A Holistic Approach to Understanding the Costs of Computing
Total Cost of Ownership is a concept developed in the late 1980's designed to provide insight to the real cost of computing. More than providing a different perspective of the IT capital and operations budget, TCO takes into account indirect, or non-budgeted costs as well, and presents costs and metrics on a per-client-computer basis. This holistic approach takes into account amortized equipment costs for technology (client computers, servers, network equipment, printers, software and external service providers), direct labor, and indirect labor. Direct labor, expressed in FTE terms is the formal support organization and any others who have as part or all of their responsibility the support of users and the computing infrastructure. Indirect labor is the time spent by users in training and lost productivity dealing with problems or time lost when the computer or network is down.
Performing a TCO assessment sheds a lot of light on the real cost of computing for the school or district and can be used as an approach to budgeting. Furthermore, the CoSN-Gartner TCO tool provides the high and low values from the eight K-12 TCO case studies for each result field as a means of comparison and to help flag areas that may need attention. This allows you to focus on improving and justifying the cost structure of your computing environment. The per-client-computer costs can vary widely depending on many factors, including district size and complexity of the computing infrastructure. A guide entitled "What is your TCO Type
" that was published a few years ago by CoSN addresses some of the cost/value questions and is still relevant today. The question is not cost, but effective use of computers.
The inclusion of indirect labor provides a broader view of costs, as lost productivity on the part of end users (a real but unbudgeted cost) is accounted for. This holistic view of costs allows for a modeling of the current environment and provides a means for projecting the effects of anticipated changes, such as number of support personnel or computer refresh cycle.
It is recommended that a baseline TCO assessment of the entire organization (district or independent school) be performed first and updated annually.
See the TCO tool/Tips and Recommendations
for recommendations on conducting a successful TCO assessment and the TCO checklist
for IT efficiency considerations.