How to Use the Enterprise Software TCO Calculators

What This Article Covers

  • The Common Thinking on Overall TCO
  • The Necessity for Independence in TCO
  • Our TCO Analysis
  • Our Work on TCO Estimation and TCO Calculation

Introduction

TCO or total cost of ownership is the estimation of the total cost of enterprise software. TCO analysis is often discussed but very rarely performed. TCO is often proposed by software vendors, but every software vendor “TCO analysis” invariably shows the software company that performed the study or paid for the study to have the lowest TCO.

The Necessity for Independence in TCO

Clearly, no software vendor’s TCO study should be accepted and TCO should be performed only by independent entities.

  • Brightwork Research and Analysis has the most intellectual property and experience calculating TCO.
  • Our calculators below demonstrate this, and they are the only calculators on TCO available directly on the web that we know to exist.
  • In our research into TCO methods employed by other entities, we invariably found costs that were left out. We call these TCO studies “PCO” or partial cost of ownership studies. We could not find a single entity that followed a logical TCO method. Seeing such a vacuum in the marketplace is why we put so much effort into our own TCO analysis.

What It Is

This offering provides buyers with the detailed information they need to for both the total cost of ownership of a single application, as well as the comparative total cost of ownership between multiple applications. This is the only self service TCO calculator that exists on the Internet, and it is available currently for 57 of the most well known enterprise software applications. This calculator receives input from you and automatically adjusts the costs so that they are customized for your intended way of implementing and using the software.

Transforming a Complex Analysis into a Simple Cost Breakdown

Even though all of the calculations behind each TCO calculator are complex and have been extensively tested and validated, they are easy to use. All that you need is basic information about your project such as the number of projected users, whether the implementing is more simple or more complex, etc..

Each package covers a single application including a comprehensive total cost of ownership analysis that takes into account the following costs:

  • Software Costs
  • Hardware Costs
  • Implementation Costs
  • Maintenance Costs
  • Lifetime Improvement Costs

What Is Included

Each package is a combination of two analyses. The first analysis is the interactive TCO Calculator which is provides a total TCO based upon the individual costs of software costs, hardware costs, implementation costs, maintenance costs as well as Lifetime Improvement Costs (the costs of the estimated improvements and adjustments to the application over its lifetime). Both these individual component costs as well as the aggregate of all the costs constantly change given your input to the calculator.

How It’s Unique

Our self-service calculators have been developed through detailed analysis verified by many years of project experience combined with all the available research – all in order to develop a series of uplifts to costs based upon inputs. The formulas used are nuanced, and do not simply “scale” in direct proportion with changes to the inputs.

  • Our TCO calculators are designed to scale to any sized implementation and different levels of implementation complexity and customization.
  • We offer a true TCO by estimating internal costs (such as the time spent by internal resources on implementation and support) as well as the external costs. In comparison with the very limited TCO studies that exist on enterprise software, our TCO calculations are easily the most comprehensive.
  • Having performed this analysis for many applications, we have brought key observations between these applications as well as between various software categories.

How It Works

Each TCO calculator is self-service allowing you to continually change different elements in order to see the impact on costs. They are designed to adjust to the specific project factors such as the number of users, the general level of customization, the number of post go live adjustments to the application, etc..

The TCO calculators can improve your ability to plan your purchase.

Total Cost of Ownership

Select Your Software Category of Interest
Big ERP
SAP ECC
SAP ECC XL
JD Edwards EnterpriseOne
JD Edwards EnterpriseOne XL
Epicor ERP
Infor Lawson
Small and Medium ERP
Sage X3
SAP Business One
MicroSoft Dynamics AX
Process Pro
RootStock
OpenERP
ERPNext
JD Edwards World
Finance & Accounting
Intacct
Financial Force
NetSuite OneWorld
Intuit Quickbooks
PLM
Arena PLM On Premises
Arena PLM SaaS
Hamilton Grant
SAP PLM
Demand Planning
SAP DP
Oracle Demantra
ToolsGroup SO99 Forecasting
SAS Demand Driven Forecasting
Tableau Forecasting
Demand Works Smoothie
Forecast Pro TRAK
Supply Planning
SmartOps
SAP SNP
ToosGroup SO99 Supply
Demand Works Smoothie
Production Planning
SAP PP/DS
Aspentech AspenOne
PlanetTogether Galaxy APS
Preactor
Delfoi Planner on Premises
Delfoi Planner SaaS
BI Heavy
SAP BI/BW
SAP Business Objects
TeraData
IBM Cognos
Oracle BI
SAS BI
MicroStrategy
Actuate One On Premises
Actuate One SaaS
BI Light
Crystal Reports
Tableau BI on Premises
Tableau BI
QlikTech Qlikview
Birst
CRM
Salesforce
SAP CRM
Base CRM
Sugar CRM
NetSuite CRM
Infor Epiphany
Microsoft Dynamics CRM
Oracle CRM On Demand
Oracle RightNow

Our Work in TCO Estimation

We are really the only source on TCO that includes all the costs. We also offer the only online TCO calculators and have performed more research into TCO calculation of enterprise software than anyone else.

But we provide an objective consulting on TCO.

  • We customize TCO per client, using more information than is available as inputs to our online calculators.
  • Unlike a software vendor or Accenture or IBM, we have no motivation to minimize TCO. In fact, the major consulting companies and software vendors generally do not want their customers to know the actual TCO.
  • We can include various scenarios in the TCO calculation.
  • We can support projects anywhere in the world remotely.

For more information fill out the form at the end of this page.

How Much Do you Know About TCO?

TCO Quiz

This quiz asks the foundational questions of TCO.

References

See our TCO method which is explained in the following book.

TCO Book

TCO3

Enterprise Software TCO: Calculating and Using Total Cost of Ownership for Decision Making

Getting to the Detail of TCO

One aspect of making a software purchasing decision is to compare the Total Cost of Ownership, or TCO, of the applications under consideration: what will the software cost you over its lifespan? But most companies don’t understand what dollar amounts to include in the TCO analysis or where to source these figures, or, if using TCO studies produced by consulting and IT analyst firms, how the TCO amounts were calculated and how to compare TCO across applications.

The Mechanics of TCO

Not only will this book help you appreciate the mechanics of TCO, but you will also gain insight as to the importance of TCO and understand how to strip away the biases and outside influences to make a real TCO comparison between applications.
By reading this book you will:
  • Understand why you need to look at TCO and not just ROI when making your purchasing decision.
  • Discover how an application, which at first glance may seem inexpensive when compared to its competition, could end up being more costly in the long run.
  • Gain an in-depth understanding of the cost, categories to include in an accurate and complete TCO analysis.
  • Learn why ERP systems are not a significant investment, based on their TCO.
  • Find out how to recognize and avoid superficial, incomplete or incorrect TCO analyses that could negatively impact your software purchase decision.
  • Appreciate the importance and cost-effectiveness of a TCO audit.
  • Learn how SCM Focus can provide you with unbiased and well-researched TCO analyses to assist you in your software selection.
Chapters
  • Chapter 1:  Introduction
  • Chapter 2:  The Basics of TCO
  • Chapter 3:  The State of Enterprise TCO
  • Chapter 4:  ERP: The Multi-Billion Dollar TCO Analysis Failure
  • Chapter 5:  The TCO Method Used by Software Decisions
  • Chapter 6:  Using TCO for Better Decision Making

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