Thursday, September 02, 2004
"TCO is really about process improvement and best practices that result in lower costs and improved service levels...", Bill Kirwin, the father of TCO.
What does it really cost to own a PC? The answer is the Total Cost of Ownership (TCO). The term was introduced by Bill Kirwin from Gartner Group, Inc. It is estimated that for a $1500 PC, the TCO (Total cost of ownership) is $20,000 over a 4 year period. Gartner's TCO studies have repeatedly shown that the sticker price of technology is a fraction of the true total costs.
Why so high? TCO examines everything that goes into supporting the PC. The cost of the PC, wires, maintenance contracts, spare parts, and labor costs to maintain and repair. It also includes the indirect costs like the time each individual learns to use the desktop, the downtime caused by viruses, and the controversial "futzing". Futzing means the time spent playing with the PC, and includes everything from setting up elaborate screen savers to playing games.
Why is TCO important and what is it used for?
- TCO provides a way to compare products. For example, the cost of Linux vs. Windows is only valid when you compare the TCO of the products.
- TCO enables examination of alternatives to having PCs, including using thin clients or internet machines with Application Service Providers and other subscription services.
- TCO provides the SOHO with the true value of an asset. If that value is much higher than assumed, it might call for more protection.
The Real Cost of Owning a PC By Dale Edmonds CNETAsia.
"Computers are steadily getting cheaper while IT budgets demand more and more resources, a financial puzzle that can be solved with Total Cost of Ownership."
Total Cost of Ownership Quickstudy by Jacqueline Emigh
"Total cost of ownership (TCO) has been a steady beacon in the information technology landscape since 1987, when Bill Kirwin, vice president and research director at Stamford, Conn.-based Gartner Group Inc., first applied the model to desktop systems. "
Gartner, Inc. is the leading provider of research and analysis on the global IT industry. Go there and you will find 400+ documents on TCO - most are for sale.