Total Cost of Ownership

What is Total Cost of Ownership?

Total cost of ownership refers to all the costs associated with the use of computer hardware and software including the administrative costs, licence costs, hardware and software updates, training and development, maintenance, technical support and any other associated costs. Total cost of ownership analyses serve as planning tools: until you know what you own it is hard to come up with a plan to reduce costs or to make better use of the available resources. This section outlines the purposes, reasons and benefits for undertaking a TCO; and proposes some contextual issues, including the use of open source software, that ought to be considered when undertaking a TCO.

Purpose of Undertaking a Total Cost of Ownership Analysis:

Total Cost of Ownership analyses are undertaken for a variety of purposes including to:

• Identify the components of an IT deployment
• Enable calculations of what the total assets are worth
• Allow for the weighing up of options
• Help in the management of risk
• Enable analysis from a system or whole school perspective.

Why Undertake Total Cost of Ownership Work?

Examining total cost of ownership components and frameworks is important because:

• The role of technology within organization should be outlined
• Purchases of hardware, software, licences, professional development and other associated costs should match the roles required of the technology in organization , and deliver a Return on Investment (ROI)
• Decisions about what purchases can best be handled in the organization can be made based on documented total cost of ownership analyses
• Organization has to budget over time according to the technology architecture and standards
• Completed total cost of ownership frameworks provide a basis upon which to monitor costs over time.

How can Total Cost of Ownership Analyses Help Organization Plan?

Frameworks for conducting total cost of ownership operate at different levels within organization and have the capacity to:

• Provide leaders, managers and administrators with an oversight of expected IT costs
• Provide a basis through the use of agreed benchmarks upon which to measure changes and improvements in technology
• Enable the development of budgetary guidelines
• Support the development of informed understandings about all the costs that are required to adequately support the use of technology in organization
• Enable insights into the longer-term costs of particular models of technology deployment
• Enable identification of the direct and ‘hidden’ costs of technology deployment in the business sector
• Facilitate decision-making between different choices available, based upon agreed benchmarks;
• Provide the basis for the development of business cases for technology investments;
• Support decision-making about the pros and cons of centralised deployment and management versus site-based strategies.

Total Cost of Ownership Analyses Should not be Undertaken in Isolation

Total cost of ownership data is context or location specific, and should not be undertaken in isolation to other activities occurring within the school or jurisdiction.

As such:

• Technology should be viewed as part of education and the infrastructure needs to support the teaching and learning
• Organization needs to understand their educational goals and how technology supports and aligns with those goals
• The key to understanding the financial aspects of the use of software is consideration of the range of viable options for the investments to be made.
• Business case analyses of viable solutions should include the identification of both quantifiable and intangible benefits for those respective potential solutions.

Determining the Costs: Total Cost Of Ownership Data Collection Proforma