Small and Medium Business Solutions Center

Total Cost of Ownership. TCO. Lifecycle maintenance costs.

The terms may be familiar. But the impact these have on IT costs may not be the easiest concept to grasp, even for some IT professionals. With a little research, everyone who benefits from an optimized IT infrastructure can understand TCO -- and how managing TCO can add up to both immediate cost reductions and significant long-term savings.

So, what is TCO?

With the introduction of the personal computer and the client-server infrastructure, businesses needed a new way of quantifying IT costs. Simple depreciation of capital assets, like mainframe systems, no longer applied.

As a result, the industry started basing total cost of computer systems on initial purchase price plus overall long-term costs. This calculation became known as Total Cost of Ownership (TCO).

TCO is normally broken down into three main categories:

• Initial Capital Costs (price paid at point of purchase)
  •  Includes hardware, operating system, office productivity software, virus protection licenses and associated peripherals.

• Maintenance/Support

• The costs associated with installation: training (IT staff and end users), troubleshooting/repairs, help desk support
• Hardware and software upgrades/repairs; parts stocking/replacement
•  Infrastructure/Hidden or Soft Costs
  • Servers and routers, network cable and electrical, wireless access points, floor space for network servers and storage
  • Electrical power consumption and cooling/ventilation
  • Systems management (virus protection, IT inventory tracking, and parts/software consistency)
  • Backups (server and desktop)

Smart TCO Management

When they’re aware that computer systems cost more than just the initial price, decision makers can improve their businesses’ financial strategies through intelligent planning. For many, preparedness starts with choosing the right IT partner, one that has developed TCO management strategies for long-term savings.

Adopt Standards

The most important element of TCO management is selecting standard platforms for both hardware and software. Minimizing the number of platforms may be the smartest, easiest way to save resources, reducing costs associated with upgrades, maintenance and training.

Employing an IT vendor that has adopted industry standards as its baseline can help with cost-effective systems implementation and maintenance. That vendor will use resources, such as Dell™ PowerEdge™ servers, which feature open-standards-based architecture and the most cost-effective technologies and software.

Choosing hardware systems on a single platform is another way to keep TCO low. Some computers, such as Dell Latitude™ E-series laptops, are specifically designed to use interchangeable parts: batteries, optical and hard drives, docking stations, etc. These systems automatically create a pool of parts and accessories.

Standardizing on a platform also minimizes the costs associated with managing software images, drivers and maintenance across the network.

With integrated systems, such as Dell’s EqualLogic™ storage solutions, IT personnel can back up individual data, file images and software. The more homogenous and integrated the hardware and software, the lower the cost of IT infrastructure.

Automate monitoring and backup

Reducing the amount of desk-side attention to remote systems is another extremely effective, easy-to-adopt cost-reduction measure. It reduces costs over time, especially as you multiply the number of trips saved for every system in your network over weeks, months, and years.

Tools such as Dell’s remote management utilities allow remote monitoring of individual desktop, laptop and server systems, as well as their individual components. One central management console replaces a small army of IT technicians.

Smart desktop systems, such as Dell OptiPlex™ systems, provide easy network-wide management. An IT manger can push software and driver updates -- or ensure virus protection is updated -- remotely and cost effectively.

Minimize soft costs

One area often overlooked in TCO calculation is the cost to power and house systems. To help reduce energy expenditure, companies turn to ENERGY STAR®-compliant and EPEAT® Gold certified systems, which include some configurations of Dell Precision™ and OptiPlex desktops. Systems such as these significantly reduce power consumption for dramatic energy savings.

Another cost-saving trend in server technology, consolidation and virtualization, reduces footprint space, power consumption and cooling costs. In a consolidated and virtualized environment, Dell’s M-series blade servers both provide more CPU power per IT-center square and reduce energy consumption. Coupled with Dell’s server virtualization technology, each server reaches its maximum capacity -- for more power with little investment.

IT Partnership

You can see what an important role your IT vendor can play in helping you reduce TCO. A dedicated, enterprise-level partner such as Dell not only helps to ensure that you have integrated hardware and software, but also makes certain that you get seamless support services, such as Dell ProManage-Managed Services.