In education,
as in business, there is a willingness to pay if the goal
is clear, the total cost is known, and there is confidence
that the money is being well managed.
The Importance of Understanding and Using Total Cost of
Ownership Analysis
Technology systems
are
complex. In addition to the initial
determination of how and what to purchase, there is
the difficult task of determining what to replace,
what to add and when. Given the many variables
involved each decision will have long term
implications which will affect the total system
configuration and its operation.
Education technology budgets
are under stress. During times of budget constraint there is an
increasingly urgent need for all parties to be able
to accurately forecast multi-year costs against
various outcomes so that
the use of available funds can be optimized. Schools throughout the
country are being asked to make do with less.
Without increased budget forecast and control the
implication is clear: a (downward) trend toward an
inventory of older equipment, and an inadequately
trained staff.
-
A well organized TCO process provides all members of the school community
with heightened awareness of how technology,
construction, professional training, equipment
procurement and replacement, and energy consumption
(among others) impact each other.
Many school
administrators and other members of the education
community have not had the opportunity to apply Total
Cost of Ownership analysis. As a result the
multi-year cost linkage
between technology, building construction, personnel
training and other
school functions is often over looked.
Lower total school costs, increased
financial control and more efficient integration of
technology into the school's operations can (and
will) result from the early application of a TCO program
.
To determine the true total cost of ownership, not only
must all initial costs be included, but also the multi-year costs
necessary for support, replacement, and servicing.
Analysis has shown that those items
usually defined as "technology" account for only
about 50% of the total system cost, and the computers,
which are often considered the core of the system will
account for less than 25% of the total over 5 years.
TCO References:
Taking TCO to the Classroom developed by COSN
http://classroomtco.cosn.org/
Why TCO matters by the Gartner Group
https://k12tco.gartner.com/home/homepagepromo/files/TCO_Overview.pdf
Total Cost of Ownership by Dell Computer
http://www1.us.dell.com/content/topics/global.aspx/tco/en/tco?c=us&cs=28&l=en&s=dfb
TCO additional sources of information offered by Tech-Learning
http://www.techlearning.com/story/showArticle.jhtml?articleID=60402206
Investing in Palm handhelds: understanding total cost of ownership
http://www.palmpowerenterprise.com/issuesprint/issue200109/tco.html
The strengths and weaknesses of Total Cost of Ownership
http://www.nucleusresearch.com/research/a21.pdf
ITEG, LLC
makes extensive use of the capabilities of Microsoft
Excel, and can apply these capabilities to financial
studies of all kinds. We look forward to
discussing your needs.
2/23/10