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Managing Information Systems and Communication Technology Presenters: Tim Stoik & Ethan Turenne What to Leave With An understanding of Total Cost of Ownership (TCO) and why it is a big deal when Managing Information Systems and Communication Technology

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what to leave with
What to Leave With
  • An understanding of Total Cost of Ownership (TCO) and why it is a big deal when Managing Information Systems and Communication Technology
  • An understanding of the process involved with Total Cost of Ownership
main topic for today
Main Topic for Today
  • Factors and Elements that make up the Total Cost of Ownership (TCO) for Desktop Computing

Source: study Conducted by the University of Tennessee

what is tco
What is TCO?

Definition: TCO is a financial estimate designed to help consumers and enterprise managers assess direct and indirect costs related to the purchase of any capital investment, such as (but not limited to) computer software or hardware.

total cost of ownership
Total Cost of Ownership
  • From a recently released Gartner study they asked how much would TCO be of 10 computers that are $2,000 each after administration and management costs are added up.

Any Guesses?

why bother with tco
Why Bother with TCO?
  • Nearly 80% of IT costs occur after the purchase of the unit – half lie outside the budget
  • If a company can save Millions by switching there POS from Linux to Windows, that’s what makes TCO important to consider
windows vs linux for tco
Windows Vs Linux For TCO
  • When the Facts are there!
  • Link To a Cool Video
what makes up tco
What Makes Up TCO
  • Purchase Price
  • Training Costs
  • Application costs
  • Maintenance
  • Environmental Change
  • Contracted Technical Support
purchase price
Purchase Price
  • Direct:
    • Desktop computer – Operating systems
    • Utility Apps – Communication equipment and software
  • Indirect:
    • Departmental Fileserver or Departmental Printer
training costs
Training Costs
  • Both Direct and Indirect cost apply:
    • Formal and informal training occurs at the installation of every desktop
    • Cost and Method for training vary
      • Computer based training
      • Local vendors to out-of-town vendors
      • Local experts to local classes
application costs
Application Costs
  • Includes any change necessary to the system in order to maintain compatibility within the institution:
maintenance and support costs
Maintenance and Support Costs
  • Labor force and personnel needed to support the desktop computer environment
  • Labor force and personnel includes:
    • Telephone support lines
    • Desktop service specialists
    • Desktop installers and troubleshooters
    • Customer service help for first-hand help
environmental change costs
Environmental Change Costs
  • communication linkage to the institutional communication backbone
    • Starts with software and network interface card
    • Ends with the maintenance of the communication environment for the enterprise
contracted technical support costs
Contracted Technical Support Costs
  • Cost includes the acquisition and maintenance of vendor contracts which provide expert tech support for the desktop – includes:
    • Warranty and maintenance agreements
    • Second and third level software expertise
recommendations to lower the tco for purchasing
Recommendations to Lower the TCO for Purchasing
  • Develop standards configurations and review them quarterly.
    • Basic, intermediate, MultiMedia, and Power level
  • Limit the number of vendor / manufacturers
    • (6 choices)
  • Simplify acquisition of new systems -
    • (web based or e-commerce methods)
  • Certify vendor models and configurations
    • Including OS and NOS, and some peripherals
  • Aggressively retire legacy hardware and software systems
  • Make new technology affordable
recommendations to lower the tco for training
Recommendations to lower the TCO for Training
  • CBT contract that provides a large # of courses
  • Use CBT material as quick reference via its online indexing
  • Offer course via the web
  • CD’s with course material
recommendations to lower the tco for applications
Recommendations to Lower the TCO for Applications
  • Simplify the profiles by selecting a Company “soft standard”
  • An industrial standard utility suite
  • Aggressively retire legacy systems
  • Automate the updates and distribution software
lowering the tco for maintenance and support
Lowering the TCO for Maintenance and Support
  • Establishing “soft Standard” based on industrial standards
  • Centralize and automate management and support
  • Simplify the reporting and problem tracking procedures
  • Develop a tracking system to measure improvements
lowering the tco for environmental changes
Lowering the TCO for Environmental Changes
  • Same as Maintenance and support for the most part
  • Simplify the environment and limit the # of choices
lowering the tco for tech support
Lowering the TCO for Tech Support
  • Centralize the management and support of vendor contracts
  • Limit the # of choices and contracts available
  • Develop and advertisement methods to inform the organization of there existence

TCO is a major factor in every companies budget. Using and understanding TCO right will make or break an Organization in the long run. TCO is very critical when there are mass purchases of computers or software in the organization. Know the facts about a product and chose wisely.