Professional Documents
Culture Documents
(TCO)
WHAT IS TCO
All of the possible costs incurred in the life cycle of a
workstation, from acquisition to disposal
Step 2
Add the names of resources to each cell
Resource items that go together in a cell should be those
that are planned and managed together, and which may
have common cost drivers
TCO ANALYSIS PROCESS
Acquisition Operating Change
Costs Costs Costs
Software
Hardware
Personnel
NW &
Comm
Facilities
TCO ANALYSIS PROCESS
Step 3
Other cells in the same model are similarly populated with
resources
Step 4
Different action scenarios were compared fairly
The model should be designed so that one model covers all
relevant costs in all scenarios
Some items may have 0 values in one scenario and non zero
values in others
Step 5
Estimate cost figures for each item, for each scenario under
consideration, for each year covered by the analysis
TCO ANALYSIS PROCESS
Cost estimates: $ in 1,000s
Proposed System Acquisition Scenario
Yr 1 Yr 2 Yr 3 Total
Server system purchase.... $454 $ 84 $ 70 $608
Business as Usual Scenario
Yr 1 Yr 2 Yr 3 Total
Server system purchase $154 $ 64 $ 64 $282
Incremental cash flow (Proposal less Business as Usual)
Yr 1 Yr 2 Yr 3 Total
Server system purchase $300 $ 20 $ 6 $326
TCO ANALYSIS PROCESS
Step 6
•The cash flow statements take their line items from the model and
retain some of the model's structure
•The cash flow statements have the parent cost model's vertical
axis categories, but in the horizontal dimension, the statements
present a time line covering the TCO analysis period
Step 7
Consideration of scenarios
Proposed System Acquisition
Business as Usual.
The Incremental Scenario - cost differences between
corresponding line items on scenarios (1) and (2).
TCO ANALYSIS PROCESS
$ in 1,000s Acqn C Opng Change Total %
osts Costs in costs of TCO
• The Open Systems scenario includes all upfront costs for the
solution as well as on-going operating costs
CASE STUDY
4 year Annual total cost comparisons for the
Mainframe Systems environment
CASE STUDY
4 year Annual total cost comparison for the Mainframe
Systems environment
CASE STUDY
4 Year TCO Comparison
CASE STUDY
ROI Analysis