Determining Total Cost of Ownership (TCO) is a way of measuring, understanding, and managing IT costs. Enterprises often misunderstand what TCO is and how it should be used. In this research note and attached spreadsheet, Info-Tech defines TCO and examines the most useful context for this measurement framework.
TCO Defined
The key objective of TCO is to improve the overall value of an IT investment. It does so by:
- Providing a framework for understanding the costs associated with Return on Investment (ROI);
- Comparing cost profiles of various environments over time; and
- Eliminating vendor hype in competitive purchasing decisions.
TCO is a comprehensive set of methodologies, models, and tools used to help an organization assess IT costs over time. This implies the collection of all costs associated with IT investments, including capital investment, license fees, leasing costs and service...