TCO - The True Cost of Ownership

Increasingly, IT executives are turning their attention to the total cost of ownership (TCO) of both their existing infrastructure and future investments. Originally conceived by Gartner Group in the mid 1990s, TCO is a calculation designed to help IT managers assess the costs and benefits, both direct and indirect, related to the purchase of any IT component. The goal is to determine a final figure that reflects the real cost of a purchase, all things considered.

While TCO is typically associated with desktop computers, it can be used to determine the total cost of any aspect of a business's IT infrastructure, including networks and enterprise servers. IT decision makers need to understand the TCO of these purchases prior to deciding to replace outdated equipment with new hardware or agreeing to support new applications Purchase price versus cost of ownership.

Given the current economic environment, budgets and headcounts are shrinking-and IT departments need to find innovative ways to do more with less. TCO can then be weighed against to the total benefits of ownership (TBO) in order to determine the viability of a purchase.