can help improve IT and business alignment processes. While we agree TCO has become a critical tool for financial analysis and IT decision-making, we believe the unbridled use of TCO in IT-decision making without taking into account uniqueness of assets and technologies, and solely considering costs, can be counter-productive for businesses from the long-term perspective.

Notwithstanding these limitations, we believe TCO still remains a very productive tool that helps reveal the inherent inefficiencies and provides insight to help sort out existing problem areas. We also believe that IT departments not using TCO to justify their spending decisions are not only doing themselves and the enterprise a disservice, but are missing out on gaining monetary benefits that can be derived through its proper application.

This report takes an in-depth look into the concept of Total Cost of Ownership (TCO) and how it measures and enhances IT-efficiency within business enterprises. Some of the key issues addressed in this report include:

. What is TCO and how is it calculated?

. Are analyst firms upbeat on the long-term utility and relevance of TCO for the IT industry?

. What are some of the best practices associated with TCO?

Analyst firms referenced in this report include Gartner, Info-Tech Research and Odellion Research.

Our partners at Analysts Perspectives present a discussion on TCO by several analyst firms, including Gartner, Info-Tech Research and Odellion Research, and how it fits into the enterprise.

Some key findings include calculating the Return on Investment (ROI) and Total Cost of Ownership (TCO) of any technology is essential prior to adoption; the lifecycle of an IT asset typically consists of five phases, namely Acquisition, Deployment, Operations, Support, and Retirement; and the main benefit of TCO is the ability to know beforehand both one-time and recurring costs related to the implementation of a software or technology investment.

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