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Rich Castagna, Editorial Director
TCO numbers vary widely because there are highly variable, subjective numbers that go into the calculation. For example, the cost of lost business due to an outage is one of the factors and different industries are affected more significantly than others. A company that makes its money based on the processing of information such as E-bay would have a very high dollar value on the price of an outage. There are many factors in calculating TCO. Some of listed below.
Elements of TCO include:
Product costs - software and hardware
Implementation costs - Training costs
Administration (operational) costs - Support - monitoring and tuning, Maintenance (including power, space, etc.), Upgrade
Data unavailability cost - Direct - additional support, Indirect - lost business
Doing TCO calculations is a business. Some professional services organizations do that as part of their practice. I believe Gartner does it as a consulting engagement. I've worked with Larry Hendershot of Associated Management Group before on TCO.
If you're looking for an easy answer, it's not there. There are many variables and it takes time to research. That's why these consulting companies make money at it.
Randy Kerns
Evaluator Group, Inc.
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This was first published in May 2002