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Consider the Total Cost of Ownership (TCO) When Investing in Technology


"We live in a society exquisitely dependent on science and technology."

Today, business owners know that it is imperative that they have the right technology just to stay competitive. Technology expenditures are a necessity, but calculating the true cost of such expenses isn't a simple matter. Many hidden and
ongoing costs can result in a sobering disconnect between your initial investment and the true, total cost of ownership (TCO) in technology.

That's why understanding TCO is so important.

What Is TCO?
At its most basic level, Total Cost of Ownership (TCO) can be defined as both the direct and indirect costs incurred throughout the life cycle of an asset. These costs relate to acquisition, deployment, operation, support and the expiration date of a product's usefulness:

Direct costs:
Direct costs cover tangible and support-related investments and expenses, including hardware, software, technical operations, technical support, fully loaded labor costs, and various administrative departmental allocations such as finance, human resources, procurement, etc.

Indirect costs:
Indirect costs are hidden costs that are dispersed company-wide. These costs involve ongoing interaction between a company's employees and the training, troubleshooting and maintenance associated with operating a technology. Such indirect costs reflect the value of employee time taken away from their primary or planned duties.

Determining TCO
To determine your Total Cost of Ownership (TCO) on an annual basis simply compile and compute all of your a particular technology investment's direct and indirect costs.

Studies have shown that some technology items such as a basic $200 company printer can easily have an annual TCO of over $1,000 or more when needed supplies and maintenance requirements are factored in. A single corporate desktop computer can average over $5,000 per year in TCO.

However, in some rare cases, like that of a FleetBoss GPS technology purchase, a business's TCO can actually be quickly exceeded by a substantial Return On Investment (ROI) and revenue generation due to an increase in productivity, efficiency and profitability.

Clients who purchase a FleetBoss GPS solution generally experience a complete ROI within six months. A typical FleetBoss customer sees a 15% savings in fuel costs alone within the first year of solution operation. Similar savings and revenue are generated from preventive maintenance and increased service calls.

Making TCO analysis a regular part of your technology investment purchase process is a valuable and essential tool for any successful business.

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