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Why is TCO important?

People looking at costsSome companies define TCO as the total cost of using and maintaining an IT investment over three to five years. These calculations consist of a combination of hardware, software, operations and administration cost and end-user operations and downtime. TCO is often overlooked and unbudgeted, presenting an inaccurate IT budget.

Most companies believe their costs end at the point of installation. However, research shows that a computer system’s base price typically represents less than 20%, with support, maintenance and labor accounting for the remaining 80%. These expenses represent the greatest piece of the TCO equation and should not be taken lightly.

Understanding Technology Cost

How can your organization reduce unnecessary costs and focus your resources on the areas that create the most value for your business?
For some companies technology is a source of competitive advantage. However how do you quantify the value that IT brings to the table? Before you can evaluate the return on investment or ROI, you need to understand your costs. Total Cost of Ownership or TCO is the method of calculating your IT costs in a way that will help you to make better decisions, and understand where your dollars are going.

How Much Do You Spend On Technology? Have you really thought about it?

Killmenow.comThe initial purchase is just a piece of the TCO, which means a $1,500 PC could cost nearly $15,000 over its three-year lifespan. If a 10 person company upgrades its computers every 3 years, it likely spends a minimum of $70,000 managing those same computers post purchase. The same realistic theory applies to buying servers – the real investment begins once that equipment is installed in your office. A rule of thumb to use to estimate the average cost to maintain a computer is approximately one hour a month after initial setup .

PC's, networks, and servers require constant administration and maintenance. Costs related to security, software updates, computer repair and support are unavoidable. However, simplifying your IT and management will increase efficiency, expand productivity and significantly reduce your TCO. A solution is the service provided by The Solution Centre called RemotelyManaged . It addresses these and additional concerns such as anti-virus software, backup services and monitoring.

How to Reduce Total Cost of Ownership?

IT spending is a balancing act! Here are some basic ways to reduce your TCO and add to your bottom line.
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1. Outsource the IT functions, such as technical support, data storage and back-up, to trusted advisors such as The Solution Centre.
2. Establish and follow a compressive backup and disaster recovery plan. bacITup2
3. Lock down the hardware by limiting who can make changes to the system settings.
4. Establish strict internet and email policies.
5. Seek solutions that can scale up or down with your organization both in size and cost.