Five thoughts on total cost of ownership

Why the CIO and CFO are stuck in the same boat when it comes to TCO calculations, and how only an independent expert can help.

1. Many do it, but few are good at it.

All too often, TCO is just a buzzword. For TCO to provide reliable criteria upon which to base a procurement and financing decision, an end-to-end calculation must be carried out. But most companies (and providers) lack the expertise, experience, benchmarks, and time to do so.


2. The CIO and CFO are stuck in the same boat when it comes to TCO.

CFOs love TCO calculations, but they often do not trust them. Unless all internal and external costs are included, the calculation is worthless to the finance department. CIOs are therefore well advised to provide their colleagues in finance with a comprehensive TCO overview.


3. Only independent experts can calculate TCO fairly.

Every large service provider offers TCO calculations, but they are biased toward the provider’s offerings, of course. Unless you have access to reliable benchmarks, it can be difficult to gauge this bias. Only independent (funding) partners can do that.


4. TCO for complex infrastructure projects? That is too big an ask for most companies.

It is fairly easy to calculate the TCO for a single server, but only few can handle such a calculation for an entire international IT infrastructure. That requires experience, benchmarks, and expertise that most companies simply do not have.


5. TCO and flexible contracts are not compatible.

If you base your purchasing decision on TCO, are you locked in over the entire period of the contracts? No. Flexibility is key – it is not just about financial aspects, it is also about satisfied users. The right financing partner can manage the contractual situation accordingly.



Do you have a different opinion? Would you like to know more? Then please feel free to contact me.

Todd Fortescue

Vice President of Sales, ANZ

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