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
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
See our TCO method which is explained in the following book.
Getting to the Detail of TCO
The Mechanics of TCO
- 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.
- 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